We have frequently reported on the increased use of a new contract vehicle for research and development and prototype work called Other Transactions.  Such agreements are not subject to FAR provisions, performance or dispute resolutions and as you might expect, the government is attempting to devise terms and conditions to fill this gap.  The first attempt is “Guide on Section 845, 804 Other Transactions for Prototype Contracts” intended to apply only to prototype projects.  Guidance for R&D projects can be found at http://alpha.1mi.org/dodgars .  Areas of interest include:

1.  Pricing/Cost Recovery and Accounting.  Like the FAR, DOD should ensure the amount of the OT is “fair and reasonable”” and permits agreement officers to require whatever data it need to ensure this including commercial pricing data, market data, parametric data or cost information (as a last resort).  The guidance recognizes OTs are often created to attract commercial firms and such firms avoid doing business with the government because their accounting systems do not collect and track contract data required by FAR.  The Guide suggests  OT awardees only need to account for federal funds received and any required cost sharing.

2.  Access to records.  OT agreements should give a government representative direct access to books and records for a period of three years following final payment.

3.  Changes.  If the awardee does not make a significant monetary contribution to the project, the government should have the right to make unilateral changes.

4.  Terminations.  Unlike R&D OT projects that allow awardees to terminate an agreement, awardees of prototype agreements should not have such a right absent a substantial investment.

5.  Disputes.  Though normal government accounting offices or appeals board do not apply to OTs, each agreement should stipulate a means to resolve disputes.

Other topics covered by the guide include management and reporting, patents and technical data rights and property administration and rights.  The guide will be “referenced by OT agreements and not incorporated.

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