Other Transaction Agreements: DOD Can Improve Planning for Consortia Awards
Fast Facts
DOD sometimes awards funds via an "other transaction agreement." OTAs allow for more flexibility than traditional contracts do, enabling DOD to partner with contractors it hasn't worked with before. DOD can award OTAs to an individual organization (like a contractor) or to a consortium, which is a group of organizations focused on a specific technology area (like cybersecurity).
DOD has been awarding OTAs through consortia more frequently. But the agency hasn't systematically tracked data on which consortia—and therefore which technology areas—receive these funding awards.
Our recommendations could help DOD address this and other issues.
Awarding OTAs to consortia can facilitate access to new technologies, such as microchips
Highlights
What GAO Found
The Department of Defense (DOD) has the authority to use a contracting mechanism known as an other transaction agreement, or OTA, which is not subject to certain federal acquisition laws and requirements. DOD can award OTAs to individual organizations or to consortia—a group of organizations focused on specific technology areas. The share of awards that DOD has made to consortia is significant. From fiscal years 2019 through 2021, DOD obligated over $24 billion on OTA awards to consortia for prototyping efforts, which included developing COVID-19 vaccines. These obligations represented nearly two-thirds of all DOD's prototype OTA dollars obligated. In addition, of the 28 consortia that received OTA awards in this 3-year period, most were established since 2014 and managed by one of four organizations.
DOD's 28 Consortia by Year Established and Consortium Management Organization
DOD has collected some data on consortia-based OTAs, but it does not have data on the obligations each consortium has received because it does not have a systematic approach for tracking which consortia receive awards. GAO analyzed other sources of OTA data, including from industry, and found that from fiscal years 2019 through 2021, the top three consortia—medical defense, armaments, and aviation and missiles—received obligations of $8.0 billion, $5.0 billion, and $2.6 billion, respectively, from DOD. By not systematically tracking this type of data, DOD does not provide decision makers insight into consortia and their technology areas.
GAO also found that DOD contracting personnel have limited information to help inform planning when considering whether and how to use consortia-based OTAs. In prior work, GAO found that collecting and sharing lessons learned from previous efforts provides organizations with a powerful method for improving work processes. However, DOD has collected, documented, and shared limited information with contracting personnel on considerations related to:
- benefits and challenges of different ways to structure OTAs,
- compensation for organizations that manage consortia, or
- whether to use an existing consortium or create a new one.
By sharing limited information, DOD is missing opportunities to leverage the knowledge of contracting personnel to better inform planning for future awards.
Why GAO Did This Study
In fiscal year 2020, DOD awarded OTAs valued at billions of dollars to companies that were members of consortia to respond to the pandemic. DOD has increased the use of consortia-based OTAs in recent years. GAO found in July 2021 that there was limited insight into who received these OTAs. GAO recommended that DOD track the contractors performing on consortia-based OTAs. DOD agreed with GAO's recommendation and implemented it in June 2022.
A conference report included a provision for GAO to review DOD's use of consortia-based OTAs. This report examines the extent to which DOD (1) used consortia-based OTAs from fiscal years 2019 through 2021, and (2) shared consortia-based OTA information with contracting personnel.
GAO analyzed DOD and federal procurement data; reviewed agency policies; interviewed agency and industry officials; and reviewed a nongeneralizable sample of 12 OTAs. GAO selected the sample based on high dollar amounts and a variety of consortia, among other criteria.
Recommendations
GAO is making six recommendations to DOD, including to develop a systematic approach to track OTA award dollars each consortium receives and to collect, document, and share with its contracting personnel information to consider when planning for consortia-based OTA awards. DOD agreed with the recommendations.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | The Secretary of Defense should develop and implement a systematic approach to track the obligated dollars each consortium has received from consortia-based other transaction agreements. (Recommendation 1) |
DOD agreed with this recommendation and has taken some actions to implement it. In July 2022, DOD issued a memo directing its contracting organizations to report in the Federal Procurement Data System the consortium and consortium members performing on other transaction agreements awarded to consortia. To facilitate this, the General Services Administration updated the System for Award Management (the primary government repository for prospective federal awardee information) and the Federal Procurement Data System to help track the obligated dollars each consortium has received from consortia-based other transaction agreements. DOD's fiscal year 2022 report to Congress included total obligations awarded to all consortia, but did not track the obligations each consortium has received.
