An argument to, in lieu of abolishing the FAR-based system, to use existing authorities to build a new acquisition system—and see which system comes out on top.

There can and should be an alternative to the traditional “costs-too-much, takes-too-long” Department of Defense (DOD) acquisition system. Creating one merely requires DOD to implement existing congressional mandates and promulgate supporting policies. DOD has the authorities, the mandates, and a serious need for a system based on other transaction authority (OTA).

Where the federal government can and should be innovative is in its business arrangements and contracting. To advance science and technology, engage a wider industrial base and, most important, deliver new capabilities at the speed of relevance, the innovation with potentially the greatest impact would be to transform how DOD conducts its business. Allowing an OTA-based acquisition system to compete with the existing system based around the Federal Acquisition Regulation (FAR) will allow DOD to evaluate whether one or the other—or both—should prevail.

The unique and arcane business practices mandated by the traditional system discourage companies from participating in the government marketplace, particularly in DOD’s research and development (R&D) efforts. The defense industrial base is separated from the far broader national industrial base. DOD is failing to engage Fortune 500 companies and industry segment leaders that invest billions of dollars in R&D in a wide variety of technologies that are relevant to defense needs, while at the same time small and medium-size innovative companies are loath to burden themselves with DOD-unique business practices that add expense but no value to the delivered product or service. Tapping into the inventiveness of these companies in R&D efforts is of great advantage to DOD. 

Before going any further, let me clarify—I don’t advocate abolishing FAR-based contracting for executing projects under DOD Instruction 5000.02[1]; instead, I recommend that DOD comply with congressional mandates and implement legal authorities by creating an alternative system based on other transactions (OTs), procurement for experimental purposes,[2] and other flexible business practices. Already, in the National Defense Authorization Act for Fiscal Year 2018,[3] legislators directed DOD to create a preference for using OTs for science and technology, prototyping programs, and procurement for experimental purposes. The argument here is that DOD should take Congress up on its order by creating and operating an OT-based system in parallel with the current one.

The idea of a new approach to weapons systems contracting is not new. It was my personal vision from the very first legislative step that resulted in the enactment of Section 2371 in 1989. As long ago as 1994, the Defense Science Board (DSB) Task Force on Acquisition Reform concluded: “mature jet engines, microelectronics, software, and space systems can and should be procured and supported in a fully commercial manner.”[4] The task force also concluded that “it is feasible to eliminate many of the barriers to adoption of commercial practices without sacrificing the public trust in the spending of public funds.”[5]

In 2009, the DSB Task Force on Fulfillment of Urgent Operational Needs[6] pointed out that speed is countercultural to the traditional system. It recommended the creation of an alternative system and identified some of the characteristics such a system might possess, including use of flexible contracting methodologies like OTs.

The spirit inherent in flexible contracting demands flexible thinking—critical consideration of an entire project. This involves an analysis of needs; exploring and strategizing possible technical, business, and financial approaches; developmental contracting; and a business approach for potential production and sustainment. In the current traditional system, virtually every element just mentioned is executed in isolation—in a stovepipe disconnected from other parts of the system.

According to the FAR, acquisition begins “when agency needs are established” and requirements described.[7] For major systems acquisitions in DOD, the Joint Capabilities Integration Development System (JCIDS)[8] defines requirements. Many would agree with Jarrett Lane and Michelle Johnson, who wrote in their 2018 article, “Failures of Imagination: The Military’s Biggest Acquisition Challenge,” that “under the JCIDS process, [DOD] typically predetermines the solution it seeks, spending far too little time analyzing and truly understanding the problem and the full range of ways to solve it.”[9] In contrast, the OT process starts with “defining the problem, need, or capability gap.”[10] This allows for innovative trade space for a wide-range of solutions, which is the function of an empowered multidisciplinary action team.

At whatever level it operates, the multidisciplinary team must be staffed with the right mix of talent operating cooperatively. Team members are not limited to speaking only as representatives of their organization or discipline but are freed to speak as valued contributors seeking a common goal. As the Office of the Under Secretary of Defense for Acquisition and Sustainment’s “Other Transactions Guide” says:

A small, dedicated team of experienced individuals works best when planning an OT agreement. In addition to the project manager, end user, and warranted [agreements officer], the agency needs to secure the early participation of subject matter experts—such as legal counsel, comptrollers, contract administrative support offices—on the cross-functional team.[11]

Rather than erecting stovepipes and barriers, the government needs to operate collaboratively with science and technology informing the art of the possible and the solutions sets available. Prototyping demonstrates the technical potential and financial implications of an approach or project. Once the government team has made progress in parsing the problem to be solved and potential solution sets, collaboration needs to be expanded to include industry inputs.

Science and technology must incorporate good ideas from all sources. Today, many of the most advanced ideas are in the private sector. Combining DOD needs with commercial advances has many benefits initially in R&D and later in economies of scale and product improvements. A dual-use approach to science and technology should be DOD’s default position, with defense-only solutions being a last resort. R&D contracting needs to be freed from the FAR. The first sentence of the FAR chapter on R&D[12] states that the purpose of contracted R&D is the acquisition of “knowledge,” not what the FAR regulates—which is procurement of “supplies and services.” A dual-use strategy is best accomplished by commercial-like contracting with OTs.

