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Going beyond the prototype phase: a snapshot of OTA Production Contracts

Published: August 02, 2022

USAFARMYDEFENSEDefense & AerospaceInformation TechnologyUSMCNAVYOther Transaction Agreements (OTAs)Research & DevelopmentSBIR/STTRUSSF

This article explores at a high level the production contracts that have been issued thus far under the § 4022 (previously § 2371b) OTA authority.

Background:

The production mechanism permits the award of a sole source follow-on contract to a vendor(s) who provided or demonstrated a successful prototype for a given requirement. Other conditions are required to be met as well.

The underlying goal is to provide a means to bridge the 'R&D valley of death', to get needed capabilities fielded more quickly, and to provide an alternative acquisition tool to the longstanding but lengthy MDAP process.

Adoption of the § 4022 authority has been growing steadily over the past several years, as evidenced by the volume of prototype awards that have been issued.

But to what extent are projects transitioning from the prototype stage to the production stage?

We will look to explore this via several different charts: the volume and value, which vendors are winning production contracts, and what types of capabilities are reaching the production phase.

How many production contracts have been issued so far and what is their total value? 

Point of clarification: The production contracts noted above are ones that are readily identifiable; this is not an exhaustive list. Put another way, at least 93 OTA production contracts have been issued since 2017, totaling about $28B in anticipated value.

There are few key points to consider when evaluating the universe of production contracts:

- Production agreements can be issued as FAR-based contracts, and are not reported as a follow-on production OTA. One example is the Rapid Analysis of Threat Exposure contract.

- Prototype OTAs may result in or be part of larger procurements, with no expectation of a follow-on production agreement. Examples include USAFs EITaaS and VADR program or the 5G OTAs out of the National Spectrum Consortium.

- For consortia-based OTAs, the reporting as of now is mixed in terms of the ability to isolate for production contracts. An example is the Space Enterprise Consortium (or SpEC) where projects are likely to proceed to subsequent stages, but where reporting does not currently include granularity at this level.

Which vendors are winning production contracts?

Production OTAs that are $100M+

Production OTAs between $45M and $99M

What types of technologies / capabilities are moving to the fielding?

A survey of the awards suggests there are a few categories that stand-out as recurring areas of investment:

- Military hardware (e.g. aircraft, night vision goggles, unmanned systems)
- Cybersecurity and access solutions
- Cloud operations
- IT services
- Satellite systems (when including SpEC)
- AI applications (e.g. predictive maintenance, nuclear monitoring)

To explore production prime contract further, see the following search within GovWin: Production OTAs. To explore production OTA orders, see the following search within GovWin: Production OTA Orders. Differences in number from the above are expected as newer data gets populated.