Other Transactions (OT) Guide
Publicizing, Soliciting, and Evaluating
Publicizing for Solutions
When publicizing a problem set, areas of needs, or capability gap for industry solution submission, the team should leverage the results of its market intelligence efforts to target the community of relevant technology providers. Methods for publication should be chosen to maximize exposure of the problem set to relevant technology providers, both traditional and NDCsAdd a Tooltip Text, and should be marketed through multiple avenues.
Soliciting for Solutions
Agencies that intend to award only OTs from a solicitation are free to create their own process to solicit and assess potential solutions provided it is a fair and transparent process, provides for competitive procedures to be used to the maximum extent practicable (or merit-based competitive procedures for TIAs), and documents the rationale for making the Government investment decision. Just as there is a wide range of methods to publicize OT problem sets, there is an equally wide range of methods by which to solicit solutions and the Government team need not be confined to using a Request for Proposals (RFP) process. Overarching calls for solutions similar to a Broad Agency Announcement (BAA)A general solicitation as defined at 10 U.S.C. 2303 and may only be used to solicit for research and development (R&D) if the Government contemplates award of different types of instruments., Annual Plan Call for White Papers, or a Commercial Solutions Opening (CSO)A competitive solicitation process with three-phases focused on being ‘fast, flexible, & collaborative’ for innovative prototype projects. are just a few examples of possible solicitation methods to make calls for solutions across a wide array of problem sets. Requests for white paper, oral presentations, panel pitches are also common methods for effectively soliciting OT solutions. Additionally, agencies are encouraged to leverage other events, activities, or even authorities to provide for the collection of potential solutions. Some examples where acquisition teams have been creative in performing solicitation outreach include: Tech Demonstrations, Design Sprints, Hackathons, Innovation Workshops, Rodeos, Shark-Tank like presentations, Prize Contests and other similar events can be leveraged to solicit for solutions (see Glossary for descriptions of examples above). Such activities can be conducted by the agency, through other Government resources (www.challenge.gov), or through other Government-sponsored arrangements. The selected solicitation approach should be tailored to the complexity and potential value of the problem set, as well as industry norms. At a minimum, Grants.gov must be used for TIA solicitations.
The evaluation of any set of solutions must be fair and transparent, and should be conducted in accordance with industry norms for the technology being solicited. Additionally, because technical solutions and price may vary significantly, it is a best practice to provide for the efficient and timely evaluation of solutions as to not delay award. Requests for white papers and rough order of magnitude (ROM) pricing, followed by a panel pitch or request for proposals, is an example of an efficient method to expedite selection and award. Specifically, by using white papers and ROMs, the Government is able to review, for example, 3-10 page white papers and to request a panel pitch or proposal from those offerors that are of potential interest to the Government vice requesting proposals from all potential offerors. As a result, the Government saves time and resources and offerors save time and proposal preparation costs. Ultimately, with fewer proposals to award, the Government’s proposal evaluation period is lessened while award and delivery of mission capability is expedited.
Selection and Negotiation of Terms
With OT competitive procedures, offerors with the most advantageous solution(s) are typically selected for negotiation. Unlike FAR-based contracts, the terms and conditions for the award of an OT may take considerable time to negotiate as the proposed solutions, schedules, terms and conditions, and price are likely to vary significantly amongst competitors (See Myth 10). As a result, the Government may make multiple selections and only come to terms with one offeror. In cases where the Government and the selected offeror cannot come to agreement on the agreement terms and conditions, the Government may choose to negotiate with the next most advantageous offeror that was not initially selected for negotiation. Where multiple prototype solutions are awarded for a single problem set or requirement, the agreement and agreement file must both document the rationale for award of a follow-on production contract or transaction to a single participant of the overarching effort. As long as competitive procedures were utilized, the participant successfully completed the prototype, and the solicitation and original agreement allowed for a follow-on for production contract or other transaction, a sole-source award may be made to a single participant.
Depending on where the project falls on the research, prototype, and production spectrum, the ability to establish firm cost, schedule and performance requirements will vary from best effort to clearly identifiable and enforceable fixed requirements. It is the Government team’s responsibility to ensure the terms and conditions negotiated are appropriate for the particular project and provide for any expected future program needs. It is important to note that terms and conditions can evolve via modification as a project proceeds through multiple phases of differing degrees of technological maturity. In negotiating terms, the Government team should consider the following:
Price Reasonableness. The Government team shall determine price reasonableness. The Government team may need data to establish price reasonableness, including commercial pricing data, market data, parametric data, or cost information. However, the AO should exhaust other means to establish price reasonableness before resorting to requesting cost information.
