Other Transactions in DoD, Not Business as Usual

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As government desires to expand the sources of innovative solutions for products or research capabilities that could be adapted to meet critical needs, thereby increasing the level of competition and innovation by accessing companies that have not traditionally done business with the government and encouraging the traditional industrial base to seek innovative solutions.  One way to meet this challenge is to simplify and expedite the process of contracting for new capabilities.

Despite best intentions, current contracting authorities are often ill-suited to effectively to meet challenges. Large segments of American and foreign industry are unable or unwilling to partner with the government either directly or through subcontracts because business practices are, from a commercial perspective, too slow, inefficient, burdensome and arcane. In large measure those business practices are driven by the requirements of the contracting system.  

In an attempt to increase agility in contracting, Congress has provided the Department of Defense with an array of authorities that allow the Department to conduct research, development, test, evaluation, and procurement outside the constraints of the normal contracting system. Authority exists to engage in basic, applied, and advanced research (10 U.S.C. 2371), conduct prototype projects (10 U.S.C. 2371b), make selected purchases for purposes of test and experimentation (10 U.S.C. 2373), and award follow-on production efforts (10 U.S.C. 2371b). These authorities have been used for a number of years and have proven successful both in appealing to non-traditional sources and in expediting research, development, and prototyping. Despite the record of success and the availability of lessons learned on these authorities, they are often not understood and little used by most contracting activities of the Department.  

These authorities allow unprecedented opportunity to experiment with innovative forms of collaboration, new technical as well as business approaches, and allow goals rather than rules to be the primary force in forming the contractual relationship. Collaboration under these authorities allows the Department to design and explore innovative ideas in partnership with companies rather than unilaterally prescribing solutions that companies must then build. This results in faster development and adaptation of innovative ideas and fosters improved partnerships with industry. Collaborations should include arrangements between government laboratories and programs of record to address the “valley of death” transition issue as well as collaborations between government and industry. Innovative arrangements to combine funding from various budget categories and private funding as well as acceptance of commercial standards, technology and investment should be adopted when appropriate.  

Authorities to engage in “other transactions” (10 U.S.C. 2371 and 10 U.S.C, 2371b), and make purchases for experimental purposes (10 U.S.C. 2373) are not to be considered niche or last resort methods but are to be used whenever they are legally appropriate and have the potential to contribute to the Department’s mission. Planning for actual fielding of capabilities and follow on production needs to be carefully considered as part of the use of these authorities.


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