OTA (Other Transaction Authority)

Other Transaction Authority (OTA) is one of the most powerful tools in government procurement because it essentially allows agencies to break standard rules. Granted by Congress to specific agencies (primarily DoD, DHS, NASA, and NSF), OTA allows government officials to enter into agreements that don't have to follow the Federal Acquisition Regulation, which means they can negotiate flexibly on pricing, terms, intellectual property, and structure.

OTAs are typically used for innovation and prototyping projects where the government wants to work with non-traditional contractors, startups, or academic institutions that would be scared off by traditional FAR contracts. Think of OTA as the government's way of saying, "We want to innovate, and standard procurement rules would get in the way."

Why it matters: If you can get an OTA, you get to negotiate rather than bid. The agreement can be structured to be attractive to your business model. OTAs also tend to move faster than formal procurements and have less burdensome reporting and compliance requirements. The intellectual property terms are more favorable than standard FAR contracts, which is why OTA is attractive to tech companies and startups.

In practice, OTA doesn't mean "no rules"—it means flexible rules negotiated between government and contractor. The agency still has requirements they need met, but you have more flexibility in how you meet them. One misconception is that OTA is only for small businesses or startups; large contractors win OTAs too, especially in defense and innovation initiatives.

OTA is particularly common in the defense space under the "Middle Tier of Acquisition" and rapid prototyping initiatives. If an agency explicitly mentions OTA in a solicitation, that's a signal they're focused on innovation and speed over traditional compliance.