Historical Institutionalism and Defense Public Procurement: The Case of Other Transactions Agreements

Abstract

Since the 1980s, private sector spending on Research and Development (RandD) has outpaced federal RandD spending. For example, while the Department of Defense (DoD) spent $64 billion on RandD in fiscal year 2015, the private sector spent $260 billion. DoD relies on the private sector to develop advanced technologies for defense requirements. However, some innovative businesses are hesitant to work with DoD because of the perceived bureaucracy of the DoD procurement system. Recognizing this problem, in 1989, Congress created a new type of non-procurement agreement for DoD called Other Transactions Agreements (OTs). OTs are excluded from most laws and regulations that govern traditional procurement agreements. OTs can be written to meet the needs of the parties and the project, enabling agreements that resemble commercial contracting. Congress has expanded OT authority, and DoD has issued OT guidance to its employees. But DoD has not used OTs as widely as expected. This is puzzling because commentators find OTs are helpful to DoD and the private sector in reducing the legal and regulatory compliance costs associated with the DoD procurement system. Using qualitative methods, and drawing on the OT and historical institutionalism literature, this study explores institutional factors that may explain why DoD has not more widely used OTs. The study relied on interviews with DoD employees and contractors. OT case studies were used to triangulate the interview findings. Potential causal mechanisms are identified to support future research of the DoD OT program using causal process tracing. The study findings are used to offer policy recommendations to support the wider use of OTs by DoD.