The Department of Defense can issue Other Transaction Agreements (“OTA”) for research, prototypes, and production. 10 U.S.C. § 2371b. Research OTAs are available for basic, applied, and advanced research projects. The DoD may also acquire prototypes using OTAs. Production OTAs are only permitted where the government has previously acquired a prototype under an earlier OTA. Additionally, the solicitation for the original prototype must have notified offerors that the government reserved the right to issue a follow-on Production OTA.
OTAs at the GAO
In a much-discussed decision in 2018, the GAO confirmed its jurisdiction to hear protests concerning an agency’s use of its Other Transaction authority. Oracle America, Inc., B-416061, May 31, 2018, 2018 CPD ¶ 180. In Oracle, the protester contended that the DoD had exceeded its authority in entering into a Production OTA (“P-OTA”). The protester argued the P-OTA was improper because the Solicitation for the Prototype did not contemplate a follow-on P-OTA – a mandatory prerequisite. The protester further argued the P-OTA was improper because the awardee had not yet “successfully completed work” under the Prototype OTA. The GAO agreed on both points and sustained the protest.
While Oracle established that the GAO will undertake a protest challenging whether the DoD has properly exercised its OTA authority, a recent decision made clear that the GAO will not review the propriety of an agency’s evaluation of proposals in response to an OTA solicitation. In MD Helicopters, Inc., the GAO stated “our jurisdiction [is limited] to reviewing protests concerning alleged violations of procurement statutes or regulations by federal agencies in the award or proposed award of contracts for the procurement of goods and services, and solicitations leading to such award.” MD Helicopters, Inc., B-417379, Apr. 4, 2019, 2019 CPD ¶ 120 at 2. The GAO determined that OTAs are not “procurement contracts” for purposes of the Competition in Contracting Act and dismissed the protest.
The United States District Courts
MD Helicopters filed a complaint in the United States District Court for the District of Arizona following the GAO’s dismissal. Remarkably, the United States conceded jurisdiction. The DoD concluded the Administrative Dispute Resolution Act (“ADRA”), which stripped the United States district courts of their jurisdiction over bid protests, did not terminate district court jurisdiction over non-procurements. Like the GAO in MD Helicopters’ protest, the DoD concluded that OTAs “are not procurement contracts and are exempt from the typical panoply of federal procurement statutes and regulations, including the Federal Acquisition Regulations (‘FAR’), the Defense Federal Acquisition Regulation Supplement (‘DFARS’), the Competition in Contracting Act (‘CICA’), and the Contracts Disputes Act (‘CDA’).” The government’s position in conceding jurisdiction is consistent with the understanding that ADRA only repealed district court jurisdiction over procurement contracts. Resource Conservation Group, 597 F.3d 1238 (Fed. Cir. 2010).
The key point is that the GAO is an appropriate venue to challenge whether the government has properly exercised its authority. However, an offeror concerned with the propriety of an award decision in an OTA competition should protest under the Administrative Procedure Act in district court.
Please reach out to a member of Maynard Cooper’s Government Solutions Group if you have any questions or need assistance.