OTA comes under increased scrutiny

In the wake of Oracle's successful protest of a $950 million "other transaction authority" award by the Army to REAN Cloud, House appropriators are putting the Defense Department on notice that they'll be keeping a close eye on future OTA awards.

For appropriators, as was the case for the Government Accountability Office, the issue is the use of such awards for procurements that don't fit the experimental or prototype model that OTAs were intended to handle.

The flexible procurement authority is "an important tool to provide flexibility and agility for cutting-edge research and development projects and prototypes," lawmakers wrote in a legislative report accompanying the defense funding bill released by the House Appropriations Committee on June 13. "However, the Committee is concerned with the lack of transparency on the use of OTA authority for follow-on production procurements."

The bill requires that the Secretary of Defense notify House and Senate defense committees 30 days in advance of obligating funds for production contracts under other transaction authority.

In the decision on Oracle's protest of Army's cloud award on behalf of U.S. Transportation Command, which was released with redactions on June 4, GAO General Counsel Thomas H. Armstrong concluded "the Army had no authority to award the [production OTA] here."

GAO found that the solicitation for the prototype, prepared in conjunction with the Defense Innovation Unit Experimental (DIUx), didn't indicate the possibility for a follow-on production award. The decision also points out that the sole-source production OTA was issued despite the fact that the prototype work of moving Transcom apps and data to cloud enclaves had not been completed.

In a June 12 note to clients, the Washington, D.C., law firm Arnold and Porter said the Oracle decision sends a strong signal to defense agencies that GAO will use its authority to review whether agencies are following the law when it comes to choosing OTA over a competitive procurement.

In the case of Oracle's complaint, the attorneys wrote, "the GAO identified specific process flaws and implied that had the agency written its prototype OTA award slightly differently, and waited slightly longer for completion of the prototype project before issuing its follow-on production order, there may not have been a problem from the GAO's perspective."

The report concludes that "OTAs are not a get-out-of-protests-free card."