FAA takes an unusual route to spur innovation

The Federal Aviation Administration is considering using a rarely invoked procurement practice in an effort to draw the industry partners it needs to develop new avionic technologies. Called other transaction authority (OTA), the approach creates government/industry partnerships under which companies that develop new products can keep the intellectual property rights to them. Aside from the Defense Department, agencies rarely use OTA. Many civilian agencies don’t have the authority to use it, which limits the government’s effectiveness in creating new products. The FAA is seeking to develop aircraft navigation systems that are compatible with its satellite-based system.

A request for information released this month seeks avionic technologies that can interpret data collected from the FAA’s new satellite navigation system, referred to as the Wide Area Augmentation System. WAAS is a system of ground stations that improve the accuracy of the signal from Global Positioning System satellites to provide pilots with more precise position data. Ted Urda, the FAA’s government/industry partnership technical officer for the WAAS program, said the RFI does not obligate the agency to enter into any new agreements.

“The intent of the RFI is to solicit information from the targeted market to determine interest in partnering with the government to achieve these objectives,” Urda said. It marks the beginning of a new effort that does not affect existing contracts, he added.

Advocates argue for expanding OTA
Lawmakers created the OTA approach to permit select agencies, including DOD and the Homeland Security Department, to negotiate agreements for research or prototype-building projects with nontraditional vendors. The authority fully protects contractors’ intellectual property rights, an important consideration for companies developing new products for an agency. Stan Soloway, president of the Professional Services Council, said OTA could be a valuable tool only if lawmakers extend the authority to cover development and production.

It also allows companies that are not traditionally government contractors to work directly with an agency rather than as subcontractors to other companies. However, OTA’s advantages have not been great enough to entice many such companies into partnerships, procurement experts say. The real incentive for a nontraditional vendor to enter into an OTA agreement is the chance to develop something it can commercialize.

“I think there is value in trying to push [OTAs] more,” Soloway said, adding that defense and intelligence agencies should use the agreement more frequently. “But I think it’s going to be limited. The key is how do you get around this research so that it gets to market.”

Other industry analysts predict that few agencies will follow DOD or the FAA because OTA rules, while fruitful if properly executed, require agency contracting officials to carefully word their agreements so they can provide transparency to Congress and conduct a fair procurement of any technologies the contract produces.

“Generally, it’s a pro situation, but these situations have to be managed very carefully,” said Ray Bjorklund, senior vice president and chief knowledge officer at Federal Sources, a market research firm. “That’s why DOD, especially, has a lot of extra policies put on top of the decision-making process.”

Several levels of DOD contracting officers are involved in approving OTA deals, and reviews sometimes go up to senior procurement executives, he said.

Bjorklund cautioned that federal contracting officers who use OTA must understand products’ life cycles to ensure that they acquire any resulting prototypes fairly. If they enter into an OTA agreement and end up buying products that other contractors were already capable of producing, those contractors could have grounds for complaint, he said.

Such hurdles have limited OTA’s ultimate effectiveness, business analysts say. “It’s an authority that has to be carefully managed [because] it’s an authority that can really go awry,” Bjorklund said.

Soloway added that the limitations are unfortunate because the OTA model could enable the government to fulfill its long-term technology needs.

“There’s a whole world of the industry that will work with the government but won’t do [research and development] with the government,” he said.