# Understanding Other Transaction Authority in Military Construction: Flexibility, Framework, and When It Makes Sense
### A Deep Dive into How Federal Agencies Leverage Statutory Flexibility for Facility Projects
Federal facility construction has long relied on standardized procurement frameworks designed for predictability and compliance. But not every project fits neatly into those frameworks. When deadlines are tight, technical demands are high, and scope remains uncertain, agencies need a different approach — one that allows them to adapt in real time while still operating within the boundaries of law.
Enter Other Transaction Authority, a tool embedded in federal statute that offers agencies a path outside traditional acquisition rules without stepping outside the law itself.
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## The Statutory Foundation
Under **10 U.S.C. Section 2808a**, the “Secretary concerned” is empowered to enter into transactions for facility construction and repair projects. This authority was established to give the Department of Defense a mechanism for acquiring construction work with fewer procedural constraints than those imposed by the Federal Acquisition Regulation.
However, this flexibility is not a free pass. The statute mandates that the secretary notify the congressional defense committees at least 14 days before entering into any transaction. It also subjects the use of this authority to the requirements laid out in **10 U.S.C. Section 2853**, which imposes its own set of oversight and accountability measures.
The key takeaway is that OTA exists within a legal framework. Exempting a transaction from the Federal Acquisition Regulation does not exempt it from statutory controls. It shifts the rules, not removes them entirely.
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## The Progressive Design-Build Model in Practice
One of the most prominent implementations of OTA in military construction comes from the **United States Army Corps of Engineers (USACE)**. Rather than using OTA as a standalone acquisition method, USACE has paired it with a collaborative procurement strategy known as **Progressive Design-Build (PDB)**.
Under this model, the agency selects a design-builder based on qualifications rather than price. The selected team then works collaboratively with government stakeholders to develop project scope, refine designs, and establish a guaranteed maximum price before major construction begins. This process unfolds in distinct phases:
– **Qualifications-Based Selection**: The government evaluates design-build teams on their expertise, experience, and proposed approach.
– **Pitch Presentations**: Candidate teams present their vision and methodology for the project.
– **Open-Book Cost Sharing**: Both parties share cost data transparently to inform pricing.
– **Phase 1 Design Services**: The team develops preliminary and detailed design work, addressing unknowns and technical challenges.
– **Two-Phase Price Negotiation**: After design maturity is achieved, the team and the government negotiate a fixed price for construction.
These steps represent USACE’s chosen implementation strategy — they are not requirements written into the statute itself. Agencies operating under the same statutory authority could design their own procedures.
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## A Real-World Example: The FORGE Program
In July 2026, **Conti Federal Services** was awarded a **$169.1 million OTA** to execute the **Joint Base Lewis-McChord FORGE (Facilities, Operations, Readiness, Growth and Experience) Facilities Modernization Program**. The program encompasses 19 individual projects spanning operational facilities, energy resilience systems, training infrastructure, and housing modernization efforts.
This award demonstrates how OTA can be structured at scale. Rather than running 19 separate procurements, the government bundled multiple projects under a single transaction. The approach leverages collaborative problem-solving and iterative design to compress timelines that would typically stretch across years in a conventional acquisition pathway.
Whether the schedule compression delivers measurable results will become clearer as the contract progresses. The structure itself, however, is designed with acceleration as a core objective.
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## Where OTA Shines: Complex, Mission-Critical Projects
Projects with tight deadlines and complicated technical requirements stand to benefit the most from combining OTA flexibility with a collaborative delivery model. When a project involves:
– **Scope uncertainty** — where end-user needs are still evolving or technical feasibility has not been fully validated
– **Site complexity** — where unknown conditions could derail a fixed-scope plan
– **Schedule pressure** — where delays carry operational consequences
– **Integration challenges** — where design and construction must be tightly coordinated
…the combination of OTA and Progressive Design-Build creates a framework that allows the government to adjust course without sacrificing accountability. Early contractor involvement surfaces problems before construction dollars are committed. Progressive pricing means the government only locks in a firm price once the design has reached sufficient maturity, reducing the incentive for contractors to build large contingencies into their estimates.
For firms operating outside the traditional federal contractor ecosystem, OTA can also lower barriers to entry. Because the agreements are not bound by the full suite of FAR compliance requirements and standardized contract terms, companies specializing in advanced construction techniques, sustainability integration, or emerging technologies may find OTA-based opportunities more accessible. While the Defense Department has broader experience attracting nontraditional contractors through other transaction agreements in different contexts, the specific track record for facility construction under this authority is still developing.
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## Where OTA Falls Short: Routine, Well-Defined Work
Flexibility has a cost — and that cost becomes harder to justify when the work itself is straightforward.
For routine, repetitive facility projects where scope is mature, technical complexity is low, and requirements are unlikely to shift, the extra effort involved in qualifications evaluation, collaborative design sessions, open-book cost analysis, guaranteed maximum price development, and agreement administration may offer little return compared to conventional procurement.
Standardized, well-defined work is best suited to **competitive fixed-price design-bid-build** procurement. In that model, the government writes clear requirements, multiple contractors submit pricing, and the award goes to the most competitive offer. The path is predictable, the competition is broad, and the transaction costs remain manageable.
OTA delivers its greatest value when the work is genuinely complicated and evolving. Using it for repetitive tasks is like hiring a specialist surgeon for a routine checkup — technically capable, but an inefficient allocation of resources and budget.
The FORGE program illustrates a critical principle: **bundling matters**. Running one competition, one design cycle, and one price negotiation across 19 projects amortizes the overhead across a substantial program. That same overhead would be unsustainable for a single $2 million repair. Scale and complexity must align for OTA-based approaches to make economic sense.
