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Dominicke Ybarra

""Other Transactions" Are Government Contracts, And Why It Matters"

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I came across this article the other day.  It is written for a contract professional audience.  This article appears to be peer reviewed, unbiased, and well documented in the form of citations it provides in asserting its premise: “Other Transactions Are Contracts with the Government”.

 

Originally published by Public Contract Law Journal

 

Author:  Nathaniel Castellano

 

http://www.mondaq.com/unitedstates/x/839220/Government+Contracts+Procurement+PPP/Other+Transactions+Are+Government+Contracts+And+Why+It+Matters

 

Full Article:

 

https://www.arnoldporter.com/-/media/files/perspectives/publications/2019/08/other-transactions-are-government-contracts-and-wh.pdf

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I’m not sure what the purpose of the article is.  If it’s to simply say OTAs are contracts, it contains lots of unnecessary wording.  That’s obvious to anyone even remotely familiar.  Maybe it’s to educate readers on what OTAs are about, but the author went about it in an unusual manner.  Regardless anyone that’s been constructively involved with even one OTA, knows the process.

There are a couple points I take issue with.  One is this statement that OTAs break down a barrier of boilerplate terms and compliance burdens for firms.  This implies that’s a major reason why the most innovative firms decline government business.  This ignores the largest reason and that’s these firms have lots of existing business and don’t want to bother with the huge commitment of time and effort responding to proposals and waiting months for award decisions.

Quote

With the freedom of OTA, the theory goes, agencies can contract with the most innovative commercial firms, which might otherwise decline the boilerplate terms and compliance burdens associated with procurement contracting

Next there’s an implication that the OTA rules are too loose and not structured.  That’s exactly the major benefit. That’s also what attracts the needed firms to government business instead of the traditional process.

Quote

For better or worse, DoD has yet to provide meaningful regulation to govern its use of Other Transactions, perhaps with the exception of detailed regulations governing certain Technology Investment Agreements (TIAs) that are issued as Other Transactions.22 Instead of binding regulation to accompany its increased use of Other Transactions, DoD has opted for informal guidance to using OTA.

I can’t help but feel this author, as a lawyer, feels OTAs aren’t good business for them.

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I read it, and the purpose was clear to me.  It served as a warning to any contractor accepting an OTA, that many of the trip wires for liability and assignment of risk are still way more slanted in the government's favor than a standard business to business dealing under the Uniform Commercial Code.

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OTAs are a wonderful tool.  But their benefits also are their drawbacks in our government system.  Because of the benefits they:

  • Are abused and used inappropriately
  • Put fear in many procurement people used to a detailed rule based system with detailed roadmaps or cookbook approaches for them to follow
  • Threaten a whole bureaucracy existing of people who write policy, establish review boards, develop standard process and people that don’t want them
  • Threat to conservative lawyers that see nothing but bad with them unless they are closely involved
  • Upset big portions of major corporations that are set up to deal with the status quo and responding with volumes proposals written by high priced personnel - OTAs disrupt and threaten their work

I personally see this article as just more reaction to some of the above

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