Intellectual Property (IP). It is important that the Government team have a baseline understanding of the allocation of intellectual property (IP) rights under the Bayh-Dole Act (35 U.S.C. §201-204) for patents, and 10 U.S.C. §2320-21 for technical data Technical data means recorded information, regardless of the form or method of the recording, of a scientific or technical nature (including computer software documentation). The term does not include computer software or data incidental to contract administration, such as financial and/or management information., even though none of these statutes apply to OTs. IP rights are fully negotiable under all types of OTs. The negotiated IP clauses should consider the project goals, including any likely commercialization of the research or production and follow-on support of the prototype, and balance the relative investments and risks borne by the parties both in past development of the technology and in future development and maintenance of the technology (see IP considerations).
- Title to Property. The Government is not required to, and generally should not, take title to physical property acquired or produced by a private party signatory to an OT, except property the agreement identifies as a deliverable. In deciding whether or not to take title to property under an OT, the Government should consider whether known or future efforts may be fostered by Government ownership of the property. If the Government takes title to property or furnishes Government property, then the property is subject to the Federal Property and Administrative Services Act, and at a minimum, the Agreement terms should include the following:
- A list of property to which the Government will obtain title and when title will transfer to the Government;
- Whether the awardee Any responsible entity that is a signatory to an OT agreement. A sub-awardee is any responsible entity performing effort under the OT agreement, other than the awardee. or the Government is responsible for maintenance, repair, or replacement;
- Whether the awardee or the Government is liable for loss, theft, destruction of, or damage to the property;
- Whether the awardee or the Government is liable for loss or damage resulting from use of the property;
- The procedures for accounting for, controlling, and disposing of the property. Generally, when the awardee Any responsible entity that is a signatory to an OT agreement. A sub-awardee is any responsible entity performing effort under the OT agreement, other than the awardee. is a company that does not traditionally do business with the Government, the company’s commercial property control system should be used to account for Government property.
- What guarantees (if any) the Government makes regarding the property’s suitability for its intended use, the condition in which the property should be returned, and any limitations on how or the time the property may be used; and
- A list of property the Government will furnish for the performance of the agreement.
- When the private party signatory has title to property that will be factored into the signatory’s cost share amount, the private party signatory and the Government should agree on the method for determining the value of the property.
Payments – The Government teams should leverage electronic invoicing ‘eInvoice’ procedures to make payments to vendors. However, it is not mandatory for project teams when using OT’s to leverage ‘Invoicing, Receipt, Acceptance and Property Transfer’ (iRAPT – formerly known as Wide Area Work Flow ‘WAWF’). Government teams are encouraged to use eInvoice platforms that best meet the intent of the project environment.
Modifications − Modifications of ongoing OT projects are fairly common. The OT agreement should address how changes will be handled. Where a project is developing a new prototype in a unique environment, the Government and the awardee Any responsible entity that is a signatory to an OT agreement. A sub-awardee is any responsible entity performing effort under the OT agreement, other than the awardee. should understand that the project will yield outcomes that may surprise the participants. AOs are encouraged to apply their business acumen as it relates to flexibility of the prototype project and make modifications that will enable successful project outcomes. However, projects should not go on indefinitely and in the event a change occurs that differs from the original intent the Government team should apply judgement as to the fairness of such a change to prospective interested parties.
The Government team should consider whether or not the Government will have the right to make unilateral changes. If contemplating unilateral changes, consider the fact that unilateral changes may lead to disputes and claims, particularly in agreements with fixed amountAgreements where the primary method of payment is not based on amounts generated from the awardee's financial or cost records, including agreements where the price is fixed against established milestones and/or estimated level-of-effort. characteristics. The Government may need the right to make a unilateral change to the agreement to ensure that critical requirements are met, or when there are changes to the availability of Government funding for the project.
Disputes − Although OTs are not subject to the Contract Disputes Act, an OT dispute can potentially be the subject of a claim in the Court of Federal Claims. The Government team should ensure each OT addresses the basis and procedures for resolving disputes. The Government team should 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. The Government team should consult with legal counsel for assistance in crafting ADR clauses. Incorporating language that allows disputes to be handled at the lowest level possible is generally a best practice.
