Other Transaction Agreements (OTAs) offer agencies ready access to cutting edge technologies only available from companies that don’t typically work with the government
The government needs innovation from small and emerging companies, which is where many breakthrough technologies are created. For these small companies, government work represents a terrific business opportunity.
So why are so few small companies involved in federally-funded research? Because they are what they are: researchers, technologists, innovators, and creators. These startups and small businesses simply don’t have the contracting experience to navigate the FAR and often lack the financial and accounting systems required to do business directly with the government.
The engagement of these “nontraditional” contractors—companies that have not performed major work for the government in the last year—is a hallmark of the Other Transaction Agreement (OTA) model. The big guys often partner up with the little guys. They learn from each other. Everyone wins (except for our adversaries).
With an average membership makeup of 73% nontraditionals, substantial participation of small businesses, nonprofits, and academic institutions typical of ATI-managed consortia. Nontraditional participation is even greater in a number of our programs: nontraditionals make up 149 of 180 members (82%) of the Medical CBRN Defense Consortium (MCDC) and 169 of 213 members (79%) of the Countering Weapons of Mass Destruction Consortium (CWMD). Moreover, nearly every project across all of the ATI-managed OTA consortia involves significant nontraditional participation.
This nontraditional involvement brings radical innovation to research and prototyping work, enhancing government capabilities.
ATI used a robust recruitment strategy to strategically expand the membership of the National Spectrum Consortium
To meet a government need for rapid access to electromagnetic spectrum technologies produced by industry innovators, ATI helped start up the National Spectrum Consortium (NSC). Today, the NSC facilitates collaborative partnerships between the government and nontraditional contractors.
ATI and NSC program management collaborated throughout the start-up process to build a diverse NSC membership base using a sophisticated, comprehensive branding and outreach strategy that would appeal to companies who normally avoid the complex vetting and contracting requirements associated with federally-funded work.
To jumpstart project work through the NSC, ATI also worked closely with the government to organize and host a week-long meeting during which NSC members, subject matter experts, and government personnel discussed opportunities and priorities for executing the first $500M of project funding.
Through targeted recruitment, collaborative engagement, and step-by-step guidance throughout the government contracting process, ATI was able to grow and diversify NSC membership significantly, allowing the consortium to quickly respond to specific government needs. Today, NSC has more than 200 members throughout the United States, including 130 nontraditionals and industry leaders like Nokia and AT&T.
Using the ICON web portal, the Defense Logistics Agency saved $275k on a recent purchase of critical airplane parts
Purchasing high quality, cost effective replacement and repair parts for legacy weapons systems poses a significant challenge for the DoD, especially as vendors go out of business or stop producing certain items. One agency is filling this need by sharing its requirements with hundreds of diverse suppliers—and this approach is yielding excellent results.
In order to expand its access to cast metal parts, the Defense Logistics Agency (DLA) worked with the Non-Ferrous Founders’ Society and the American Metalcasting Consortium to develop the Integrated Casting Ordering Network (ICON). ICON is an online marketplace where DLA can share its requirements for critical cast parts with more than 400 capable, responsive manufacturers from across the industry. Using the ICON portal, these manufacturers can quickly and easily find information to help them bid on the parts that DLA is looking for. This process allows small businesses to work with the DoD where a traditional procurement process would be too cumbersome; DLA benefits from increased competition for awards and ready access to parts that it normally could not easily find.
Recently, ICON disseminated requirements for the F-15 and F-16 Air Superior Target Program nose landing gear bumper assembly. As a result, DLA Aviation was able to conduct a fully competitive procurement, allowing the agency to expand its sourcing base for the assembly. Through this competition, DLA realized a cost reduction of approximately $275k on the first solicitation. Through the increased competition it provides, the ICON portal not only saves thousands of taxpayer dollars, but also leads to stronger, safer, and better cast parts for the warfighter.
Other Transaction Agreements improve Government/Industry Communication
The Other Transaction (OT) model enables open communication between government and industry. Unlike traditional contracts, there are few rules about how and when parties can talk under OTs. This helps government learn about and better understand industry capabilities, and it lets industry better understand government requirements.
When government and industry communicate before and, especially, after releasing a request for proposals under an Other Transaction Agreement (OTA), government can identify and access promising new technologies, while industry can tailor their responses to meet government needs.
