Innovation in Government Contracting: Increasing Government Reliance on Other Transaction Agreements Mandates a Clear Path for Dispute Resolution

I. Introduction: The Race to Space & the Creation of Other Transaction Agreements

On October 4, 1957, the first satellite to orbit the Earth crossed the night sky.The Soviet Union’s successful launch of Sputnik set the pace for an intense space race with the United States. Seeking to reassert its technological superiority over the Soviet Union,the United States launched its first rocket from Cape Canaveral on December 6, 1957, but the rocket’s thrusters failed within seconds, and it fell back to Earth. These events demonstrated the government’s need for faster technology acquisition to maintain competitiveness. President Dwight Eisenhower responded to the rocket’s loss by asking Congress to establish a civilian agency with a space exploration mandate. On July 29, 1958, Congress passed the National Aeronautics and Space Act (Space Act), thus establishing the National Aeronautics and Space Administration (NASA).

In passing the Space Act, Congress granted NASA broad acquisition authority to achieve its objectives, including the authority to enter into “other transactions as may be necessary in the conduct of its work and on such terms as it may deem appropriate.” The Act thus created a new kind of procurement vehicle, called “other transaction agreements” (OTAs), and granted NASA exclusive authority to enter into OTAs.

In the wake of the Act’s passage, the United States invested extensively in space technology, and on July 20, 1969, less than twelve years after the passage of the Space Act, NASA successfully landed the Apollo 11 astronauts on the moon.

A. OTAs Enable the Government to Procure Cutting-Edge Technology Quickly.

Today, the U.S. government purchases many of the goods and services it requires from the private sector. When agencies need to make a procurement, the process starts with instrument selection. Agencies can pay third parties to acquire necessary goods and services using several different types of procurement instruments, such as procurement contracts, grants, cooperative agreements, and OTAs.

The purpose of enabling NASA to use OTAs was to expedite acquisition of cutting-edge technology. Since 1958, “other transaction” authority (OT authority) has been extended to other executive agencies, including the Department of Defense (DoD), the Federal Aviation Administration, the Department of Transportation, the Transportation Security Administration, the National Institutes of Health, the Department of Homeland Security, the Department of Health and Human Services, and the Department of Energy.

OTAs are different from procurement contracts, which are subject to various laws and the Federal Acquisition Regulation (FAR). While the FAR and other regulations that apply to procurement contracts are burdensome, they promote competition, ensure transparency, and deter corruption.The reason for extending OTAs to additional agencies beyond NASA is clear: OTAs may enable faster, more effective, and more agile acquisitions than traditional government acquisition vehicles, which is vital in acquiring technology to address the nation’s security challenges. Furthermore, the flexibility that OTAs provide has allowed the DoD to partner with firms that infrequently participate in government contracting due to industry perception that government contract regulations are overly burdensome. However, there is uncertainty surrounding the appropriate forum when disputes arise during OTA performance or when contractors wish to protest the award of an OTA.

B. The Purpose of This Article

Two major categories of disputes arise in government contracting: bid protests and contract claims. Bid protests arise during contract formation when an interested party challenges an agency’s procurement action. Contract claims arise during performance of a contract when the agency and the contractor disagree about a question of fact or law relating to contract performance and seek remedies. This article focuses on disputes arising during the performance of OTAs. It is important to recognize the limited review of OTA solicitations and awards. Generally, the Government Accountability Office’s (GAO) bid protest jurisdiction does not extend to the review of OTA awards. However, the GAO will review challenges of OTA awards in limited circumstances, such as when a protestor alleges that an agency improperly used an OTA rather than a procurement contract.

1. Limited Review of OTA Awards

The U.S. Court of Federal Claims (COFC) recently concluded that it did not have jurisdiction to hear a post-award bid protest concerning launch service agreements (LSAs) issued by the DoD under its OT authority. In Space Exploration Technologies Corp. v. United States, Judge Lydia Kay Griggsby stated that LSAs are not procurement contracts, and “relief in bid protest matters pursuant to the Tucker Act is unavailable outside the context of a procurement or proposed procurement.”

In this protest, Space Exploration Technologies Corp. (SpaceX) challenged the Air Force’s evaluation and award decisions for space launch services. The Air Force had issued a request for proposals (RFP) for space launch services for national security missions pursuant to its OT authority, 10 U.S.C. § 2371b. The purpose of the LSAs was to provide awardees with funding from the Air Force to develop launch system prototypes. The LSAs would allow the technology to mature before the Air Force awarded contracts (referred to as “Phase 2” procurements) for launch services. The Phase 2 procurements would be separate from the LSAs and would be “open to all interested offerors.” SpaceX and three other offerors submitted proposals in response to the LSA RFP, but SpaceX was not selected as an awardee.

Following SpaceX’s filing of a bid protest with the COFC, the government moved to dismiss the bid protest for lack of subject matter jurisdiction, arguing that SpaceX’s protest does not concern a procurement or proposed procurement and thus is outside of the court’s Tucker Act jurisdiction. SpaceX argued that the court did have jurisdiction to hear its claims, but moved in the alternative to transfer the matter to the U.S. District Court of the Central District of California.

The key issue in this case was whether the COFC has subject matter juris- diction over a bid protest brought by an offeror objecting to the evaluation and award of an LSA. Judge Griggsby stated that the Tucker Act provides the court with jurisdiction to hear bid protests brought by ‘“an interested party objecting to a solicitation by a [f]ederal agency for bids or proposals for a proposed contract or to a proposed award or the award of a contract or any alleged violation of statute or regulation in connection with a procurement or a proposed procurement.”’ While the parties agreed that the LSAs at issue in the protest were not procurement contracts, SpaceX argued that the LSAs were awarded in connection with the Phase 2 procurement and should therefore fall within the court’s Tucker Act jurisdiction. The court found that the LSAs were separate from the Phase 2 procurements; therefore, the court granted the government’s motion to dismiss for lack of subject matter jurisdiction, dismissed the complaint, and granted SpaceX’s motion to transfer the matter to the district court.

While the LSAs at issue in this case were not procurement contracts and consequently could not be reviewed by the court under the Tucker Act, the court noted that its decision did “not reach the issue of whether other transactions generally fall beyond the [c]ourt’s bid protest jurisdiction under the Tucker Act.” Therefore, the case is not conclusive as to whether disappointed offerors may challenge OTA awards at the COFC. Moreover, the case is limited to bid protests and does not address the question of whether the COFC has jurisdiction to hear claims against the government that arise from OTA performance.

2. Uncertainty Surrounding the Proper Forum for Claims Arising from OTA Performance and the Importance of Spectre Corp. v. United States

Uncertainty surrounds the proper forum (or fora) for contractors to bring claims arising from OTA performance. A recent decision at the COFC, Spectre Corp. v. United States, assumed that disputes arising from OTA performance could be heard at the COFC under the Tucker Act. However, the four-page opinion failed to explain the court’s underlying legal reasoning. Furthermore, the decision created no binding precedent. Until the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) affirms a finding of jurisdiction, contractors have no clear answer as to where they may bring claims that arise during OTA performance.

