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Written by Morrison & Foerster LLP – Government Contracts Insights

The most common question we hear from clients about the recent boom in the Department of Defense’s spending on other transactions, or OTs, is a simple one:  How can I get in on the action?  Understandably, OTs – essentially contracts not subject to procurement laws or regulations like the Federal Acquisition Regulation (“FAR”) – are very enticing to traditional and nontraditional contractors alike.  And opportunities for OTs abound, particularly since Congress, in 2015, codified the DoD’s authority to award OTs for “prototype projects” (previously just a pilot program) and expanded that authority to include OTs for follow-on production efforts.  But there are limits to DoD’s authority, foremost being that, in general, DoD may acquire only “prototypes” through OTs, and must buy all other goods and services through traditional, FAR-based procurement contracts.[1]  So the question of how to access DoD’s surge in OT funding hinges, among other things, on more specific questions:  What exactly is a “prototype,” and do my offerings fit the bill?

The answers, it seems, are quite a lot and probably yes.  Congress provided very little legislative direction, instead leaving to DoD the decision over just how broad its authority might reach.[2] Unsurprisingly, it took a broadminded approach to the term “prototype,” and so far the Government Accountability Office (“GAO”), as legislative oversight, has upheld the DoD’s expanding interpretation.[3]  This continued in ACI Technologies, Inc., B-417011, Jan. 17, 2019, 2019 CPD ¶ 24, where the GAO found the DoD properly awarded a prototype OT for, among other things, training programs, skills development outreach, and the drafting of best practices for fostering commercial development of secure electronic parts.

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Originally published March 5, 2019