These insights from government also help industry focus their own investments (known as Internal R&D, or “IRAD”) on technologies that represent new opportunities. Well-targeted IRAD is a big win for the government, since agencies don’t have to pay to build technologies from scratch. Rather, government pays much less to customize what industry has already built using private money.
Robust government-industry communication is a hallmark of OTAs that leads to better technology outcomes and smoother acquisitions for industry and government alike.
Industry-government project teams increase the efficiency and reliability of ships, saving millions for the Navy
Premature failure of a component on submarines due to the buildup of calcareous deposits on these parts often necessitated unscheduled repairs and caused operational limitations for the Navy. Keeping these ships and submarines out of commission led to significant costs for the Navy and impacted mission readiness.
By bringing together companies across industry and leading academic institutions, the ATI-managed Naval Shipbuilding and Advanced Manufacturing Center (NSAM) used collaboration to address this—and many other—Navy challenges. Working with the Institute for Manufacturing and Sustainment Technologies and General Dynamics Electric Boat, the team developed a thermal spray coating solution for extend/retract cylinder rods in the submarine’s bow plane system. This coating will prevent the build-up of calcareous deposits on the cylinder rods and will reduce the need for unscheduled maintenance.
Projected savings from the project are more than $9M per hull over the life of each platform, with a total submarine lifecycle cost savings of approximately $300M. In recognition of these enhancements of the Navy’s mission readiness, the project team was awarded a 2017 Defense Manufacturing Technology Achievement Award in the Readiness Improvement category.
Three other NSAM projects were nominated for awards for their outstanding achievements in manufacturing technology: The Dynamic Change Awareness project provides identification of baseline process gaps to reduce process times. The Enhanced Task Assignment and Progressing (eTAP) project streamlines tasking assignment work for shipyard foremen. Finally, the Machine Readable Material Transactions project reduces the cycle times of material transactions using machine-readable data entry.
By facilitating collaboration between the Navy, shipbuilding and manufacturing industry leaders, and premier academic institutions, NSAM project teams combine efficiency and cost savings with innovation to increase mission readiness.
Other Transaction Agreements give government access to groundbreaking R&D in a fraction of the time it takes under the FAR
The efficiency of the Other Transaction (OT)-consortium model makes OTAs extremely fast compared to typical government-funded prototyping projects. The average solicitation timeline in ATI-managed consortia—from releasing a solicitation to beginning project work—is less than 90 days. In many cases it’s much faster, as the process is designed to go as fast as the government customer and consortium members want it to go.
The below timeline shows how the OTA cycle stacks up against FAR solicitations.
This timeline assumes that the process operates optimally—actual FAR timelines tend to be much longer where the number of proposals overwhelms the government’s internal capacity for review or where extended contract negotiations or protests occur.
On the other hand, under the OT consortium model, timelines in “shared responsibility” areas can shorten over time as cycle-to-cycle learning curves improve.
Timeline comparison between FAR and OTA
One particular advantage of the using an OTA in partnership with a CMF is the consortium manager’s ability to surge resources to perform tasks that the government would be required to perform under a FAR-based contract. There are significant time savings when the government and consortium share responsibilities and maintain an open dialogue.
For instance, when the Air Force Research Lab needed to make an urgent end-of-year award, the ATI-managed National Spectrum Consortium helped the government release a project solicitation quickly. ATI’s internal team organized multiple “Industry Day” events for members to learn about the technology need. The Air Force awarded the project within 60 days and work started only 71 days after announcing the solicitation—much sooner than projects can be awarded under a traditional approach.
The Medical Technology Enterprise Consortium (MTEC) uses a first-of-its-kind funding mechanism that enables both the government and private sponsors to support groundbreaking medical research.
The Medical Technology Enterprise Consortium has been able to expand its funding base using a novel funding construct in which private sector and philanthropic funds augment government sponsor contributions. ATI’s team of contracting experts were able to design this first-of-its-kind funding structure based on the US Army Medical Research and Materiel Command’s identified needs and MTEC’s program goals, resulting in a customized solution that minimizes government risk and builds on industry’s R&D investments. Funding provided by private sponsors or investors allows MTEC to facilitate development and application of new medical technologies that help heal our warfighters and veterans.
