OTHER TRANSACTIONS

Beginning in the early 1990s, the government expanded the use of arrangements other than contracts to obtain certain goods and services. A transaction other than a contract does not require most of the contract clauses that are mandatory for government contracting. The most notable of these are the clauses for compliance with cost accounting standards (CAS), cost allowability rules, and government audit rights. The initial usage of this vehicle was under the Small Business Innovative Research Program.

The goal of the other-transaction (OT) approach was to entice commercial organizations into providing goods and services to the government. Often strictly commercial organizations refuse to accept government contracts because of the excessive administrative and government oversight that accompanies contracts. The use of other transactions has expanded from research to prototype development and beyond. This approach is beneficial to the government because it attracts sellers that would not otherwise deal with the government, and is beneficial to the sellers because it avoids the most negative aspects of contracting with the government.