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Release No: 521-95
September 22, 1995


The Department of Defense's Advanced Research Projects Agency (ARPA) has successfully pioneered the use of technology development "agreements" or "other transactions" in recent years, and today announced that it had signed 100 of them since 1990.

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

In keeping with the DoD's effort for acquisition reform, "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.

ARPA has found that the use of "other transactions" encourages firms that normally refuse to conduct research and development for the government to become participants in Defense projects. Many companies are reluctant to adopt the government accounting and purchasing systems necessary to enter into government contracts because of the added cost burden they impose. Companies that adopt the government-required systems sometimes find themselves non-competitive in commercial markets, leading to the perpetuation of the separate Defense and commercial industrial bases. ARPA's "other transaction" authority is one way DoD can leverage the best of commercial technology for the use of the military, even if that technology is found in companies that do not normally do business with DoD. ARPA has been working with the Military Services to encourage the use of these agreements throughout the DoD. Many of the efforts sponsored under ARPA's dual use initiatives use "other transactions," and Service acquisition personnel involved in managing these efforts are gaining valuable experience in their use.

The growth in ARPA's use of "other transactions" has been dramatic. In Fiscal Years 1990 to 1993, ARPA entered into 19 "other transactions," making "other transactions" over eight percent of the number and 26 percent of the value of the financial instruments used by ARPA during that period. In Fiscal Years 1994 and 1995, ARPA entered into 81 "other transactions," which constituted 39 percent of the number and 72 percent of the total value of financial instruments awarded.

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