In the Star Wars: The Empire Strikes Back, the culmination of Yoda’s wisdom imparted to the young Jedi in training, Luke Skywalker, was to forcibly utter “You must unlearn what you have learned,” shortly before passing. This quote has remained a constant at Strategic Institute’s Other Transactions and alternative acquisition conferences. It expresses something very important; that previous learning and held beliefs can be a hinderance when trying to do something truly different. In the Strategic Institute’s Other Transactions Guide, it is said.
In teaching Other Transactions courses there are students so steeped in the procurement system they cannot hear what is said. Everything is filtered through prior learning. There is a conceptual box for almost every concept. These mental “boxes” inhibit learning and exploring new thoughts.
In psychology the phenomenon is referred to as proactive interference. The definition is simple – difficulty in learning new information because of already existing information. It may not be necessary to unlearn. Merely being aware that prior knowledge may distort the reception of new knowledge may enable a student to embrace new ideas. For those that think they are not affected by proactive interference they should at least be aware that their coworkers, subordinates or superiors might be.
Let us explore a few examples of common misunderstandings stemming from applying concepts and definitions from sources other than the statutory language, legislative history and practice of Other Transactions (OTs). This can limit or corrupt the actual meaning of the statutes. The examples are not in any way comprehensive but are merely to alert students and practitioners of OTs to the problem of injecting familiar but inapplicable notions and concepts in an OT context.
The first example deals with the meaning of “basic, applied and advanced research projects” in 10 U.S.C. 2371. It is common for lawyers to assume that these terms mean the same thing as similar descriptions of budget activities in the DOD Financial Management Regulation, DOD 7000.14-R. The conclusion is that section 2371 OTs are limited to using RDT&E funds associated with those terms. Moreover, they have opined that since section 2371b projects are “under the authority of section 2371” prototype projects were similarly limited.
The first point to understand is that regulations whether the Federal Acquisition Regulation (FAR), the Financial Management Regulation, or other regulations do not dictate the meaning of the OT statutes. OTs statutes have their own origin and legislative history separate from such regulations. In this case the original language of section 2371 authorized the Secretary of Defense “in carrying out advanced research projects” through the Defense Advanced Research Projects Agency to “enter into…other transactions with any person, any agency or instrumentality of the United States, any unit of state or local government, any educational institution, and any other entity.”
Simply stated “advanced research projects” meant the kind of things DARPA did. DARPA funded basic and applied research. It also did other things. A well know case as part of its Project Agile was to purchase a thousand off-the-shelf commercial rifles (AR-15), ship them to Southeast Asia and provide them to American and Vietnamese Army soldiers to run a test program. While DARPA was entirely funded by R&D funds the activities involved would have been appropriate for a combination of procurement and operations and maintenance (O&M) funding. The Army’s expansion of DARPA’s demonstration program used such funds. This led directly to the development of the M-16 assault rifle.
The language of section 2371 was changed with the Federal Acquisition Streamlining Act or FASA (P.L. 103-355). This was based on recommendations in the Section 800 (of NDAA 1991) Panel report. The change was not intended to limit the scope of 2371. Since OTs were extended beyond DARPA the amendment was to make clear that basic and applied research were included. In the military departments basic and applied research are typically conducted by organizations that are different from those conducting more advanced research or prototyping. The amendment meant to avoid confusion ended up causing confusion because lawyers did not do their homework and jumped to unwarranted conclusions.
It should be noted that the fact that the current version of section 2371 does not expressly contain the language “any person…and any other entity” does not mean that the original intent does not apply. There is no indication in the legislative history that a change was intended.
When it is asserted that OTs are fundamentally different from FAR contracting, many folks schooled in the FAR system are frequently restrained by previously held beliefs and views. Initially it means, unlike contracting (acquisition) that begins when agency needs are known and requirements defined (FAR 2.101), OT contracting should begin with understanding the problem to be solved and potential solution sets. Moreover, this is not a unilateral government activity but one that involves interacting with industry (and other smart people outside government). It requires a team effort and is not the exclusive domain of contracting officers warranted according to FAR procedures.
OTs are not just “another tool” in a known and defined government tool kit. This type of thinking misses the forest for the trees. Instead, OTs allow the government to conduct business in radically different ways, expand horizons. The workforce should not be faulted for not knowing this. Many of their senior leaders don’t know this. Some have opposed the very possibility this might be true!
Among misconceptions is that an OT involving “cost sharing” must be structured as a cost reimbursement agreement. The first point to make is that while the term cost sharing is a simple way to describe the conditions mentioned in 2371 (e)(1)(B) and 2371b (d)(1)(C), those words do not appear anywhere in the statutes. The notion of a requirement for a cost reimbursement structure in order to have cost sharing agreement is lore; based on Part 16 of the FAR. It is not a requirement of either OT statute.
In the recent deliberations on the National Defense Authorization Act there was a proposal to remove cost sharing from section 2371 (House Bill, sec. 5202) that was not adopted in the final version of the bill. This was thought to make section 2371, which is currently seldom used, more viable for projects involving universities. Cost sharing is thought to be a reason section 2371 is little used. However, resource or cost sharing is not an absolute requirement of section 2371. It is to be used if determined to be practicable. This contrasts with maximum extent practicable is subsection (e)(1)(A). Note: the generally good OSD OT Guide of November 2018 makes a misstatement on this point. The very first OT did not involve cost sharing. Simply put, cost sharing is practicable if it furthers or enhances the agreement, and not practicable if it impedes the agreement such as an agreement with a non-profit, academic institution, or poorly capitalized company. Many acquisition practitioners seem to be averse to making judgment calls, even easy ones, instead of following prescriptive rules. They may see prescriptive rules even when they do not exist.
A provision of section 2371b that is almost never utilized is subsection (d)(1)(D). An article on this website explains that compliance with the criteria for an SPE exceptional circumstances determination is less challenging than it might appear. See Where are the Major Defense Contractors? on this website. SPE’s should be open to accepting and approving requests for approval as discussed in that article. Contracting organizations should be submitting requests. Unfortunately, approval of waivers and obtaining high level approvals under FAR is often so onerous it is typically avoided whenever possible. FAR bureaucratic constructs need not be and should not be applied to OTs.
Changes made to OT agreements should be accomplished in an efficient and timely manner. Concepts found in Part 43 of FAR such as in-scope and out of scope changes do not apply. Beware applying terms of FAR to OTs that are not applicable. Government-furnished equipment mentioned in section 2371b (g) is not encumbered by the rules of Government Property in FAR Part 45, for example.
Unlearning, deprogramming, transcending or whatever you’d like to call it, is an essential step in shifting a paradigm. The current acquisition paradigm is long overdue for re-visioning. It is time to raise expectations, as folks tend to meet them, provide training and top cover to permit the business of federal innovation to be higher performing, intelligent, serving the best interests of the war-fighter, taxpayer and a Nation. OTs are not intended to be just a tool, instead an alternative.