3. Clarifying the Appropriate Forum for Disputes Arising During OTA Performance

In traditional procurement contracts, disputes that arise during performance may be heard at the boards of contract appeals or the COFC under the Contract Disputes Act (CDA). However, as explained in Parts II and III, the CDA does not apply to OTAs. To clarify the uncertainty surrounding the proper forum for claims arising from OTA performance, this article argues that OTAs are “contracts” for purposes of Tucker Act jurisdiction at the COFC. The DoD’s recent guidance on OTAs confirms that they are indeed contracts. To ensure jurisdiction at the COFC, this article suggests that contractors insist that a disputes clause be included in their OTAs because it would clarify the government’s intent to be bound in a contractual relationship providing for monetary damages. Furthermore, if and when an OTA-related case is appealed to the Federal Circuit, the Federal Circuit should affirm that OTAs are “contracts” within the meaning of the Tucker Act. The Federal Circuit’s decision would set binding precedent, thus providing OTA participants confidence in their ability to be heard before the COFC in the event of a performance-related dispute.

Alternatively, this article suggests that the Armed Services Board of Contract Appeals (ASBCA or Board) may have jurisdiction to hear OTA-related disputes under its Charter. Before the CDA was passed, the Board derived its jurisdiction from its Charter and disputes clauses in contracts. The ASBCA may exercise jurisdiction over non-CDA appeals where the parties have agreed to have the Board decide their disputes. The ASBCA also has the ability to arbitrate disputes when the parties jointly agree to Alternative Dispute Resolution (ADR). Therefore, an alternative solution to this problem is for parties to OTAs to include a disputes clause allowing the ASBCA to decide disputes that arise during performance. Likewise, the Civilian Board of Contract Appeals (CBCA) likely has the ability to decide or arbitrate disputes arising under OTAs with civilian executive agencies.

This article focuses on the DoD’s increasing use of OTAs and the uncertainty surrounding where contractors can go when disputes arise during OTA performance. Part II provides background information about traditional procurement contracts, the history of OTAs, the growing use of OTAs today for prototypes and for research and development at the DoD, and the agency’s guidance on the use of OTAs. Part III analyzes the choice of forum available for claims arising from the performance of traditional procurement contracts, the lack of a clear forum for OTA-related disputes, and the recent COFC decision in Spectre Corp. Finally, Part IV proposes model language that contractors may include in their agreements and recommends that the Federal Circuit affirm the COFC’s jurisdiction to hear OTA-related disputes. The Federal Circuit’s affirmation would provide binding precedent, ensuring that OTA participants may be heard at the COFC. Alternatively, Part IV considers the ASBCA’s Charter and the possibility that OTA-related appeals may be decided by the Board. Likewise, Part IV also considers the CBCA’s ability to decide or arbitrate disputes arising under OTAs with civilian executive agencies. Part V summarizes these recommendations. Together, these solutions provide OTA participants a choice of forum and a clear path for dispute resolution.

II. The DOD's Use of Other Transaction Agreements

The DoD’s authority to use OTAs has grown incrementally through the annual National Defense Authorization Acts (NDAAs). Today, the DoD has authority to enter into two types of other transactions: OTAs for basic, applied, and advanced research and development projects and OTAs for prototype projects. Prototype OTAs have the potential to turn into follow-on production OTAs.

The following section begins by providing general information about traditional procurement contracts to provide context and a point of comparison. The section describes the history of OTAs and their poor statutory definition. It then summarizes the recent expansion of the DoD’s authority to enter into OTAs. Finally, the section concludes by summarizing the DoD’s guidance document on the proper use and administration of OTAs and recent developments that suggest the continued importance of OTAs going forward.

A. OTAs in Context: A Comparison to Traditional Procurement Contracts

OTAs are one of several acquisition instruments that the government can use to partner with private entities. Examples of other instruments include grants, cooperative agreements, and procurement contracts (commonly referred to as simply “government contracts”). The statutes, regulations, and public policy concerns governing procurement contracts provide a useful frame of analysis through which to study OTAs.

The use of a procurement contract is appropriate when an executive branch agency and another party enter into a contract either for the purpose of acquiring “property or services for the direct benefit or use of the United States Government” or when “the agency decides in a specific instance that the use of a procurement contract is appropriate.” Traditional government contracting for goods and services is regulated by the FAR. In addition to the FAR, government procurement contracts are governed by several statutes, such as the Competition in Contract Act (CICA) and the CDA. The FAR, CICA, and the CDA are applied to traditional procurement contracts and have not been extended to OTAs, likely because OTAs are defined as not procurement contracts. As explained in Part III, there is a well-developed system for resolving contract disputes that arise during the performance of procurement contracts. However, there is a lack of statutory support and case law for a similar system of dispute resolution for OTAs.

B. Defining Other Transaction Agreements

While the Space Act is responsible for creating OTAs, the Act failed to define “other transactions.” Today, OTAs are typically defined in the negative, as transactions “other than [procurement] contracts, cooperative agreements, and grants. . . .” As Richard L. Dunn, former General Counsel of Defense Advanced Research Projects Agency (DARPA), has explained: “In some statutes, contract is intended to mean procurement contract. In other cases, it has a broader meaning. In the litany of terms contract, grant, or cooperative agreement appearing together, contract almost always means procurement contract.” Because OTAs are not procurement contracts, they are “not subject to the laws, regulations, and other requirements governing such traditional contracting mechanisms.” As a result, OTAs are seen as more flexible because the parties (the government and the commercial company it wishes to engage) are not compelled to follow the FAR, the Defense Federal Acquisition Regulation Supplement (DFARS), CICA, or the CDA in their agreement.Instead, the parties can negotiate their own provisions that are best suited to the project.

The flexibility to tailor OTAs and avoid the constraints imposed by the FAR is particularly attractive to commercial companies. Some private companies are reluctant to enter into traditional government contracts because the FAR is perceived as burdensome and believed to impose high compliance costs. Unlike traditional government contracts, OTAs are not subject to the FAR and can be written to fit the needs of the parties. OTAs may also allow commercial companies to obtain an agreement with and funding from the government more quickly than is possible in traditional government contracts. As a result, OTAs allow the DoD to work with commercial companies to obtain the latest technology, provide funding for significant research and development, and preserve U.S. superiority in defense technology. These traits make OTAs an attractive option for private companies.

C. Congress Incrementally Granted the DoD Other Transaction Authority

Congress has gradually granted the DoD OT authority through the use of annual NDAAs. DARPA, part of the DoD, was first granted authority to enter into OTAs for research and development by the NDAA for Fiscal Year (FY) 1990. OT authority has subsequently been extended to other offices within the DoD. This authority is codified in 10 U.S.C. § 2371.

Additionally, DARPA was granted authority to enter into prototype OTAs in section 845 of the FY 1994 NDAA. This authority was only granted temporarily but has been repeatedly extended. Unlike previous versions, the FY 2016 NDAA omitted a sunset provision and instead granted the DoD permanent authority to enter into prototype OTAs. This authority is codified in 10 U.S.C. § 2371b. In section 2371b, Congress granted the DoD broad authority to enter into OTAs for prototype projects “that are directly relevant to enhancing the mission effectiveness of military personnel and the supporting platforms, systems, components, or materials proposed to be acquired or developed by the [DoD], or to improvement of platforms, systems, components, or materials in use by the armed forces.”

