FAR vs. OTA: How Other Transaction Agreements Differ
Which rules apply, which agencies can use OTAs, and what changes for the offeror
The Federal Acquisition Regulation (FAR) governs most federal procurement contracts. Other Transaction Authority (OTA) lets certain agencies enter agreements outside the FAR, mainly for research, prototype projects, and in some cases follow-on production. For the Department of Defense, the core authorities are 10 U.S.C. 4021 and 4022.
At a Glance
FAR-based contract
- Governing rules: FAR and agency supplements
- Who can use it: Executive agencies generally
- Typical purpose: Any goods or services
- Terms: Standard provisions and clauses
- Participation: Any responsible offeror
Other transaction agreement
- Governing rules: The authorizing statute and the agreement's own terms
- Who can use it: Agencies with specific statutory authority
- Typical purpose: Research, prototypes, follow-on production
- Terms: Negotiated agreement by agreement
- Participation: Emphasis on nontraditional contractors; DoD prototypes carry participation or cost-share conditions
What Is the FAR?
The FAR is the primary regulation federal agencies use to buy goods and services. It covers competition, solicitation and evaluation, contract types, clauses, and cost principles, supplemented by agency regulations such as the DFARS.
The FAR itself is in the middle of a major rewrite. Under the Revolutionary FAR Overhaul, agencies adopted model deviations in 2025, and formal rulemaking began in 2026 with proposed rules covering the entire regulation.
What Is Other Transaction Authority?
Other transactions are agreements that are not procurement contracts, grants, or cooperative agreements. Agencies may use them only where a statute authorizes them. DoD is the largest user, and several civilian agencies hold their own OT authorities.
For DoD prototype projects, the statute requires at least one of several conditions, such as significant participation by a nontraditional defense contractor or a cost share from the non-government parties. A successful prototype OT can lead to follow-on production without a new competition when the statute's conditions are met.
How OTAs Are Awarded
Many DoD OTs are awarded through consortia. A consortium holds a base agreement with the government, and member companies compete for individual projects through white papers, solution briefs, or prototype proposals. Other OTs are awarded directly by the agency.
Evaluation criteria and submission formats vary by agency and consortium, which makes reading each solicitation's instructions closely especially important.
Weighing an OTA Opportunity
OTAs offer speed and flexibility, and they give agencies access to companies that don't usually pursue traditional government contracts. The tradeoff is less standardization: terms covering intellectual property, payment, and disputes are negotiated for each agreement, with less established precedent than FAR-based contracts provide.
The practical question for a company is whether it is prepared to negotiate those terms and to compete in a format that may look very different from a standard RFP response.
Frequently Asked Questions
Are OTAs subject to the FAR?
No. Other transactions are not governed by the FAR, although an agency may choose to include FAR-like terms in a specific agreement.
What is a consortium OTA?
It is an arrangement in which the government awards a base OT to a consortium, often run by a management organization, and member companies then compete for individual projects under that agreement.
Can a prototype OTA lead to production?
Yes. Under 10 U.S.C. 4022, a successfully completed prototype project can lead to a follow-on production contract or transaction without further competition, provided the statute's conditions are met.