In its recent decision in Air Tractor, Inc., the Government Accountability Office (GAO) held that the Department of Defense (DoD) may, at its own discretion, begin a project with agreements under its prototyping Other Transaction (OT) authority, and award later phases of the same project on a sole source basis under its experimental purchasing authority.
In the decision, GAO discussed distinctions between these avenues, and gave a broad reading to the DoD’s authority to award contracts for experimental work.
The past few years have seen a swell of interest in DoD’s ability to sidestep the Federal Acquisition Regulation (FAR) and use more flexible OT authority to enter into contracts. Thus far, the majority of this interest has centered on DoD’s OT authority to enter into prototype projects, now codified at 10 U.S.C. § 2371b.
One of the most powerful features of DoD’s prototype OT authority is that DoD may award a sole source follow-on production contract for a successful prototype. Congress included some limitations on this authority to award sole source follow-on production contracts at 10 U.S.C. § 2371b(f). For example, in its decision in Oracle America, Inc., GAO confirmed that DoD must comply with all notice and other specific preconditions at the prototyping stage in order to award a sole source follow-on production contract.
However, prototype OT authority is not DoD’s only authority to award sole source contracts. The Competition in Contracting Act (CICA) itself allows for sole source awards in certain circumstances. In DRS Sustainment Systems, GAO held that DoD need not comply with 10 U.S.C. § 2371b(f) to award a sole source production contract where DoD invokes one of CICA’s exceptions to separately justify the sole source award. In addition, under 10 U.S.C. § 2373, DoD has authority to make sole source purchases for items it “considers necessary for experimental or test purposes in the development of the best supplies that are needed for the national defense.”
In Air Tractor, GAO held that DoD properly relied on its “experimental purchasing” authority under 10 U.S.C. § 2373 to purchase a set of full production light attack aircraft for use in “experiments” to determine the best use of such planes in combat support. GAO found that this purchase was acceptable because it met the requirements of § 2373 alone, regardless of the Air Force’s initial use of its § 2371b prototype OT authority to compare various candidate aircraft. GAO confirmed that while it will exercise jurisdiction to ensure agency compliance with various statutory authorities to award non-procurement contracts, GAO will not impose requirements beyond those stated in the statutes. In upholding the Air Force’s acquisition strategy, the Air Tractor decision provides valuable insight as to the broad scope of § 2373 “experimental purchasing” authority.
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