The FY 2016 NDAA also allowed for follow-on production contracts, meaning that after a contractor successfully completes a Prototype OTA, the agency may award a follow-on production contract to the OTA participant(s) without the use of competitive procedures. The ability to award follow-on production OTAs is another significant distinction between OTAs and procurement contracts, which usually must comply with the “full and open competition” requirement imposed by CICA.

D. The FY 2018 NDAA Made the DoD a Key Player in the OTA Field.

Continuing this trend of expanding the DoD’s authority to use OTAs for prototype projects, Congress made its support for increased use of OTAs for defense technology clear in the FY 2018 NDAA. The Act made several changes to the prototype OTA authority granted to the DoD in 2016, including announcing a “preference” for the use of OTAs for prototypes and research and development projects under 10 U.S.C. § 2371b and 10 U.S.C. § 2371. To increase the use of OTAs, in section 864(a) of the FY 2018 NDAA, Congress raised the cost ceilings or approval thresholds identified in the FY 2016 NDAA. Furthermore, in section 863 of the FY 2018 NDAA, Congress amended 10 U.S.C. § 2371 to include education and training requirements in the award and administration for OTAs. In light of Congress’s endorsement of OTAs, we can expect to see the DoD substantially increase its use of OTAs in the coming years. Therefore, a clear means of dispute resolution for con- tractors that enter into these agreements must be implemented.

B. The DoD’s Guidance Is Inadequate to Resolve the Uncertainty Surrounding the Proper Forum for Claims Arising from OTA Performance.

After the FY 2016 NDAA expanded the DoD’s authority to use OTAs for prototype projects, the DoD produced the January 2017 OT Guide for Prototype Projects to assist agreements officers (AOs) in the administration of OTAs for prototype projects. The Guide was beneficial in that it clarified which statutes — of those that are traditionally applied to procurement contracts — can govern OTAs, instructing that OTAs “generally are not required to comply with laws that are limited in applicability solely to procurement contracts” For instance, OTAs are not subject to the CDA, which is limited to procurement contracts. However, the Guide warned that statutes with general applicability may still govern OTAs and explained that “if a particular requirement is not tied to the type of instrument used, it generally would apply to an OT[A].” Furthermore, the Guide noted that while “the Competition in Contracting Act . . . is not applicable to the award of OT[A]s,” competition should be achieved “[t]o the maximum extent practicable.”

Most importantly, the DoD’s Prototype OTA Guide explained that “[a]lthough OT[A]s for prototype projects are not subject to the Contract Disputes Act, an OT[A] dispute potentially can be the subject of a claim in the COFC.” However, the Guide failed to identify the law providing the COFC with jurisdiction to hear such disputes. Instead, the Guide merely suggested that AOs “reduce the risk of costly litigation by negotiating disputes clauses which maximize the use of [Alternate Dispute Resolution] when possible and appropriate.” The CDA does not apply to all contracts with the government; instead, it is generally limited to executive agency procurement contracts. Because OTAs are defined in the negative (as something “other than [procurement] contracts, cooperative agreements, and grants”), their inclusion under the CDA would contradict their definition. If OTA-related disputes can be brought before the COFC, and the CDA is inapplicable, then they would presumably be brought under the Tucker Act. However, as discussed in Part III, the court’s jurisdiction over OTAs under the Tucker Act is not yet clear.

E. Recent Developments Suggest OTAs Will Remain a Vital Acquisition Tool.

The latest NDAA and the Section 809 Panel’s report suggest that OTAs will continue to be a vital acquisition instrument. However, these recent developments have not addressed how disputes that arise during the performance of OTAs will be resolved.

1. The FY 2019 NDAA Requires the DoD to Report Use of OTAs and Update Agency Guidance.

Most recently, section 873 of the FY 2019 NDAA requires the DoD to collect data on the use of OTAs and directs the Secretary of Defense to submit an annual report to the congressional defense committees covering the Department’s use of OTAs during the preceding fiscal year. Furthermore, the Act directs the Assistant Secretary of Defense for Acquisition to use these reports to update agency guidance and policy regarding OTA awards. The purpose of these reports is to “increase prudent use of OTAs while maintaining the flexibility and agility of these tools.”While revised agency guidance could help clarify how the parties resolve disputes that arise under OTAs, a guidance document alone is insufficient to address this problem because such guidance is not granted significant weight by courts and does not have the force of law or the ability to create jurisdiction.

2. DoD Issued Revised Agency Guidance

In November 2018, the Office of the Under Secretary of Defense for Acquisition and Sustainment rescinded the January 2017 OT Guide for Prototype Projects and issued a superseding OT Guide. There are many misconceptions about OTAs, and the DoD’s new OT Guide addresses several common “myths” about OTAs. Most importantly, the Guide states that it is a misconception to assume that, because an OTA is referred to as an “agreement,” it is not a “contract.” The Guide explains:

When most people in the [g]overnment hear the term “contract,” they automatically think “Federal Acquisition Regulation (FAR)-based procurement contract” awarded under the traditional acquisition process and subject to all of the federal acquisition statutes and regulations. OT agreements are not procurement contracts, but they are legally valid contracts. They have all six legal elements for a contract (offer, acceptance, consideration, authority, legal purpose, and meeting of the minds) and will be signed by someone who has the authority to bind the federal government (i.e. an Agreements Officer). The terms and conditions can be enforced by and against either party.

As explained in Part III and IV, the classification of an OTA as a type of contract is significant because, while some federal statutes only apply to procurement contracts, other statutes (such as the Tucker Act’s language regarding contract claims) apply to contracts with the government generally.

The new OT Guide states that “[a]lthough OT[A]s are not subject to the Contract Disputes Act, an OT dispute can potentially be the subject of a claim in the [COFC].” For this reason, AOs “should ensure each OT addresses the basis and procedures for resolving disputes,” particularly those arising under IP clauses. Furthermore, the Guide suggests that AOs “seek to reduce the risk of costly litigation by negotiating disputes clauses which maximize the use of Alternate Dispute Resolution (ADR) procedures when possible and appropriate.” While the Guide may serve as a warning to AOs that disputes arising from OTAs could be subject to COFC jurisdiction, the guide lacks the force of law and is not entitled to deference by courts. Given the DoD’s increasing use of OTAs, a stronger statement of jurisdiction is necessary.

3. The Section 809 Panel’s Report Calls for Increased Use of OTAs.

Section 809 of the FY 2016 NDAA called for the formation of an advisory panel to review the procurement system and recommend modifications to streamline acquisitions. The Section 809 Panel’s report was released in three volumes, the third of which was released in January 2019. The Panel observed that the “DoD’s acquisition process has not adequately kept pace” with the military’s need for innovation, and this “necessitate[s] increased use of work-arounds, such as Other Transaction Authorities and rapid acquisition organizations, to deliver [the] DoD’s strategic objectives in a timely manner.” The Section 809 Panel recommended steps to “[c]larify and expand the authority to use Other Transaction agreements for production.” Their recommendations focus on how current statutes authorizing the use of OTAs can be modified to allow for increased use of OTAs for efficient follow-on production; however, the report does not address how disputes that arise in the performance of OTAs will be resolved.