Termination − The Government team should consider termination clauses in light of the circumstances of the particular OT project. In cases in which there is an apportionment of risk allocation and cost sharing, it could be appropriate to allow an awardee Any responsible entity that is a signatory to an OT agreement. A sub-awardee is any responsible entity performing effort under the OT agreement, other than the awardee. the right to terminate as well. Such a termination could occur in instances in which an awardee discovers that the expected commercial value of the technology does not justify continued investment or the Government fails to provide funding in accordance with the agreement. Termination clauses should identify the conditions that would permit terminations and include the procedures for notifying the other party and deciding termination settlements.
Remedies − When agreements provide for the Government’s right to terminate for cause or provide the awardee the right to terminate, the agreement must also address what remedies are due to the Government. For example, it may be appropriate to require recoupment of the Government’s investment or to obtain unlimited or Government purpose license rights to IP created during performance that are necessary to continue a prototype project.
Follow-On Activities − In negotiating and drafting the terms of the Prototype OT agreement, the parties must provide for any anticipated follow-on activities, to include follow-on production. Anticipated follow-on activities may include issues such as life cycle costs, logistics products, sustainment, test and evaluation, IP requirements, and future competition. Any Prototype OT shall contain a provision that sets forth the conditions under which that prototype agreement must be successfully completed L. The Government team should establish metrics for their project that help define successful completion A transaction for a prototype project is complete upon the written determination of the appropriate approving official for the matter in question that efforts conducted under a Prototype OT. Any Prototype OT shall contain a provision that sets forth the conditions under which that prototype agreement must be successfully completed. for the effort.
In cases where the prototype project is intended to, or likely to, result in follow-on production and deployment, the Government team should assess the impact of restrictions on IP rights, or the failure to obtain necessary IP deliverables (e.g. technical data Technical data means recorded information, regardless of the form or method of the recording, of a scientific or technical nature (including computer software documentation). The term does not include computer software or data incidental to contract administration, such as financial and/or management information. or computer software Computer programs, source code, source code listings, object code listings, design details, algorithms, processes, flow charts, formulae and related material that would enable the software to be reproduced, recreated, or recompiled. Computer software does not include computer data bases or computer software documentation.), on the Government’s total life cycle cost of the technology, both in costs attributable to royalties from required licenses, and in costs associated with the inability to obtain competition for the future production, operation, maintenance, upgrade, and modification of prototype technology.
Where multiple prototype solutions are awarded for a single problem set or requirement, the agreement must define successful completion and identify the potential for award of a follow-on production contract or transaction to one or more solutions. No additional evaluation or competition is required to award to a single participant if the initial award was competed, the awardee successfully completed the prototype, and the solicitation documents and the original Prototype OT agreement included the potential for a follow-on production contract or transaction.
Participants include the Government as the awarder of the OT and the company as the awardee. Government organizations that award a Prototype OT under 10 U.S.C. §2371b do not have to be the Government organization that awards the follow-on production contract.
Recovery of Funds − OT agreements made under the authority of 10 U.S.C. §2371 and 2371b provide that an OT project may include terms and conditions that allow for recoupment of Government investment funding from the performer in certain situations. More commonly, this authority has been used under separate OT agreements whereby the performer buys back the prototype or other program materials from the Government for some negotiated amount. That amount represents the recovery of funds which would be placed in the agency’s designated Treasury account and would be available for the agency to use on subsequent programs. The Government team should consult their comptroller representative and legal counsel on the application of this provision, the disposition of the amount collected, and whether accounts can be established to capture recovered funds.
Comptroller General Access − Per section 2371b(c)(1), a Prototype OT that provides for payments in a total amount in excess of $5 million must include a clause that provides Comptroller General access to records. This clause is not required for Research OTs.
Flow Down Provisions − The Government team should consider which OT terms and conditions the awardee should flow down to sub-awardees. In developing this negotiation position, the Government team should consider both the needs of the Government (e.g. audits) and the protections (e.g. IP) afforded to all participants.
Accounting Systems − When structuring the OT agreement for an expenditure-based or resource-sharing type project, the Government team should consider the capability of the awardee’s accounting system. Agreements that impose requirements that will cause an awardee to revise or alter its existing accounting system are discouraged. The Government team should not enter into an OT agreement that provides for payment based on amounts generated from the awardee’s financial or cost records if the awardee does not have an accounting system capable of identifying the amounts/costs to individual agreements/contracts.