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| Department of Defense | Until a systematic approach to track obligations each consortium has received from consortia-based other transaction agreements is implemented, the Secretary of Defense should direct the Director of Defense Pricing and Contracting to provide information to the public and congressional decision makers on the dollars awarded to consortia using consortia-based other transaction agreements, such as by updating Department of Defense guidance to require contracting personnel to manually report this information. (Recommendation 2) |
DOD agreed with this recommendation. DOD and the General Services Administration have taken some actions to track the obligated dollars each consortium has received from consortia-based other transaction agreements. However, DOD did not provide this level of detail in its fiscal year 2022 report to Congress, which included obligations awarded to all consortia rather than the amount each consortium has received from consortia-based other transaction agreements.
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| Department of Defense | The Secretary of Defense should direct the Director of Defense Pricing and Contracting to collect, document, and share information on ways to structure consortia-based other transaction agreements and the related benefits and risks for contracting personnel to consider when planning to award consortia-based other transaction agreements. (Recommendation 3) |
DOD agreed with this recommendation. In July 2023, DOD issued an updated version of its Other Transactions Guide which added an appendix on consortia-based other transaction agreements. The guide includes a series of high-level questions for agreement officers to consider prior to awarding a consortium-based other transaction agreement. However, the guide does not provide information or examples on how to structure these agreements or the benefits and risks associated with various structures.
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| Department of Defense | The Secretary of Defense should direct the Director of Defense Pricing and Contracting to collect, document, and share information on negotiating consortium management organization compensation for contracting personnel to consider when planning to award consortia-based other transaction agreements, such as methods for determining the compensation and frequency of renegotiation. (Recommendation 4) |
DOD agreed with this recommendation. in July 2023, DOD issued an updated version of its Other Transactions Guide which added an appendix on consortia-based other transaction agreements. The guide includes a series of high-level questions for agreement officers to consider prior to awarding a consortium-based other transaction agreement. However, the guide does not provide information or examples on how to negotiate consortium management organization compensation, such as methods for determining compensation or the frequency of renegotiation.
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| Department of Defense | The Secretary of Defense should direct the Director of Defense Pricing and Contracting to collect, document, and share information on creating new consortia and using existing consortia for contracting personnel to consider when planning to award consortia-based other transaction agreements. (Recommendation 5) |
DOD agreed with this recommendation. In July 2023, DOD issued an updated version of its Other Transactions Guide which added an appendix on consortia-based other transaction agreements. The guide includes a series of high-level questions for agreement officers to consider prior to awarding a consortium-based other transaction agreement. However, the guide's discussion on consortia-based other transaction agreements does not provide information on the factors to consider when deciding whether to create a new consortia or use an existing one.
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| Department of Defense | The Secretary of Defense should direct the Director of Defense Pricing and Contracting to maintain and share a list of current consortia that have DOD other transaction agreements with contracting personnel, and include information on associated consortium management organizations, consortia technology focus areas, other transaction agreement unique award numbers, and contracting and program offices' contact information. (Recommendation 6) |
DOD agreed with this recommendation. In July 2023, DOD issued an updated version of its Other Transactions Guide and the guide states that information about current consortia will be posted on the Defense Acquisition University's Other Transactions Community of Practice website to ensure the widest dissemination to the DOD acquisition community. The Other Transaction Guide states that the information will include the name of the consortium, the industry focus areas, the other transaction agreement unique award number, and point of contact information. However, a search of the Defense Acquisition University's Other Transaction Community of Practice website in August 2023 indicates the website does not include this information.
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