In the past decade, the Pentagon has increasingly relied on the Other Transaction Authority (OTA) to advance major weapon programs while skirting competition requirements and cost transparency standards. If lawmakers don’t narrow the authority, they risk sleepwalking the American people into a generation of Pentagon boondoggles.

Congress created the OTA in 1958 to provide the newly-established NASA with a flexible tool to pursue “research, development and exploration” in its race to space after the Soviets’ successful Sputnik launch. In the decades since then, lawmakers have dramatically expanded the OTA’s usage and scope, enabling elements of the Pentagon to rely on it not only for research and development, but also for weapons prototyping and production. As a result, Other Transactions have become the predominant approach to military contracting, at great risk to taxpayers.

Under the OTA, contractors are exempt from standard procurement rules specified in the Federal Acquisition Regulation (FAR), including competition standards, cost and pricing data requirements and accounting principles designed to protect the government from unreasonable expenses on military contracts. Put simply, the authority grants contractors the freedom to set prices on military contracts practically unilaterally, simultaneously foreclosing the possibility of government recourse should contractors price gouge the military. 

Read the full article on Breaking Defense.