Defence Notes

PREMIUM: US DoD bets on non-standard procurement to improve readiness

23rd October 2020 - 12:01 GMT | by Flavia Camargos Pereira

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Other Transaction Authority (OTA) obligations of the US DoD have increased by 712% between FY2015 and FY2019. The largest proportion of these resources is going to non-traditional contractors and is primarily being used for R&D. The army was the leader in OTA usage across the DoD and accounted for 67% of obligations in FY2019.

The US DoD's Other Transaction Authority (OTA) obligations increased by 712% between FY2015 and FY2019 according to a study by the think-tank Center for Strategic & International Studies (CSIS), released in October. 

OTAs are legally binding instruments used by federal agencies to engage industry and academia for obtaining or advancing R&D work or prototypes. As they are not standard procurement contracts, they are generally not subject to the federal laws and regulations that non-traditional suppliers are unable to match.

The CSIS study analysed the topline contracting trends of the DoD that are available in the Federal Procurement Data System (FPDS).

‘There are not too many large budget or contract spending categories within the DoD where you see 712% growth in anything,’ Andrew Hunter, senior fellow in the International Security Program and director of the Defense-Industrial Initiatives Group at CSIS explained during a media roundtable on 21 October.

The OTA obligations also recorded a growth of 75% from FY2018 ($4.4 billion) to FY2019 ($7.7 billion). Hunter noted that the largest amount of these resources is going to non-traditional contractors.

‘Definitely, the majority share is going to non-traditional players, whether they are consortia or smaller companies that are getting these dollars directly,’ Hunter claimed.

He added that the DoD OTA obligations are primarily being used for R&D purposes, but are not limited to those activities. On average, 82% of OTA obligations over the last five years have gone towards R&D, while products and services each accounted for 9% of the total.

‘The research and development contracts give a leading indicator of where defence spending and industry trends are heading in the future,’ Hunter pointed out.

Regarding the service branches, the army was the leader in OTA usage across the DoD. In FY2019, the service accounted for 67% of such obligations, while the air force had 21%, DARPA 6% and the navy 2%.

Between FY2015 and FY2018, the army accounted for 73.6% of total defence OTA obligations; the air force and ...

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