DoD Seal

Table of Contents

National Performance Review

Report on
Reinventing the Department of Defense
September 1996

  • Other Transactions. The Defense Advanced Research Projects Agency (DARPA) has created a new way to fund hi-tech projects that cuts the costs of such projects in half and dramatically reduces government red tape. Using a special authority from Congress, DARPA has awarded over 100 of these new cost-shared funding agreements, which are called “Other Transactions,” and a move is now underway to expand their use to technology projects throughout DOD.

Other transactions are contractual arrangements that support research and development without using standard procurement contracts, grants, or cooperative agreements. DARPA requested authority for their use and Congress enacted the authority as 10 U.S.C 2371. In 1993, Congress broadened the use of other transactions from the original research and technology development efforts and encouraged DARPA to experiment with using other transactions to carry out military prototype projects that would normally require a procurement contract.

In keeping with the DOD's acquisition reform effort, other transactions do not follow the sometimes inflexible government policies and standards found in the usual government procurement system and the Federal Acquisition Regulations. They are based on commercial practices rather than government standards. Government patent rules, accounting and business practices, for example, are not imposed on participants in other transactions but rather are negotiating points.

The other transactions have attracted firms that traditionally have not performed research for DOD by enabling more flexible terms and conditions than the standard financial management and intellectual property provisions typically found in DOD contracts and grants. Both the DOD and consortia representatives feel that the use of these other transactions has improved information flow and expedited technology development. The use of other transactions has been cited by DOD officials as a means to 1) help reduce the barriers to integrating the defense and civilian sectors of the industrial base, 2) promote new relationships and practices within the defense industry, and 3) allow the government to leverage for defense purposes the private sector’s financial investments in research and development of commercial products and processes. The General Accounting Office released a report indicating that DARPA’s use of the new authority has been successful in achieving those goals.

Through cost sharing, DARPA has reduced the cost of research and technology developments by half or more. Reduced Administrative oversight has driven costs down even further. Accountability of public funds is maintained not only by cost sharing but by crafting agreements in which there is strong incentive for industry to push the sponsored technology to practical application.