Agencies Spent $10.4B in 10 Years Using Other Transactions. Here's Where It Went.Start
Defense and civilian agencies have been using other transaction authorities—a lightly regulated contracting process outside of the Federal Acquisition Regulation—to fast-track acquisition of bleeding-edge technologies and encourage private sector innovators to work with the government.
At inception, OT authorities were created to support research and development efforts but that’s not always how they are used. To get a better idea of the scope of OT contract spending—both in dollars and purpose—Nextgov pulled more than 10 years of contracting data from the Federal Procurement Data System.
From the start of fiscal 2008 to April 2018, government agencies awarded $10.4 billion on more than 7,000 contracts. That money went to developing and prototyping advanced weapons systems, spacecraft, cloud computing and other IT systems, to professional services like research consulting and airport construction.
- Other Transaction Authorities: By the Numbers
- OT Contracting Since 2008
- The Most Prolific Contracting Office in OTs
- OT Contracting Gets Popular
- TSA Unrestricted
- TSA Is Contracting More Than Everyone Else
- Correlation Is Not Causation
- The Big Spenders Focus on R&D
- Including One Very Big Spender
- More On OT Authorities
Other Transaction Authorities: By the Numbers
OT authorities were originally established to support research and development of new technologies by tapping non-traditional contractors—those who have not done extensive work for the government. However, in recent years, the majority of contracts have gone to areas other than R&D.
Since the start of fiscal 2013, 4,223 of the 5,263 contracts awarded, 80 percent, have gone to companies doing work other than R&D. The Transportation Security Administration awarded most of these—more on that later.
But data shows R&D is where the big money is. The 1,040 R&D contracts awarded since 2013 combine for $5.3 billion of the $6.9 billion contracted through OT authorities, or just under 77 percent.
The Most Prolific Contracting Office in OTs
There are localized spikes in 2011 when TSA began using its OT authority for airport construction and services and again in 2013 when the agency had a large number of reimbursements for construction, including more than $100 million to Miami-Dade County.
OT Contracting Gets Popular
But use of OT contracts really took off in 2015.
Richard Dunn, the former general counsel for the Defense Advanced Research Projects Agency who wrote the statute used to establish the Defense Department’s OT authority, pointed to a number of factors contributing to the uptick.
Among those were the 2016 National Defense Authorization Act, which included additional OTA provisions, including the ability to issue follow-on contracts for production. Dunn also cited an increase in the use of consortia, a contracting model unique to OTs.
The Defense Innovation Unit Experimental, or DIUx, a contracting office specifically designed for OTs using the Army’s authority, was also established in 2015.
The program garnered heavy media attention early on. And though DIUx did not award any funding until 2016, its principals were out extolling the virtues of OT contracts.
The number of OT contracts issued over that same period closely follows the increase in dollars. But that correlation doesn’t tell the whole story.
TSA is, by far, the most prolific user of OT authority by number of contracts.
TSA was given OT authority when the agency was established in the wake of the Sept. 11, 2001 terrorist attacks. Unlike other agencies, like the Defense and Energy departments, TSA was given unrestricted use of OTs to fund any immediate needs.
Going back to at least 2008, TSA used this authority to reimburse airports for upgrades to checked baggage screening systems and other security measures, including bomb-sniffing dogs and additional security personnel. The use of OT contracts rose drastically in 2011, when TSA issued 860 contracts, the vast majority of them for construction and professional services. The agency issued just 36 OT contracts in 2010.
TSA Is Contracting More Than Everyone Else
A look at the number of contracts issued governmentwide broken into R&D and everything else shows how large the divide has become.
The trend appears clear: TSA began issuing more contracts using its OT authority, so that must be where the contracting dollars are flowing.
Correlation Is Not Causation
However, with the exception of 2013, R&D continues to lead in total funding governmentwide, despite there being far fewer contracts.
The Big Spenders Focus on R&D
The view becomes even starker looking at the total funding awarded in fiscal 2018 broken down by agency and purpose.
This treemap shows the total dollars awarded from Oct. 1, 2017, to April 27, 2018, by contracting office (color) and category (cell) as listed in the General Services Administration’s Product and Services Code manual.
Research and development is fourth in total spending for TSA, which has put the most funding into professional services.
DARPA’s $81 million in funding for R&D is more than the $67 million spent by the Air Force, Defense Threat Reduction Agency, Office of Procurement Operations, TSA and USSOCOM in all areas combined.
And the Army’s R&D spend of almost $355 million dwarfs all other agencies and areas—including other Army funding—combined.
Including One Very Big Spender
The trend goes back to 2011, with Army as the largest single source of OT funds for any given year. Army contracts accounted for more than half of all funding in 2012 and from 2014 on.
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More On OT Authorities