The U.S. Department of Defense has authority to use other transactions for prototype projects (OTs) to develop prototypes outside of most federal laws and regulations governing contracts, grants, or cooperative agreements. Through literature reviews, interviews, and seven OT case studies, researchers reviewed recent U.S. Air Force experience in using this authority, identifying lessons for acquisition professionals and improvements for use.
Prototyping Using Other Transactions
Case Studies for the Acquisition Community
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Research Questions
- How has the Air Force used OTs?
- What outcomes are associated with the use of OTs?
- What lessons from the use of OTs might be helpful to acquisition professionals?
- What challenges exist with using OTs?
- Is there potential to improve the effective use of OTs? If so, what changes in law, policy, or surveillance might be required?
Researchers reviewed the U.S. Air Force's recent experience with using the authority for other transactions for prototype projects (OTs). This authority allows the U.S. Department of Defense to develop prototypes outside of most federal laws and regulations governing contracts, grants, or cooperative agreements. Through literature reviews, interviews, and case studies, researchers reviewed recent U.S. Air Force experience in using this authority, identifying lessons for acquisition professionals and improvements for use. Participants from the cases stated that OTs provide a number of flexibilities not inherent in Federal Acquisition Regulation procurements, such as allowing for more freedom to communicate with industry, tailoring solicitations and agreements, and working under conditions acceptable to nontraditional firms. Effective OT teams respond to this flexibility by engaging in a more commercial-like manner with industry while still applying an appropriate level of discipline. However, challenges with the effective use of OTs remain. Compliance-based training methods are insufficient, and establishing institutional knowledge is difficult. Further, a compliance-based contracting culture results in personnel discomfort with necessary risk-taking. The Air Force might be able to mitigate such challenges by developing case-based training that focuses on problem-solving, facilitating OT information sharing, and strategically managing the OT workforce to include mentoring programs and provide for broader experience. To fully leverage such changes, the Air Force should continue to work toward shifting its culture to ensure that personnel using OTs are rewarded for their willingness to take risks to accomplish the mission using sound judgment.
Key Findings
Flexibility is the most important outcome associated with the use of OTs
- Participants in the case studies reported that OTs provide them with flexibilities that are either not available or are more difficult, time-consuming, or costly to achieve under the Federal Acquisition Regulation (FAR).
- These flexibilities include more open communication between contractors and the government during the entire OT life cycle; new, innovative ways to perform market research and publicize solicitations; and the lack of mandated specifications when developing an agreement.
Lessons learned concern flexibility, appropriateness, communication, and cost-sharing, among others
- OTs provide flexibility not inherent in FAR procurements.
- OTs are one mechanism in the contracting toolbox and should be used only when appropriate.
- The rules of good government contract and program management still apply to OTs.
- OTs can take a number of forms or execution mechanisms. Government personnel should consider the advantages and disadvantages of the various options.
- Early and frequent communication among all OT stakeholders is especially important to the effective use of OTs.
- The problem and OT strategy are not static and may require more user engagement during execution than is normally required in FAR-based transactions.
- Cost-sharing can be an important incentive tool for OTs.
- Although OT agreements require tailoring to the unique need and prototype, they can be informed by a number of existing sources, including example OT agreements, the Department of Defense's OT Guide, and basic contract law.
Recommendations
- Adjust the Air Force acquisition environment to provide relevant training, facilitate information sharing, and manage the OT workforce.
- Foster an Air Force culture—at all levels of the organization—that values taking calculated risks. Reward OT personnel when they exhibit sound judgment and a willingness to take risks in service of the mission.
Table of Contents
Chapter One
Introduction
Chapter Two
Legislative Background and Recent Air Force Use of OTs
Chapter Three
The OT Life Cycle: Phases, Overarching Characteristics, and Challenges
Chapter Four
Observations About Developing the Problem and OT Strategy
Chapter Five
Observations About Soliciting, Awarding, and Executing OTs
Chapter Six
Policy Considerations in Employing OTs: Goals, Culture, Environment
Chapter Seven
Conclusions
Appendix A
Case Study Methodology
Appendix B
Case Study Background
Appendix C
Legal Considerations
Research conducted by
This research was sponsored by the U.S. Air Force and conducted within the Resource Management Program of RAND Project AIR FORCE.
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