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## Small Business Participation: A Different Landscape
Traditional small-business procurement mechanisms — such as the Rule of Two and FAR set-aside structures — do not apply to OTA agreements in the same way they apply to standard procurement contracts. There is no formal requirement for a competitive range populated by small businesses, no mandatory subcontracting plan in the FAR sense, and no structured set-aside process.
Under USACE’s PDB model, a single design-builder is chosen during the qualifications phase to lead both design and preconstruction services. That same team typically continues into the construction phase if price negotiations succeed. This means firms outside the selected team have fewer late-stage entry points compared to traditional models where design and construction are bid separately.
That said, USACE does acknowledge that small business participation remains a consideration. The agency can set participation goals, encourage teaming arrangements between large and small firms during the collaborative process, and negotiate subcontracting shares as part of the agreement. The mechanisms are different, but the intent to support small business involvement can still be present — it simply operates outside the conventional regulatory architecture.
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## The Off-Ramp: Managing Risk When Collaboration Fails
One of the most important features of the USACE model is the built-in off-ramp. If the government and the selected design-builder cannot negotiate a fair and reasonable price within the available budget during Phase 1, USACE has the authority to end the transaction.
By that point, however, the team has typically refined the scope, identified key risks, and developed design documentation far enough to support an alternative acquisition path. The government retains design deliverables and data rights secured through the OTA agreement, which can then be used to pursue construction separately through traditional procurement methods.
This safety valve is critical. It ensures that collaborative acquisition does not become a sunk-cost trap. If the partnership is not working economically, the government can pivot without losing the progress already made.
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## Dispute Resolution: Building Your Own Framework
OTA agreements do not automatically fall under the jurisdiction of the Contract Disputes Act or the standard FAR dispute resolution procedures. Instead, the parties are responsible for crafting their own framework for handling performance disagreements.
Each agreement should clearly define:
– How claims are raised and documented
– Who has authority to decide disputes
– How disputes escalate through organizational levels
– What remedies are available to each party
The framework must still comply with generally applicable federal law, but the specific procedural rules are a matter of negotiation between the government and the contractor.
It is also important to distinguish **performance disputes** from **bid protests**. Bid protests challenging OTA awards involve separate jurisdictional considerations. Recent decisions by the Court of Federal Claims, including *Raytheon Company v. United States*, have found that courts can assert jurisdiction when an OTA transaction has a sufficient connection to a procurement or proposed procurement and is intended to provide the government with a direct benefit. However, those cases involved different OTA authorities and different factual contexts. Contractors considering a protest of a construction OTA should carefully evaluate both the transaction terms and the award’s relationship to any procurement activity before relying on existing precedent.
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## Frequently Asked Questions (FAQ)
**Q: Is Other Transaction Authority the same as a traditional federal contract?**
A: No. OTA agreements are legally binding transactions governed by their specific statutory authority, not by the Federal Acquisition Regulation. They operate under different rules and procedures, though they remain subject to federal law and congressional oversight requirements.
**Q: Can any federal agency use OTA for construction projects?**
A: The authority under 10 U.S.C. Section 2808a is specifically available to the “Secretary concerned,” which applies to the Department of Defense and its component agencies. Other OTA authorities exist under different statutes and may apply to different agencies.
**Q: Does OTA eliminate competition?**
A: Not necessarily. While OTA agreements are not subject to the full competition requirements of FAR, agencies like USACE still conduct qualifications-based selection, pitch presentations, and negotiations that involve evaluating multiple candidates. However, the competition model differs from traditional procurement.
**Q: Are small businesses excluded from OTA projects?**
A: No. Formal small-business procurement mechanisms do not apply in the same way, but agencies can still establish small-business participation goals, encourage teaming arrangements, and negotiate subcontracting opportunities. The pathways are different, but inclusion is still possible.
**Q: What happens if the government and contractor cannot agree on a price?**
A: Under USACE’s PDB model, the government has an off-ramp that allows it to terminate the transaction if a fair and reasonable price cannot be reached within budget. Design work completed up to that point can then support a different acquisition approach.
**Q: Can OTA awards be protested?**
A: Yes, but jurisdictional questions remain complex. Courts have found jurisdiction in certain cases involving other transaction awards, but the legal landscape is still evolving. Contractors should consult legal counsel and assess the specific transaction’s connection to procurement activity.
**Q: Is the FORGE program representative of how OTA is used across the Department of Defense?**
A: The FORGE program is one prominent example, but it represents USACE’s specific implementation model. Other agencies and commands may use OTA differently, with different delivery methods and administrative procedures.
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## Conclusion
Other Transaction Authority represents a powerful tool in the federal government’s acquisition arsenal — but like any tool, its value depends entirely on how and when it is used.
For complex, mission-critical facility projects with uncertain scope, tight schedules, and demanding technical requirements, pairing OTA with a collaborative delivery model like Progressive Design-Build can reduce acquisition delays, surface risks early, and deliver better outcomes through iterative problem-solving.
For routine, well-defined, and repetitive work, conventional procurement methods remain more efficient. The added transaction costs of qualifications evaluation, collaborative design, and open-book pricing do not pay off when the work is predictable and the requirements are clear.
The decision framework is straightforward: match the acquisition method to the nature of the project. Use flexibility where uncertainty demands it. Use traditional approaches where stability allows them. And understand that OTA’s greatest strategic advantage may lie not in when to use it, but in knowing when not to.
As agencies continue to explore the boundaries of this statutory authority, the lessons from early implementations — particularly USACE’s PDB-with-OTA model — will shape how the federal government thinks about construction delivery for decades to come.
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