Guidance on the Use of "Other Transactions" Authority under 10 U.S.C. 2371
GUIDANCE ON THE USE OF "OTHER TRANSACTIONS" AUTHORITY
UNDER 10 U.S.C. 2371
BACKGROUND:
IPT Findings:
From March 18 to June 10, 1996, a Department of Defense (DoD) Integrated Product Team (IPT) studied the use of "other transaction" authority under 10 U.S.C.2371 by the military services as compared to the use of this authority by the Defense Advanced Research Projects Agency (DARPA).
The IPT report included the following key findings. First, the Services have used "flexible" cooperative agreements with commercial firms or consortia with commercial firms as members to perform dual use programs while DARPA has used "other transactions" in such cases. Second, the terms of the flexible cooperative agreements and DARPA's "other transactions" are similar and both provide much flexibility; the only sustantive difference is that Bayh-Dole patent rights provisions are required by law and regulation in cooperative agreements and are negotiable in "other transactions". Third, despite the similarity and flexibility of agreements executed by the Services and DARPA, a perception exists that "other transactions" are less burdensome. This perception may make some commercial firms reluctant to submit a proposal when solicitations do not state that they might lead to award of "other transactions" as well as contracts, grants and cooperative agreements. Fourth, the Services identified the language in 10 U.S.C. 2371 permitting use of an "other transaction" "only (emphasis added) when the use of a standard contract, grant or cooperative agreement for such project is not feasible or appropriate..." as a barrier to increased use of "other transactions".
Statutory Changes:
The IPT made recommendations that were intended to increase the Services' flexibility and encourage use of "other transactions". One recommendation, designed to overcome the barrier to the use of "other transactions" discussed above in the fourth IPT finding, was that DoD submit a legislative proposal to amend the language in 10 U.S.C. 2371 by deleting the word "only". DoD acted upon this recommendation. In testimony before the Senate Armed Services Committee, the Under Secretary of Defense (Acquisition & Technology) explained that this minor revision would retain the benefits of this condition, such as requiring "thoughtful analysis" before using an "other transaction", while removing the impression that this condition imposes an almost unattainable standard. Congress adopted the proposal in Section 267 of the National Defense Authorization Act for Fiscal Year 1997. Accordingly, although the statutory preference for a contract, grant or cooperative agreement remains, in enacting this change to 10 U.S.C. 2371, Congress clearly indicated an intent to increase the flexibility available to the Services to use "other transactions". The legislative history accompanying this change to 10 U.S.C. 2371 mentions Congress' desire that the Services aggressively use the authority under Section 2371.
DISCUSSION:
To encourage participation in Department of the Navy research projects by the broadest spectrum of both non-profit and for-profit organizations, we need to make potential participants aware that the Navy is willing to use "other transactions", in addition to instruments that may be perceived as more standard. Therefore, broad agency announcements and solicitations for basic, applied, or advanced research should make clear that they may result in an "other transaction", as well as a contract, grant, or cooperative agreement, depending on the nature of the work proposed and other factors. Those responding should be encouraged to include in their proposals a discussion of the type of instrument they believe to be appropriate and the reasons for that choice.
Negotiations should be conducted to achieve a good business deal that protects and fosters the interests of the Government, without regard to the label that will ultimately be attached to the agreement that is reached.
In the case of cooperative agreements involving commercial firms and "other transactions" for assistance involving commercial firms, patent rights provisions will determine whether the agreement is called a cooperative agreement or an "other transaction". If the agreement has patent rights provisions in accordance with the Bayh-Dole Act, it should be called a cooperative agreement and cite 10 USC 2358 as its authority. If it contains other patent rights provisions, it should be called an "other transaction" and cite 10 USC 2371.
