Other transactions are agreements used for research and prototype projects that are principally defined in terms of what they are not. They are not a contract, grant, or cooperative agreement. To the extent that a statute or regulation is limited in its applicability to the use of a contract, grant or cooperative agreement, it generally does not apply to an other transaction. For example, the Contracts Disputes Act and the Federal Acquisition Regulation do not apply to other transactions.
BASIC AUTHORITY
The Navy's use of an Other Transaction is authorized by 10 U.S.C. 2371 that states, "..the Secretary of each military department may enter into transactions (other than contracts, cooperative agreements, and grants) ...in carrying out basic, applied and advanced research projects".
Provisions in the statute that should be noted are:
- Cost Sharing. To the extent that the Secretary determines practicable, the funds provided by the Government under the other transaction are not to exceed the total amount provided by the other parties.
- Use of an Other Transaction. An other transaction may be used for a research project, "when the use of a standard contract, grant, or cooperative agreement for such project is not feasible or appropriate".
- Annual Report to Congress. The Secretary of Defense is required to submit an annual report to Congress on the use of other transactions.
PROTOTYPE AUTHORITY
The Navy's use of an Other Transaction to carry out certain prototype projects is authorized by Section 845 of the National Defense Authorization Act for Fiscal Year 1994 as amended which states that, "the Secretary of a military department may, under the authority of section 2371 of title 10, United States Code, carry out prototype projects that are directly relevant to weapons or weapon systems proposed to be acquired or developed by the Department of Defense"".
It should be noted that:
- The paragraphs in section 2371 that pertain to cost sharing and using an other transaction "when the use of a standard contract, grant, or cooperative agreement for such project is not feasible or appropriate", do not apply to other transactions for prototypes (however, note the restrictions placed on award of other transactions for prototype projects by Section 803 of the National Defense Authorization Act for Fiscal Year 2001.)
- The annual report to Congress does apply.
- The prototype authority expires at the end of Fiscal Year 2004.
- Section 803 of the National Defense Authorization Act for Fiscal Year 2001 places restrictions on the award of other transactions for prototype projects.
- Other Transactions Guide for Prototype Projects, issued December 21, 2000, provides guidance and sets forth mandatory requirements pertaining to the use of other transactions for prototype projects.
USES
The flexibility of other transactions has enabled DoD to do business with entities (e.g. commercial firms and consortia) that have historically declined to participate in research projects because aspects of contracts, grants, or cooperative agreements have made the use of those instruments inappropriate.
Under the basic authority, a primary use of other transactions has been to increase DoD's access to dual use technologies by supporting and stimulating research that has both commercial and military application. Under the prototype authority, other transactions have been used for projects such as the Arsenal Ship that have no known commercial application; as well as for dual use applications programs such as the Commercial Operations and Support Savings Initiative.
Other transactions are highly flexible instruments available to the assistance and acquisition communities. Their use is encouraged when doing so achieves a good business deal that protects and fosters the interests of the Navy.