III. Analysis: The Lack of a Clear Forum for Disputes Arising During OTA Performance May Discourage Private Sector Participation.

The importance of jurisdiction cannot be overstated. Jurisdiction determines whether a court has the authority to hear a particular case. There are two types of jurisdiction that must be present for a court to hear a case: personal jurisdiction and subject-matter jurisdiction. The following section focuses on subject-matter jurisdiction, which addresses whether a specific court has the power to decide the issue posed by a case.

In traditional procurement contracts, the boards of contract appeals and the COFC have jurisdiction to hear claims arising from disputes under the CDA. Additionally, the COFC has jurisdiction to hear claims arising from “any express or implied contract with the United States [government]” under the Tucker Act. Because the CDA is inapplicable to OTAs, parties wishing to bring OTA-related claims before the COFC must look to the Tucker Act for jurisdiction. Alternatively, the ASBCA has jurisdiction to hear certain non-CDA contract-related disputes under its Charter and the disputes clause in the contract at issue. Likewise, the CBCA may also be able to hear or arbitrate disputes arising between civilian agencies with OTA authority and their agreement partners.

A. The Well-Developed Disputes Process for Procurement Contracts Provides Transparency and a Clear Choice of Forum for Contractors.

Transparency is an important benefit of having a well-settled practice for resolving disputes. For example, during the formation of traditional procurement contracts, disappointed offerors can petition the procuring agency, the GAO, or the COFC to have their concerns heard. This bid protest system ensures integrity and transparency in the procurement system. There is a similarly well-defined process for resolving contract disputes that arise during contract performance. The COFC has jurisdiction to hear contract claims brought by contractors against the agencies with which they are working under the CDA. Alternatively, the CDA allows these claims to be brought to the appropriate board of contract appeals. The following subsections provide an overview of contractors’ choice of forum between the COFC and the boards of contract appeals and summarize the significance of Tucker Act jurisdiction and the CDA in resolving procurement contract disputes efficiently and transparently. The section concludes with a comparison between the well-developed system for resolving disputes that arise during the performance of traditional procurement contracts and the absence of a clear process or forum for resolving similar disputes that arise during OTA performance.

1. Choice of Forum: Court of Federal Claims or Boards of Contract Appeals

When a dispute arises during contract performance, contractors that receive an adverse final decision from a Contracting Officer have the exclusive right to appeal the decision to the appropriate board of contract appeals or to file their claim at the COFC.

a. Boards of Contract Appeals

“The boards of contract appeals are designed to provide ‘to the fullest extent practicable, informal, expeditious, and inexpensive resolution of disputes’ arising from [g]overnment contracts.” There are three boards of contract appeals: the ASBCA, the CBCA, and the Postal Service Board of Contract Appeals (PSBCA). This subsection will focus on the ASBCA and the CBCA, as the U.S. Postal Service has not been granted authority to enter OTAs.

The ASBCA is an independent tribunalwith

jurisdiction to decide any appeal from a final decision of a contracting officer, pursuant to the Contract Disputes Act, 41 U.S.C. [§§] 7101-7109, or its Charter, 48 CFR Chap. 2, App. A, Pt. 1, relative to a contract made by the Department of Defense, the Department of the Army, the Department of the Navy, the Department of the Air Force, the National Aeronautics and Space Administration or any other department or agency, as permitted by law.

“The ASBCA is chartered to serve as the authorized representative of the Secretary of Defense and the Secretaries of the Army, Navy, and Air Force in hearing, considering, and determining appeals by contractors from decisions of [C]ontracting [O]fficers . . . regarding claims on contracts under the [CDA] or other remedy-granting provisions.” The ASBCA’s Charter states that appeals may be taken (1) “pursuant to the Contract Disputes Act,” (2) “pursuant to the provisions of contracts requiring the decision by the Secretary of Defense or by a Secretary of a Military Department or their duly authorized representative,” or (3) “pursuant to the provisions of any directive whereby the Secretary of Defense or the Secretary of a Military Department or their authorized representative has granted a right of appeal not contained in the contract on any matter consistent with the contract appeals procedure.” In sum, the ASBCA can hear contract disputes under the CDA, as well as certain non-CDA disputes under its Charter.

The CBCA is an independent forum within the General Services Administration. The CBCA was established by the FY 2006 NDAA, which consolidated the prior civilian boards of contract appeals. The CBCA has the jurisdiction of all of its predecessor boards. The CBCA is also authorized to decide contract disputes between contractors and civilian executive agencies under the CDA. Furthermore, in addition to deciding contract disputes under the CDA, the CBCA also exercises jurisdiction in other areas pursuant to statutes and memoranda of understanding with executive agencies. “The board’s authority extends to all agencies other than the Department of Defense, the Department of the Army, the Department of the Navy, the Department of the Air Force, the National Aeronautics and Space Administration, the United States Postal Service, the Postal Rate Commission, and the Tennessee Valley Authority.”

Both the CBCA and the ASBCA have broad authority to engage with executive agencies and government contractors who voluntarily seek ADR services. The boards’ ADR authority comes in part from the CDA, as well as from the Administrative Dispute Resolution Act of 1996. Both boards can engage in ADR efforts on contract-related matters not covered by the CDA when the board’s help is jointly requested by an executive agency and its contractor.

b. Court of Federal Claims

The COFC is an Article I court with limited jurisdiction. Like the boards, the COFC has jurisdiction to decide contract claims under the CDA. In addition to contract claims, the COFC also hears bid protests and non-CDA contract disputes under the Tucker Act, as well as Fifth Amendment takings cases, military pay cases, and other types of cases involving the federal government. The COFC may also engage in ADR if the parties elect to do so.

2. The Contract Disputes Act

In traditional government contracts, disputes that arise during the performance of a procurement contract between the contractor and the government are governed by the disputes procedures outlined in the Contract Disputes Act of 1978 (CDA), 41 U.S.C. §§ 7101–7109. The CDA waives sovereign immunity by allowing contractors to seek remedies against the government in court. The CDA applies to “any express or implied contract . . . made by an executive agency for — (1) the procurement of property, other than real property in being; (2) the procurement of services; (3) the procurement of construction . . . ; or (4) the disposal of personal property.” Therefore, the CDA does not apply to all contracts with the government, only procurement contracts.

Before the passage of the CDA in 1978, “the major statute covering contractor’s claims against the government was the Tucker Act, 28 U.S.C. § 1346(a) and § 1491.” As explained in the following subsection, the Tucker Act waived sovereign immunity for “any claim against the United States . . . upon any express or implied contract with the United States.” Therefore, before the CDA was adopted, contractors had to rely on provisions in their contracts in which the agency waived its sovereign immunity to allow the contractor to pursue certain claims for monetary relief at the COFC.

