Other Transactions are a special type of agreement with industry and academia for a broad range of research and prototyping activities. Other Transactions are not your typical government contract.
In fact, their legal authority classifies them specifically to be something “other than” a traditional contract, grant, or cooperative agreement. That way, OTs have maximum flexibility instead of being tethered to the strict requirements of most government contracting. That flexibility is ideal for cutting-edge research and prototype development.
The Department of Defense has authority for three different types of OTs: (1) research OTs, (2) prototype OTs, and (3) production OTs. You can research the laws supporting these three types of OTs at Title 10 of the United States Code, Section 2371, Section 2371b, and Section 2371b(f), respectively. These three types of OTs represent three stages of initial research, development of a prototype, and eventual production.
Since OTs are not considered contracts, grants, or cooperative agreements, they are not subject to most of the laws and regulations of government contracts. The Federal Acquisition Regulation (FAR) does not apply to OTs. GAO protests of OTs are very rare but GAO can and has reviewed OTs to make sure they comply with statutory requirements. Check out the protests section to see the existing litigation on OTs. Most other government contracting laws do not apply either, such as the Competition in Contracting Act, Bayh-Dole Act, and Contract Disputes Act. OTs also allow a departure from the Cost Accounting Standards of federal contracts.