July 16, 2020 Public Contract Law Journal

Leveraging the Department of Defense’s Other Transaction Authority to Foster a Twenty-First Century Acquisition Ecosystem

by Douglas Steinberg

Douglas Steinberg is a third-year student at The George Washington University Law School in Washington, D.C. Prior to law school, Doug worked as a lobbyist at the Boston-based firm Sachem Strategies, which works with small and midsize defense technology companies. Doug received his B.A. from Bates College, and he has previously completed internships with the United States Army War College, the United States Attorney’s Office (Criminal Division), and the Kings County District Attorney’s Office.

Introduction

Twenty-four years ago, the Third Taiwan Strait Crisis began when the People’s Republic of China initiated an aggressive series of military exercises aimed at intimidating Taiwan (also known as the Republic of China) in the leadup to Taiwan’s elections.1 The People’s Republic of China’s military held live-fire missile drills and mock amphibious assaults in an apparent threat to invade the island of Taiwan.2 The small island nation would have been overwhelmed in any military conflict with China.3 In response, President Bill Clinton sent two U.S. Navy Aircraft Carrier Groups, along with an amphibious assault ship, into the Strait of Taiwan.4 The massive show of naval power forced the Chinese military to back down, and the situation in the Strait of Taiwan eventually stabilized.5 The Chinese military recognized that the U.S. Navy’s capabilities significantly outmatched their own, even right off the coast of the Chinese mainland.6 In this crisis, the United States demonstrated that it could credibly deter aggression because of its military superiority.

Today, if a similar crisis arose, it is much less certain that the U.S. military could exercise the same degree of credible deterrence.7 The Chinese military has significantly improved its capabilities,8 especially in terms of missile technology, electronic warfare, and cyberspace.9 The Russian invasion of parts of Eastern Ukraine and annexation of Crimea further demonstrate the erosion of the U.S. military’s ability to credibly deter aggression.10 U.S. military superiority has waned in the decades since the Third Taiwan Strait Crisis.11

This Note begins with an in-depth look at the “Third Offset Strategy,” the U.S. Department of Defense’s (DoD) effort to reestablish technological military superiority over potential adversaries. As part of the examination, this Note analyzes the evolving nature of threats to international security, specifically looking at the technological improvements to the Chinese and Russian militaries.

This Note next explains why the DoD’s efforts to equip the military for credible deterrence are in jeopardy. It examines the incompatibility of the current defense acquisition system with that of technological supremacy. The primary reason for this is the failure of DoD’s acquisition system to harness the capabilities of the U.S. commercial technology sector. Without the ability to procure the most cutting-edge weapons capabilities, the DoD will not be able to sustain its technological supremacy.

After thoroughly analyzing the problem, this Note advocates for the use of the DoD’s Other Transaction Authority (OTA) as a work-around to the acquisition system. An “Other Transaction” is a type of contract that allows the DoD to procure technology from the private sector without following the regulations in the traditional acquisition system.12 The analysis of OTA will center on a recent case in which the Army attempted to use OTA to procure a new cloud computing system, but had its OTA award nullified by the Government Accountability Office (GAO) because it violated the OTA statute.13

Finally, this Note lays out proposed legislative reforms for DoD’s OTA. These reforms include eliminating restrictions for awarding follow-on contracts to Other Transactions. In addition, Congress should move away from micromanaging OTA through process-oriented regulations and instead establish an oversight framework for OTA based on resource allocation. The proposed reforms would enable DoD to more effectively partner with America’s commercial technology sector in support of the Third Offset Strategy.

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