The OTA Consortium Model for Prototype Development

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In preparing this blog post we benefitted from support from the Army Contracting Command-New Jersey to make sure the descriptions were correct.

Other transaction agreements (OTAs) and their underlying authorities allow for more flexible, commercial–like, and novel business solutions than the Federal Acquisition Regulation. In fact, Office of the Secretary of Defense (OSD) guidance states that contracting officers should not use specific templates for designing such structures. The intent, rather, is for the government to structure business arrangements that are most appropriate for each specific scenario.

However, there are OTA structures that have been effectively demonstrated and can be replicated. One such structure was implemented by Army Contracting Command-New Jersey (ACC-NJ) and involves the use of a consortia of companies interested in working with the Army within a given subject area.

The OTA consortium model has existed for more than a decade and has cumulatively resulted in the award of over $1B for prototype development. While there are several variants between OTA consortia, the general premise is that ACC-NJ executes an OTA not with a single entity but an organized group of entities that agree to participate under a common rule set.

The consortia typically employ a management organization to address administrative needs and manage the flow of information between the Army to the consortia. Typically, these consortia are designed to minimize barriers for new companies to participate.

In several cases, the application to become a consortium member is a one-page form that can be completed online with a $500 annual consortium membership fee. Prospective members must agree to the terms of the consortium and the OTA, but these terms are much more flexible than standard FAR-based contracts (e.g., intellectual property issues may be negotiated on a case-by-case basis).

Once the consortium self-forms the Government may negotiate and award a base OTA. Once the base OTA is awarded, the Government may issue calls for white papers to the consortium in lieu of full-up proposals, thereby cost effectively separating good ideas from those that are less desirable.

The Government may then select a small number of companies to submit a more formal proposal based on the evaluation of the white papers. Ultimately, the Government selects one or more awardees and delivers funding to the selected consortium member(s) – typically through the consortium management organization.

In any instance, OTA provides for flexibility to alter the solicitation, evaluation and award process. However, once the process is established, government compliance is extremely important to maintain fairness in determining contract awards.

The OTA consortium model provides tremendous flexibility, streamlined processes and procedures, and access to the broadest possible pool of prospective vendors.


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