The proposed rule is misguided and counterproductive. Issuing the rule involves a major change
and would be contrary to law!
General. A regulatory approach to implementing “Other Transactions” (OTs) is contrary to the
spirit of OTs and undermines the innovation and flexibility that should be the hallmark of OT
contracting. In pioneering OTs the Defense Advanced Research projects Agency (DARPA)
avoided promulgating regulations. The statutory language itself guides the implementation of
the authority. Non-binding guidance can be helpful but effective workforce education is also
needed. Regulation is not a substitute for critical thinking. Mandatory regulation only dampens
and reduces flexibility that can help overcome the “costs too much, takes too long” traditional
system. Research OTs (10 U.S.C. 4021) were burdened with regulations (32 C.F.R. Part 37)
and their use declined dramatically. Agencies that understand Part 37 does not apply to all
research OTs make successful use of them under direct statutory authority. The regulation
under consideration for modification – 32 C.F.R. Part 3 – applied to prototypes and follow-on
production. No follow-on production projects were ever successfully conducted under Part 3.
The purpose of contracted research, development and prototyping is the acquisition of
knowledge and the application of that knowledge to create capabilities to meet agency and
national goals. Research, development and prototyping is unlike acquisition of routine supplies
and services which typically takes place in a highly regulated environment. The proposed rule
would impose mandatory regulatory restrictions where the flexibility of the statute itself and non-
binding guidance is appropriate.
The DOD acquisition bureaucracy and its promotion of so-called “OT consortia” (not true
collaborations and partnering or even OTs compliant with statute) has demonstrated an
inclination to place OTs in an intellectual box. The perceived “easy button” of OT contracting for
business-as-usual acquisition professionals trumps the potential of OTs to blaze new ways of
doing business. Exceptions to this exist but the proposed rule does nothing to promote them.
Statutory Authority Repealed. The regulation being amended by the proposed rule (32 C.F.R.
Part 3) has been moribund and virtually ignored for twenty years. The legal authority on which
part 3 is based, section 845, Public Law 103-160, was repealed nearly ten years ago by section
815 (c), Public Law 114-92. Part 3 has had no legal existence or effect since that date. Its
continued presence in the Code of Federal Regulations may be a matter of sloth or possibly a
profound lack of knowledge of the OT statutes their history and intent.
Subject Matter Different. Section 845, Public Law 103-160 which 32 C.F.R. Part 3
implemented related to prototype projects directly relevant to “weapons or weapons systems”.
The subject matter to which 10 U.S.C. 4022 applies (the statute amended Part 3 purports to
implement) are projects directly relevant to “enhancing the mission effectiveness of personnel of
the Department of Defense or improving the platforms, systems, components, or materials
proposed to be acquired or developed by the department of defense, or to improvements of
platforms, systems, components, or materials in use by the armed forces.”
Guidance Not Regulations to be Issued. The Department of Defense has awarded and
administered prototype projects and follow-on production under 10 U.S.C. 4022 (and
predecessor 10 U.S.C. 2371b) pursuant to statute and non-binding guidance for a decade. This
approach was mandated by Congress: “shall issue updated guidance…”sec 815 (e), Public law
114-92. Section 4022 is carried out under the authority of section 4021 which calls for the
issuance of “guidance” (10 U.S.C 4021 (h)). Current DOD guidance has faults, but they are not
cured by the proposed rule.
Law Ignored. What is needed is not regulations issued contrary to law but for DOD to comply
with the law. Deficiencies in current DOD OT guidance not addressed by the proposed rule
include failure to create a “Preference for Use of Other Transactions and Experimental
Authority”, as required by section 867, Public Law 115-91. Also ignored is the civil-military
integration policy of 10 U.S.C. 4811(b), not just including non-traditional contractors in defense
business but allowing traditional contractors to convert business segments to commercial
business processes.