Today, the CDA provides certainty for parties in the disputes process by outlining “established procedures that are mandatory for all procurement contracts of executive branch agencies.” On the one hand, the CDA’s inapplicability to OTAs means that companies participating in OTAs are left without a clear forum with jurisdiction to hear claims in the event of a dispute. On the other hand, the CDA’s inapplicability means that contractors are free to negotiate disputes clauses with the agency that may differ from the procedures required by the CDA to better fit their needs. Such clauses may be similar to pre-CDA clauses that provided contractors the option to bring disputes arising under the contract to the COFC under the Tucker Act.

3. Tucker Act Jurisdiction over Contract Disputes at the COFC

The Tucker Act, 28 U.S.C. § 1491, is a jurisdictional statute that waives sovereign immunity and allows contractors to bring claims against the government at the COFC. Under the Tucker Act, the COFC has “jurisdiction to render judgment upon any claim against the United States founded . . . upon any express or implied contract with the United States.” So, even without the CDA, the court can hear contract claims against the government for monetary damages. However, the Act “does not confer any substantive rights that are enforceable against the government.” This means that the Tucker Act alone is “insufficient to support jurisdiction.” As a result, “[a] party invoking the Tucker Act must identify a separate source of substantive law mandating a right of recovery in money damages.” This “source of substantive law” can be a contract, so long as the contract contemplates monetary damages.

Therefore, companies bringing an OTA-related dispute to the COFC should be prepared to demonstrate that their OTA is indeed an enforceable contract and that it provides them with a right to money damages in the event of a breach.

4. What Is a “Contract” for Purposes of Tucker Act Jurisdiction?

As stated previously, because OTAs are not procurement contracts, they are not subject to the laws and regulations governing traditional government con- tracts. To identify which statutes apply to OTAs, practitioners have to con- sider the term “contract.” As explained in Part II, some statutes use the term “contract” broadly to include all contracts with the government, while other statutes use the term to refer only to procurement contracts. This point is significant, because while the term “contract” in the CDA only refers to procurement contracts, the term “contract” in the Tucker Act applies to contract disputes in general with the federal government.

For an agreement to be considered a contract for purposes of the Tucker Act, the agreement must have been entered into by a government representative with authority to bind the U.S. government in contract, and the agreement must meet “the standards traditionally applied by [the] court[s] requiring a mutual intent to contract, including an offer, acceptance, and con- sideration.” The DoD’s new OT Guide explains that OTAs are “legally valid contracts” and that their “terms and conditions can be enforced by and against either party.” As a result, while OTAs are valued for providing flexibility to tailor agreements to the needs of the parties, OTAs are still valid and enforceable contracts that are subject to statutes that apply to contracts generally. Therefore, OTAs should fall under the COFC’s Tucker Act jurisdiction, so long as the OTA was entered into or ratified by an agreements officer with authority to bind the government and the agreement satisfies the required elements for a contract.

B. Spectre Corp. and the Unexplained Assumption of Jurisdiction at the COFC.

The issue of jurisdiction over OTA disputes is not a purely academic matter; the COFC, faced with an OTA dispute, broadly asserted jurisdiction over the issue in Spectre Corp.On June 30, 2017, Senior Judge Loren A. Smith on the COFC assumed without discussion in Spectre Corp. that OTA-related disputes could be heard at the court under the Tucker Act. As the first case to address the COFC’s jurisdiction over OTA-related disputes, it merits discussion.

The plaintiff, Spectre Corporation, sought “compensatory damages for alleged breaches of two contracts” with NASA. The first agreement (Space Act Agreement) was executed using NASA’s other transaction authority under the Space Act and concerned the commercialization of NASA’s silicon-carbide (SiC) sensor patents. The second agreement was an Exclusive Licensing Agreement under which Spectre paid a fee to NASA in return for a license to practice the SiC sensor patents. After unexplained delays, “NASA terminated the Exclusive Licensing Agreement and halted its performance under the Space Act Agreement.” Spectre alleged that NASA breached both their Space Act Agreement and their Exclusive Licensing Agreement by failing to deliver “NASA-fabricated SiC sensors that met certain performance specifications along with the technology and data necessary for Spectre to manufacture those SiC sensors on its own,” thus making it more difficult for Spectre to continue performance under the agreement. The government responded that Spectre was responsible for making patent payments, and NASA was not obligated to perform under the agreements without payment. The government argued that Spectre’s claims should be dismissed. The court denied the government’s motion to dismiss, signaling its approval of the court’s jurisdiction over OTA-related disputes.

Importantly, the opinion repeatedly refers to the Space Act Agreement and the Exclusive Licensing Agreement as “both contracts.” The classification of the Space Act Agreement as a contract carries legal significance. The Court does not explain its analysis but instead assumes that the Space Act Agreement is a “contract.” The opinion briefly summarizes the Court’s jurisdiction under the Tucker Act and then makes a logical jump that Space Act Agreements are contracts that fall under this jurisdiction. The case does not cite to the CDA; instead, the decision relies on Tucker Act jurisdiction. In omitting any citation to the CDA, the court may have been “recognizing that the agreement, while a ‘contract’ for the purposes of the Tucker Act, is not a procurement contract for the purposes of the Contract Disputes Act.” Presumably, the two “contracts” at issue are the “separate source of substantive law” required by the Tucker Act that the court relies upon.

This case is significant because it appears to be the only case that the author is aware of that has addressed the COFC’s jurisdiction over disputes arising from the performance of OTAs (referred to as “Space Act Agreement[s]” by NASA). Despite its importance, it does not resolve the question of whether disputes arising from the performance of OTAs can be heard by the COFC. In its short opinion in Spectre Corp., the COFC failed to provide an “analysis explaining why jurisdiction was appropriate.” Furthermore, the case does not bind other judges on the COFC, and, while the opinion is persuasive, it is not an authoritative answer regarding the proper forum for OTA-related disputes. The only way to resolve this problem is for the Federal Circuit to affirm in a proper case that OTAs are contracts and to clarify the COFC’s jurisdiction over OTA-related disputes.

IV. Proposed Solutions

The COFC’s decision in Spectre Corp. assumes that OTAs are contracts within the meaning of the Tucker Act. Because this decision does not provide binding precedent, there is no clear answer as to where private parties may bring claims or disputes that arise during OTA performance. As explained earlier, it is clear that OTAs are outside of the scope of the CDA, which only applies to procurement contracts, because OTAs are defined as not procurement contracts. Therefore, practitioners seeking to bring OTA-related disputes to the COFC must look to other sources of law for jurisdiction. The Tucker Act is the logical candidate because it is the jurisdictional statute for the COFC. As the drafters of the new OT Guide correctly stated, OTAs are contracts because they have offer, acceptance, and consideration. While the OT Guide provides support for the idea that OTA-related disputes can be heard at the COFC, a clear rule is necessary.

