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
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
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