Other Transaction Agreements

On Friday, March 20, 2020, the Office of Management and Budget (OMB) issued Memorandum No. M-20-18, titled “Managing Federal Contract Performance Issues Associated With The Novel Coronavirus (COVID-19).”  The Memorandum, directed to the heads of all Executive Departments and constituent federal agencies, provides key guidance on maintaining continued contract performance while respecting the need to protect the safety of the contracting community during this unprecedented time.  The critical aspects of the Memorandum, accompanied by a contractor “To Do” list, are as follows:

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The spread of the COVID-19 virus and the unprecedented steps taken by federal, state and local authorities to contain it by shutting down or significantly altering normal business operations pose great challenges to government contractors in meeting the needs of their universal customer, the U.S. Government.  Work spaces are closed.  Supply chains are disrupted.  Key employees may no longer be available to oversee critical operations – both on and off U.S. Government installations.  Here are some proactive measures that contractors can take now to avoid loss and to maximize the potential of obtaining new business opportunities created by the expected exponential increase in government spending:

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As federal agencies have exponentially increased the use of “Other Transaction Agreements,” or OTAs, over the past few years, the question of the extent to which OTAs are subject to judicial review has arisen and, fortunately, recently been answered by GAO.  Although GAO will not review an agency’s award decision once it properly elects to utilize an OTA, GAO will examine the transaction to assess whether the agency properly chose to use the OTA instead of a procurement contract. The MD Helicopters decision, B-417379, April 4, 2019, 2019 WL 1505296, is GAO’s most recent decision on the subject.  With this in mind, federal contractors considering OTAs as a procurement vehicle should take note of GAO’s limited scope of review regarding such agreements and tread carefully.

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In the August 2018 publication of Thomson Reuters’ Briefing Papers, McCarter & English Government Contracts and Export Controls Partner Dan Kelly provides a comprehensive review of patent rights under “Other Transaction Agreements” (OTAs) with DoD and NASA. Heavily promoted by Congress, and only partially understood by industry, OTAs are quickly becoming DoD’s and NASA’s contractual vehicle of choice to lure commercial companies to sell the Government their latest and greatest technologies. However, OTAs are not governed by standard government contracts laws and regulations, meaning there are significant changes to the common provisions of ownership and license rights incident to government contracts and grants. The Briefing Paper should be required reading before entities enter into an OTA as a vehicle for developing new technologies for NASA and DoD to ensure their company’s intellectual property efforts are properly protected.

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