This article proposes that private parties insist that a disputes clause, such as the language modeled in the following section, be included in their OTAs to provide for the possibility of monetary remedies in the event of a dispute and Tucker Act jurisdiction at the COFC. Furthermore, this article suggests that in future OTA-related cases heard by the Federal Circuit, the Federal Circuit should affirm at the first opportunity that OTAs are contracts within the meaning of the Tucker Act and that the COFC has jurisdiction to hear OTA-related disputes. This decision would set binding precedent and thus provide parties to these agreements with a reliable path to dispute resolution. Alternatively, this article suggests that the ASBCA may exercise jurisdiction over non-CDA appeals where the parties have agreed in a disputes clause to have the Board decide their disputes. Therefore, companies contemplating an OTA should insist that a disputes clause be included in their agreement providing for resolution by the Board. Likewise, parties participating in OTAs with civilian executive agencies may be able to bring disputes to the CBCA.

A. Tucker Act Jurisdiction over OTA-Related Disputes at the COFC

In Spectre Corp., Judge Smith already found, without discussion, that OTA-related disputes are subject to Tucker Act jurisdiction. While the case correctly found that OTAs are contracts within the meaning of the Tucker Act, the decision is not binding on other COFC judges. To solidify this solution, this section proposes that (1) OTA participants negotiate a disputes clause that confirms that the agreement is a contract and that the parties may pursue monetary relief at the COFC, and (2) the Federal Circuit affirm that OTAs are contracts within the meaning of the Tucker Act.

1. Disputes Clause

Private parties contemplating an OTA should insist that the government include a disputes clause providing for COFC jurisdiction. Assuming that the AO has actual authority to bind the government, the AO’s agreement to the clause would provide clarity by allowing the parties to agree in advance that the agreement is a contract that contemplates monetary damages. This would support the Court’s jurisdiction over the dispute under the Tucker Act.

Many OTAs already have disputes clauses; however, they do not address whether the parties can bring claims in federal court. Instead, the disputes clauses in existing OTAs frequently call for the use of ADR or some level of internal review within the agency, but do not provide any indication of where parties may bring claims in the event that a party is dissatisfied with the dispute resolution outcome or wants the dispute adjudicated by a court. The following language is typical of OTAs:

DISPUTES

A. GENERAL

1. The Parties shall communicate with one another in good faith and in a timely and cooperative manner when raising issues under this Article.

B. DISPUTE RESOLUTION PROCEDURES

1. Any disagreement, claim or dispute between [THE GOVERNMENT AGENCY] and [CONTRACTOR] concerning questions of fact or law arising from or in connection with this Agreement, and, whether or not involving an alleged breach of this Agreement, may only be raised only under this Article.

2. Whenever disputes, disagreements, or misunderstandings arise, the Par- ties shall attempt to resolve the issue(s) involved by discussion and mutual agreement as soon as practicable. . . .

3. Failing resolution by mutual agreement, the aggrieved Party shall document the dispute, disagreement, or misunderstanding by notifying the other Party (through the [AGENCY’S] AO) in writing of the relevant facts, identify unresolved issues, and specify the clarification or remedy sought. Within five (5) working days after providing notice to the other Party, the aggrieved Party may, in writing, request a joint decision by the [AGENCY’S] Senior Procurement Executive [OR EQUIVALENT OFFICIAL] and [A SENIOR EXECUTIVE APPOINTED BY THE CONTRACTOR]. The other Party shall submit a written position on the matter(s) in dispute within thirty (30) calendar days after being notified that a decision has been requested. The [AGENCY’S] Senior Procurement Executive and the senior executive shall conduct a review of the matter(s) in dispute and render a decision in writing within thirty (30) calendar days of receipt of such written position. Any such joint decision is final and binding.

4. In the absence of a joint decision, upon written request to the Deputy Director of [THE AGENCY], made within thirty (30) calendar days of the expiration of the time for a decision under subparagraph B.3 above, the dispute shall be further reviewed. The Deputy Director of [THE AGENCY] may elect to conduct this review personally or through a designee or jointly with a senior executive . . . appointed by the [CONTRAC- TOR]. Following the review, the Deputy Director of [THE AGENCY] will resolve the issue(s) and notify the Parties in writing. Such resolution is not subject to further administrative review and, to the extent permitted by law, shall be final and binding.

To provide contractors a clear forum in which to be heard in the event of a dispute, contractors should insist that the disputes clause contain additional language, such as that proposed below:

5. The parties agree that this agreement is a contract under 28 U.S.C. § 1491(a) contemplating monetary damages. Accordingly, failing resolution by mutual agreement, the aggrieved Party may pursue monetary remedies before the U.S. Court of Federal Claims.

The proposed clause supports the COFC’s jurisdiction because it demonstrates the government’s intention to bind itself in a contractual relationship with the contractor and subject itself to the COFC’s jurisdiction under section 1491(a) of the Tucker Act. Furthermore, the clause indicates the government’s consent to be held accountable for monetary damages. This provides strong support for jurisdiction under the Tucker Act because a COFC judge is less likely to challenge the government’s clear intention, as articulated in the clause, to be bound by Tucker Act jurisdiction in the event of a dispute. Furthermore, COFC judges may be persuaded to follow Judge Smith’s lead and treat OTAs as contracts for purposes of Tucker Act jurisdiction.

However, the inclusion of a disputes clause calling for disputes to be settled at the COFC is not a sure fix because parties cannot confer jurisdiction themselves. A COFC judge could review the clause and determine that they still lack jurisdiction to hear the case. The agreement of two parties in a contract to settle all disputes before a particular court is insufficient if the court determines that it lacks the aforementioned jurisdiction. However, the new OT Guide has made it clear that OTAs are contracts; therefore, it is unlikely that jurisdiction at the COFC under the Tucker Act is barred (so long as it is clear that the contract contemplated monetary damages). Together, the inclusion of a disputes clause and affirmation by the Federal Circuit of the Tucker Act’s applicability to OTA-related disputes would provide a clear answer for contractors assessing their ability to litigate OTA-related disputes.

2. Judicial Solution: The Federal Circuit Should Affirm That OTAs Are Contracts Within the Meaning of the Tucker Act.

The next time that an OTA-related case comes to the COFC, the court should explain its reasoning as to why OTAs are within their jurisdiction under the Tucker Act instead of making a logical jump. Jurisdiction at the COFC is logical because the court has subject-matter expertise in the area of government contracts from its experience adjudicating bid protests and contract disputes. However, this will not serve as a strong solution until the Federal Circuit upholds the decision, at which point it will provide precedent binding on all COFC judges.

The Federal Circuit has jurisdiction to decide appeals from the COFC. If an OTA-related dispute is appealed to the Federal Circuit, the court should opine that OTAs are “contracts” for purposes of Tucker Act jurisdiction. Assuming that an agency has properly acted within its other transaction authority and the agreement was entered into on behalf of the government by an official with authority to bind the government, agreements between the government and a contractor under an OTA will create enforceable contractual obligations. While OTAs remain outside the scope of the CDA, the COFC should be able to exercise jurisdiction over disputes arising under OTAs pursuant to its jurisdiction under the Tucker Act to “render judgment upon any claim against the United States founded either upon . . . any express or implied contract with the United States.”

a. The Supreme Court's Interpretation of Term "Contract" Supports Classification of OTAs as Contracts.