To leverage this innovative funding structure, MTEC partnered with The Allergan Foundation, a U.S.-based, private charitable foundation that supports programs working to improve patient diagnosis, treatment, care, and quality of life. Through MTEC, The Allergan Foundation recently awarded funding to Stanford University (PI: Dr. Jeffrey Goldberg) to continue a vision restoration research effort originally funded by the Army via MTEC.
ATI rapidly established the Space Enterprise Consortium by leveraging our expansive infrastructure for collaboration management
When the Air Force Space and Missile Systems Center wanted to quickly access cutting edge space technologies from across industry and academia, ATI was able to stand up and begin operating the Space Enterprise Consortium (SpEC) in less than 60 days! We worked closely with the Air Force to quickly and efficiently adopt governance documents, elect consortium leadership, and recruit members that met the government’s specific technology needs.
ATI was awarded the SpEC OTA on November 2, 2017, began adding member organizations by Day 36, and issued its first solicitation to 40 active members on Day 67. By Day 180, SpEC had more than 140 members, had released five solicitations and had made eleven project awards to ten different members totaling $22M of funding on contract!
By strategically leveraging our suite of template governance documents, best practices developed while building five other OT consortia since 2014, and our staff surge capacity, ATI made SpEC’s speedy ramp-up possible.
OTA Consortia Democratize Government Contracting for Small Businesses and Nontraditional Contractors
Through OTA consortia, small businesses and academic institutions can bring innovative technologies to the DoD to advance critical defense capabilities
This week, we’re looking at how diverse OTA consortia of government, industry, and academic organizations can better support federal contracting through collaboration with small businesses, large businesses, and academia. By bringing together the groundbreaking technologies from small businesses and academic institutions and the production and integration capabilities of large companies, diversity in federal contracting ultimately improves defense capabilities.
Before we begin explaining how OTAs democratize government contracting, it may be helpful to understand the current state of this market. Historically, the federal government has awarded most of its big contracts to large contractors in order to meet the substantial procurement needs of federal agencies. As the missions of these agencies continue to grow in both scope and complexity, only companies with the infrastructure to support wide-reaching national and international missions have the resources necessary to complete considerable initiatives or meet strict contracting, accounting, or security requirements.
The federal market offers significant opportunities for small and emerging business that can meet critical government technology needs: in 2017 alone, the federal government spent $3.98 trillion across all of its contracts with U.S. businesses, benefitting both these federal agencies and the domestic companies providing the talent necessary to complete that contract work. However, due to the nature of government contracting, in which large sums are often allocated to a single large vendor, small businesses and nontraditional contractors have typically been unable to participate in this “built for titans” contracting market. In the long run, this approach can restrict the government’s access to innovative technologies available from across industry.
Join us next time to learn how nontraditional contractors can offer better solutions to many of the government’s challenges!
The flexibility of OTAs makes it possible for the government and industry to use a single consortium management firm for all of their contracting and administrative needs—meaning government and industry can focus on building better technologies
You’ve already learned about how the government partners with an industry consortium through an OTA in Other Transaction 101. However, the benefits of an OTA are enhanced when the government and industry work with a consortium management firm.
Usually, the consortium management firm (CMF) handles the business operations of the consortium, dealing with all the contractual interactions needed to assemble project teams and dissolve them when the work is completed, taking care of contracting, payments, cost analyses, negotiations, IP issues, and all the other mundane tasks needed to enable the exciting prototype work. For the Government, this means the best of both worlds: the ease of one-stop shopping, coupled with easy access to innovations from flexible, as-needed industry teams.
The CMF can award projects one-by-one (as directed by the government), or it can use a streamlined approach where all Government contracting decisions are communicated through a single Agreements Officer to the CMF, which then places projects on award. In some OT-consortia, the consortium or CMF has very little involvement in technical/cost evaluation of project proposals. Others use non-Government subject matter experts to inform Government source selection bodies about the technical and/or commercial merit of project proposals submitted by consortium members.
Ultimately, allowing a CMF to take on some of the burdens of contracting meanings that the government can focus its time and resources on finding the technologies they need, and industry benefits from faster, simpler contracting.
Single Point Contracting Process for the OT Consortium Model