How to Spur Defense Innovation with OTAs

Today’s conflicts unfold across borders at lightning speed. Technological superiority over near-peer competitors hinges on rapid Department of Defense (DOD) innovation in cybersecurity, networking, and data analytics—in partnership with allies and other trusted stakeholders. DOD’s Mission Partner Environment (MPE) initiative aims to stand up technical and operational capabilities to make federated mission networking a reality.

International collaboration is a pressing need. Yet contracting barriers too often stall progress.

Other transaction authorities/agreements (OTA)—a flexible contracting approach used to spur greater collaboration between industry and government—offer a path to accelerate progress toward implementation of mission-critical MPE technologies.

The federal government initially developed OTAs for NASA to win the space race following the Soviet Union’s launch of Sputnik 1 in 1957. Today, we’re faced with similarly high stakes, locked in an innovation race with global competitors that are aggressively developing technologies such as hypersonic missiles, quantum computing, and autonomous weapon systems.

The United States must source the best technology from the defense-industrial complex to counter these threats. OTAs attract companies that are on the leading edge of innovation, yet may not traditionally do business with DOD. The agreements incentivize rapid development of functional prototypes at lower cost and reduced risk to the government while enabling real-time collaboration between DOD’s technical experts and industry partners. 

We’ve seen the success and popularity of this acquisition approach expand significantly since the 2016 National Defense Authorization Act encouraged its use. In 2020, DOD obligations came in at just over $16 billion, a 2,000 percent increase from 2015.

In 2019, Booz Allen helped the Naval Information Warfare Center (NIWC) accelerate modernization of the Marine Corps Townsend Bombing Range with a Low Altitude Range Communication System (LARCS) through the Information Warfare Research Project (IWRP) OTA Consortium. Within a year of award, engineers built a prototype to replace analog systems with a modern IP-based communications suite and bring NextGen Federal Aviation Administration (FAA) solutions to the range. In 2020, NIWC implemented the solution. Positive outcomes for the range included streamlined operations, cost savings from full integration of legacy equipment, a testing period in which to work hand in hand with industry innovators to hone the solution, and a significantly improved warfighter experience.

Another widely recognized example of successful OTA application is Operation Warp Speed, the partnership between DOD and the Departments of Health and Human Services (HHS) to accelerate the development of a COVID-19 vaccine. Initially, vendors like Pfizer and Johnson & Johnson would not sift through cumbersome Joint Program Office (JPO) requirements to complete a proposal. The OTA vehicle reduced contracting barriers to motivate commercial pharma companies to take the risks necessary to accelerate development—risk-taking which traditional federal contracting discourages. This approach was instrumental in speeding development of a viable COVID-19 vaccine.

The aim of connecting allies across borders and domains and the essential goal of securing the strategic Indo-Pacific region make MPE—essential for enabling technologies and systems—a top operational imperative. The OTA route may be particularly advantageous for the development of MPE technologies such as advanced software, data encryption, reinforced cybersecurity, and artificial intelligence. These technologies are constantly evolving. Therefore, they require real-time research, development, integration, and testing within DOD's existing infrastructure.

OTA competitions start with industry responses to program objectives through submission of  “white papers” that detail their solution, which must be a demonstrable technology. DOD evaluates the whitepaper submissions and may award a prototype OTA to the best solution. Alternatively, DOD selects the top competitors, allocates budget across the competitive field, sets a time period for development, and starts building prototypes with each competitor. The latter process is typically a “fly-off” competition, in which the government customer eliminates competitors in phases. The winning prototype must meet the requirements set forth in the original OTA to move to production without further competition.

OTA competition also requires industry partners to make significant use of at least one “non-traditional” defense contractor (NDC). This requirement offers DOD access to the most relevant emerging technology. OTA regulations define an NDC as an entity that has not entered a contract with DOD for at least a year. Industry competitors often partner with startups with the latest data encryption, AI, and technology breakthroughs to deliver the prototype. OTAs also allow industry competitors to invest throughout the competition, another benefit for the government.

OTA competitions offer high return on investment and flexibility for DOD. The government receives cost-efficient, low-risk prototypes, and myriad options for implementation. The client can select one top solution or implement the best aspects of multiple options. For example, stakeholders could choose a front-end solution from one industry partner, an interface from another, and the best commercial off-the-shelf application from a third.

The OTA process offers industry deeper insight into DOD’s obstacles and requirements. A regular cadence of technology interchange meetings enables real-time feedback, accelerating iterations of next-generation prototypes. OTAs also provide funding and a deep incentive for industry to invest to develop technologies to full maturity.