The Federal Circuit should affirm that OTAs are “contracts” for purposes of Tucker Act jurisdiction. In a rare government contracts decision by the Supreme Court, the Court instructed that the term “contract” should be interpreted broadly. The Supreme Court’s broad interpretation of the term “contract” in Kingdomware Technologies Inc. supports the classification of OTAs as a type of contract, making them subject to Tucker Act jurisdiction.

In Kingdomware Technologies Inc., the Supreme Court considered “whether the Department [of Veterans Affairs] must use the Rule of Two every time it awards contracts or whether it must use the Rule of Two only to the extent necessary to meet annual minimum goals for contracting with veteran-owned small businesses.” The Rule of Two requires the Department of Veterans Affairs (VA) to set aside contracts for veteran-owned small businesses (VOSB) so long as two or more VOSBs are capable of performing the required work at a fair and reasonable price. In answering this question, the Court had to address whether orders under pre-existing Federal Supply Schedule (FSS) contracts constituted new contracts for the purpose of section 8127(d) of the Veterans Benefits, Health Care, and Information Technology Act. The VA argued that section 8127(d) did not apply to orders under FSS contracts. The Supreme Court noted that the VA did not raise this argument in the lower courts and had thus “forfeited” this argument. However, the Court chose to address the point in important dicta. The Court stated that the VA must comply with the requirements in section 8127(d) when it “award[s] contracts.” The Court explained that “[w]hen the Department places an FSS order, that order creates contractual obligations for each party and is a ‘contract’ within the ordinary meaning of that term.” The Court’s conclusion that FSS orders constitute new contracts meant that the VA was required to apply the Rule of Two and, if more than two VOSBs could complete the work, set aside the orders for VOSBs.

The Court’s controversial decision in Kingdomware Technologies, Inc. expanded the definition of a “contract.” While the Court’s discussion defining contracts was dicta, its interpretation of “contract” is still important because it shows how broadly the term should be interpreted by the lower courts and the boards of contract appeals. The Court’s interpretation suggests that any procurement vehicle that “creates mutually binding obligations” is a “contract.” Government contracts practitioners have noted that the Court’s interpretation of a “contract” could “implicate future disputes concerning the sometimes fine distinctions between procurement contracts, grants, and cooperative agreements . . . as well as disputes regarding non-FAR ‘other transactions authority,’ for example under 10 U.S.C. § 2371.”

b. Public Policy Supports the Inclusion of OTA-Related Disputes within the Scope of Tucker Act Jurisdiction.

It is vital that private sector firms considering participation in OTAs have confidence in the dispute process. OTAs are intended, in part, to attract non-traditional contractors to participate. In order for this to succeed, companies must be confident that the system for resolving OTA-related disputes is fair, impartial, transparent, and expeditious. This begins with having an authoritative answer to the question of where contractors can be heard when disputes arise during OTA performance. If contractors participating in OTAs lack clear means to litigate disputes arising during performance, then contractors will likely perceive OTAs to be risky and avoid participating in OTAs, thus limiting their effectiveness. Therefore, the Federal Circuit should resolve this problem by finding that OTAs fall under the Tucker Act.

Professor Steven L. Schooner of The George Washington University Law School identified “system transparency,” “procurement integrity,” and “competition” as the “three pillars” of the United States procurement system. When these public policy goals are implemented, the procurement system operates optimally to provide the government with “access to the best con- tractors, lowest prices, most advanced technology, favourable contract terms and conditions, and the highest quality goods and services.” At its core, the concern about integrity and transparency is to ensure public confidence in the procurement system and its ability to use public funds effectively. Private companies will be more willing to work with the government if they know that they will have the opportunity to seek redress in the event of a dispute. Having a transparent system that openly demonstrates the impartial manner in which the government settles disputes that arise during the performance of OTAs will further these goals.

c. New Legislation Should Be Considered as a Last Resort.

The alternative solution would be for Congress to pass new legislation, like the CDA, to provide the COFC with jurisdiction to hear claims arising from OTA performance. While legislative guidance could help resolve the lack of a clear forum for OTA-related disputes, new legislation should be viewed as a last resort. One of the purposes of OTAs is to provide a more flexible option for agencies seeking research and development or prototypes. This flexibility allows the parties to negotiate an agreement that meets their unique needs. Any new legislation would need to be carefully crafted so that it did not defeat this purpose. OTAs are valuable because of the flexibility they offer participants to tailor the agreement to meet their own needs; therefore, the inclusion of a disputes clause that can be modified for each agreement remains the best solution. As a result, Congress would likely be averse to any new legislation that may limit OTAs by imposing upon them a burdensome and rigid disputes process.

Furthermore, Congress may feel that new legislation is unnecessary because the Tucker Act already provides the COFC with jurisdiction to hear OTA-related disputes. While OTAs are not procurement contracts, they are still contracts. Judge Smith correctly found in Spectre Corp. that OTA-related disputes can be heard under the Tucker Act; therefore, the legislature does not need to take steps to correct it.

B. Alternatively, the Boards of Contract Appeals Likely Have Jurisdiction to Decide OTA-Related Disputes or Provide ADR Services.

Unlike the COFC, where at least one judge has decided an OTA-related dispute, the author is not aware of any decisions by the boards of contract appeals concerning OTAs. However, the boards have the ability to decide or arbitrate contract disputes that are not covered by the CDA. As explained below, it is possible that the boards could decide OTA-related disputes if the parties agree to make the appropriate board the decider of appeals. Moreover, the boards may be able to provide ADR services to OTA participants that elect to engage in arbitration.

1. The ASBCA May Have Jurisdiction to Decide or Arbitrate OTA-Related Disputes Under Its Charter.

The ASBCA may have jurisdiction to hear OTA-related disputes under its Charter, so long as the parties include a remedy-granting clause in these agreements designating the Board as the decider of appeals. This is advantageous to companies contemplating OTAs because it provides parties participating in OTAs a choice between two fora.

The boards of contract appeals were hearing contract disputes long before the CDA was enacted, and “[t]he CDA did not take away the boards’ pre- existing authority to exercise non-CDA jurisdiction.” In General Dynamics Corp. v. United States, the U.S. Court of Claims (the Federal Circuit’s pre- decessor) examined the ASBCA’s pre-CDA jurisdiction and explained that “the board’s jurisdiction is established by the agreement of the parties.” By negotiating a disputes clause, the “parties may expand or lessen the kinds of controversies over which the board has mandatory cognizance.”

In contrast, the COFC’s jurisdiction cannot be altered or expanded by parties to a contract. The U.S. Court of Claims has stated that “parties may not collude to vest jurisdiction in a court, in a case over which its jurisdiction is otherwise lacking,” because “[j]udicial jurisdiction . . . depends upon constitutional and statutory grants, which obviously cannot be altered by litigants.” As explained in Part III, it is clear that while OTAs are not procurement contracts, they are contracts in the broader sense, so they should be subject to Tucker Act jurisdiction. However, even if the Federal Circuit finds that the COFC does not have jurisdiction under the Tucker Act to decide OTA-related disputes, parties to these agreements will still be free to negotiate contract clauses providing for jurisdiction at the Board.

