How the US can put OTA procurement process to best use

There is a right way and a wrong way to do rapid acquisitions for the U.S. military. And the recent debacle over a $950 million internet cloud contract to an Amazon partner, later dramatically cut back by the Pentagon, underscores the wrong approach towards procurement.

The contract made use of an innovation in federal procurement called other transaction authority, or OTA, which is designed to jump-start the slow weapons- and technology-buying process and rapidly develop prototypes for assessment by the military services. OTA-funded projects are vital to helping U.S. forces maintain their technological edge by allowing the military to tap into companies and universities not typically interested in working with excessively bureaucratic government agencies.

Oracle filed a protest with the Government Accountability Office, calling the cloud computing contract “an egregious abuse” of a streamlined acquisition process that was “shrouded in secrecy.” The opacity of the procurement left it open to charges of perceived favoritism. In the end, the Department of Defense slashed the contract ? to no more than $65 million ? and scaled back the scope.

The cloud contract provides a teachable moment for procurement reform-minded officials in the Pentagon and on Capitol Hill. The problem was not with the OTA mechanism, which remains an essential element of reforming Pentagon procurement. Rather, the problem was with a lack of transparency with how the mechanism was employed.

The Coalition for Government Procurement, a nonprofit association of government contractors, supports the use of OTAs. But it stressed that in the wake of the cloud contract, the Department of Defense “should be sensitive to issues, like transparency, as they reinforce the perception of fairness and credibility that is necessary for success.”

By no means an exotic contracting approach, OTA is synonymous with successes. For example, it has been in use since the late 1950s and was an essential tool for encouraging the technological advances that won the space race. In addition to NASA, other federal agencies now have the authority.

The Department of Defense is increasingly turning to OTA to help realize the promise of procurement reform. One key reason is that projects funded this way “are generally not subject to the federal laws and regulations that apply to government procurement contracts,” says the Air Force Office of Transformational Innovation.

Read more: How the US can put its OTA procurement process to best use