As far back as the 1986 Packard Commission,[13] DOD was enjoined to increase its use of prototyping. Congress has bolstered OT prototype authority with a seamless path to follow-on production. Legislators created “middle-tier acquisition”[14] with rapid prototyping and rapid fielding pathways. This supports the Science Board’s 2009 recommendations. Former Senate Armed Services Committee staffer William Greenwalt has pointed out that middle-tier acquisition is a perfect fit for OT prototype projects.[15] Production after a successful OT prototype project can take place through another OT, a FAR-based contract, or under a contracting method the Secretary of Defense has authority to create.

OTs can be used for upgrades and sustainment as well as weapons systems and other products. The successful Commercial Operations and Support Savings Initiative (COSSI)[16] of the late 1990s and early 2000s provides a model. One characteristic of that program was to encourage collaboration between DOD R&D organizations and buying commands. Collaboration on projects at any stage of the process can be facilitated through the flexibility of OTs. Government laboratories, acquisition organizations, operational commands, and other government agencies can be combined in a single-project OT agreement with private-sector organizations. Collaborations can be vertically or horizontally integrated or take hybrid forms.  

Further, an alternative acquisition system can be based on OTs in conjunction with other authorities. A variety of pathways and potential business arrangements are possible. Enhanced outreach might be provided through use of a partnership intermediary—e.g., an agency of a state or local government or a nonprofit organization engaging academia and industry on behalf of government to accelerate tech transfer and licensing.[17] Prize challenges[18] could also be used to expand the system’s reach to industry, and could either lead to prototype projects with or without follow-on production. There are past and present examples to instruct the team and help achieve project goals. To increase collaboration and better understanding of the problem, solution sets, and goals, the front end of the process needs an alternative to a priori dictates a la JCIDS.

Launching an alternative OT-based acquisition system will require, at minimum, the following actions. In the absence of leadership from the departmental level, many of these policies could be implemented at military service, command, program office, or even installation levels.

  1. Empower personnel with education and training for the execution of OTs and other forms of innovative contracting[19]; implement congressional mandates by creating a preference for the use of OTs and other forms of innovative contracting and business practices.
  2. Establish a dual-use approach as the default policy for science and technology projects, with OTs as the default instrument for execution (including Small Business Innovation Research (SBIR) contract awards).[20]
  3. Stimulate the use of middle-tier acquisition with prototype OTs as the default instrument for execution.
  4. Identify defense industry segments that can be moved to commercial practices with OTs or FAR Part 12–based commercial item acquisition as the default contracting instrument—which will require streamlining regulations governing FAR Part 12. (Here, only DOD possesses the authority to act). 
  5. Last—but critically important—make sure OT action teams at whatever organizational level are:
  • Empowered (including with delegations of authority and broad charters), and
  • Insulated and protected from layers of “just say no” bureaucracy.

Congress has enacted a package of legal authorities that create an innovation platform for reinventing the defense acquisition system and improving collaboration and business arrangements to solve complex critical problems. Connecting the legal authorities with an empowered and goal-oriented workforce is the charge of leadership. It will require finding individuals with creative instincts and critical thinking skills in the acquisition workforce to translate innovation available across national and global industrial sectors into capabilities for national security in a timely and affordable manner.


[1] DOD Instruction 5000.02, “Operation of the Adaptive Acquisition Framework” (January 23, 2020), available at

[2] I.e., the authority granted via 10 USC 2373, “Procurement for Experimental Purposes”; 10 USC 2371, “Research Projects: Transactions Other Than Contracts and Grants”; and 10 USC 2371b, “Authority of the Department of Defense to Carry Out Certain Prototype Projects.”

[3] Pub. L. 115-91, Sec. 867.

[4] “Report of the Defense Science Board Task Force on Defense Acquisition Reform” (Phase II) (August 1994) available at

[5] Ibid.

[6] See “Report of the Defense Science Board Task Force on Fulfillment of Operational Needs” (July 2009), available at

[7] FAR 2.101.

[8] “JCIDS Process Notes,” AcqNotes (February 12, 2020), available at

[9] Jarrett Lane and Michelle Johnson, “Failures of Imagination: The Military’s Biggest Acquisition Challenge,” War on the Rocks (April 3, 2018), available at

[10] Office of the Under Secretary of Defense for Acquisition and Sustainment, “Other Transactions Guide” (November 2018), available at

[11] Ibid.

[12] FAR 35.001.

[13] “A Quest for Excellence: Final Report to the President by the President’s Blue Ribbon Commission on Defense Management” (July 1986), available at

[14] Pub. L. 114-92, Sec. 804.

[15] William Greenwalt, remarks at the Strategic Institute for Innovation in Government Contracting conference, “The Future is Now” (December 6, 2017).

[16] “The Commercial Operations and Support Initiative: Challenges and Solutions for Success” (December 2001), available at

[17] See 10 USC 3715.

[18] See 10 USC 2374a.

[19] See 10 USC 2371g.

[20] See Defense SBIR/STTR Innovation Portal, available at