Despite the passage of the CDA, the ASBCA’s Charter allows it “to consider appeals to which the parties had contractually agreed to the ASBCA’s authority to resolve their disputes.” For instance, the Board previously held that it had jurisdiction over appeals involving non-appropriated funds instrumentalities (NAFIs) under the ASBCA Charter and the NAFI’s disputes clause, not the CDA. As a result, the ASBCA relied on a portion of its Charter that allowed it “to consider appeals to which the parties had contractually agreed to the Board’s authority to resolve their disputes.” While subsequent legal developments have led the Board to conclude that the CDA does apply to NAFIs, the legal reasoning in the NAFI line of cases demonstrates how the Board’s jurisdiction over a dispute may stem from its Charter and the disputes clauses in contracts. This interpretation of the ASBCA’s Charter — providing the Board with jurisdiction to hear contract disputes with the government that are not covered by the CDA so long as the federal agency and private parties participating in the contract agree to a disputes clause designating the Board as the decider of disputes — is consistent with the ASBCA’s rules. ASBCA Rule 1(a) provides: “For appeals not subject to the Contract Disputes Act, the contractor should refer to the Disputes clause in its contract for the time period in which it must file a notice of appeal.” This rule demonstrates that the Board may exercise jurisdiction over non-CDA appeals where the parties have agreed in a disputes clause to have the Board decide their dispute.

Therefore, parties negotiating an OTA should consider which forum is best suited to meet their needs. If the Board is the more desirable forum, parties may consider including a simple disputes clause such as this:

OTA Participant’s Right of Appeal to Board of Contract Appeals: Any dispute concerning a question of fact or law arising from or in connection with this Agreement, whether or not involving an alleged breach of this Agreement, shall be decided by the Agreements Officer. Within ninety days from the date of receipt of an Agreements Officer’s adverse decision, the OTA participant may appeal such decision to the Armed Services Board of Contract Appeals.

Such a clause would clearly designate the ASBCA as the decider of appeals and provide the Board with jurisdiction under its Charter to resolve the dispute. In the language proposed above, the clause provides the OTA participant ninety days to file a notice of appeal at the Board. The ninety-day time period is consistent with the ninety-day period provided by the CDA, but parties can negotiate a different time period that fits their needs.

Furthermore, the ASBCA encourages parties to resolve disputes through ADR, and the Board can provide ADR services to parties who voluntarily seek to arbitrate disputes. This possibility provides OTA participants an alternative to the dispute resolution process at the agency level that is typically provided for in OTAs.

2. Likewise, the CBCA May Hear OTA Disputes Where the Parties

Designate the Board as the Decider of Disputes or Jointly Agree to ADR. While this article focuses on the DoD’s use of OTAs, Congress has granted OT authority to several civilian executive agencies as well. The best forum for disputes arising during the performance of these agreements may be the CBCA. Like the ASBCA, the CBCA can hear non-CDA contract cases in which the parties designate the Board as the forum for resolving disputes. This is affirmed in the Board’s rules, which define “appeal” as a “contract dispute filed with the Board under the Contract Disputes Act (CDA), 41 U.S.C. [§§] 7101–7109, or under a disputes clause in a non-CDA contract that allows for Board review.”

Furthermore, the CBCA can provide ADR services on contract-related matters, even those not covered by the CDA, when the Board’s help is jointly requested by an executive agency and its contractor. As stated above, this possibility provides OTA participants an alternative to the dispute resolution process at the agency level that is typically provided for in OTAs. The boards have significant experience (and success) in using ADR techniques, so this possibility is not one to be overlooked.

3. The Collegial Nature of the Boards of Contract Appeals Provides Greater Consistency and Predictability in Board Panel Decisions.

In the previous section on the COFC’s likely jurisdiction over OTA-related disputes under the Tucker Act, this article suggests that the Federal Circuit affirm that OTAs are contracts for purposes of Tucker Act jurisdiction because this would confirm the COFC’s jurisdiction over such disputes. While this solution would help clarify the COFC’s jurisdiction, the Federal Circuit does not have authority to hear non-CDA appeals from the boards of contract appeals. The Federal Circuit’s “jurisdiction over Board decisions extends only to decisions made pursuant to the CDA.” Therefore, the Federal Circuit cannot be asked to confirm the boards’ jurisdiction over OTA-related disputes.

Unlike the COFC, in which cases are decided by a single judge, the boards of contract appeals usually decide cases on a three-judge panel. As a result, even though these panels are not bound by other board decisions, they are more likely to follow decisions from previous panels. In contrast, the COFC “does not employ procedures to ensure consistency in the court’s decisions, and any inconsistency is only resolved when and if the matter is appealed to the Federal Circuit.” Therefore, once one of the boards issues a decision finding that it has jurisdiction to hear OTA-related appeals, that precedent will likely sway future panels on that board considering an OTA-related matter.

V. Conclusion

It is vital that contractors have a clear forum or choice of fora in which to be heard when disputes arise during the performance of any project with the government, regardless of whether it is classified as a procurement contract, cooperative agreement, an OTA, or another acquisition instrument. In Spectre Corp., one COFC judge has already found that the court has jurisdiction to hear OTA-related disputes under the Tucker Act. While Spectre Corp. is useful in that it provides OTA participants one case to rely on, it alone is not enough. The case only speaks for Judge Smith, and it is not binding on the other COFC judges.

This article proposes that companies insist that their OTAs include a disputes clause, such as the language proposed in Part IV, that would provide for monetary damages and allow the COFC to decide disputes under the Tucker Act. Furthermore, this article suggests that in future OTA-related cases appealed from the COFC to the Federal Circuit, the Federal Circuit should resolve this issue by affirming that OTAs are “contracts” within the meaning of the Tucker Act. This would establish binding precedent supporting the COFC’s jurisdiction to hear OTA-related appeals and provide parties to these agreements with a reliable path to dispute resolution.

Alternatively, this article suggests that the boards of contract appeals may exercise jurisdiction over non-CDA appeals where the parties have agreed to have the board decide their disputes. Therefore, companies contemplating an OTA should insist that a disputes clause be included in their agreement providing for resolution by the appropriate board. The boards also have extensive ADR experience. Parties to an OTA should consider ADR as an alternative route to resolving disputes that arise under these agreements.

President Dwight D. Eisenhower, many years after the Soviet Union’s launch of Sputnik, described the launch as a “warning” that the United States government must make additional efforts to advance its scientific programs. The “other transactions” entered into during the space race allowed NASA to make significant technological advances, and the future use of OTAs has similar potential to provide the DoD and other agencies greater access to innovative technology. However, OTAs will not meet their full potential unless firms in the private sector are confident that they have sufficient recourse in the event of a dispute. Therefore, it is vital that OTA participants have the opportunity to be heard at the COFC or the appropriate board of contract appeals.