Other Transactions Authority (OTA) and other procurement methods outside the Federal Acquisition Regulation (FAR) are taking on an increasingly prominent role in defense contracting, including defense construction contracting. We have extensively covered the Federal Government’s emphasis on reforming the Department of War’s (DOW) acquisition process by prioritizing OTA, including important takeaways for any contractor pursuing OTA, like the need to assess unfamiliar solicitation terms, negotiate key protections, and account for compliance and performance risks that may differ from risks associated with traditional FAR-based contracts. We have also discussed the Fiscal Year 2026 National Defense Authorization Act (FY26 NDAA) priorities as they relate to OTA and non-FAR-based procurements, such as Commercial Solutions Openings (CSOs). Critically, the FY26 NDAA also removed the previous limit of two prototype construction OTAs per military service per year by enacting 10 U.S.C. § 2808a, which opens the door for DOW to use OTA for military construction (MILCON) on a larger scale. In this installment, we are doing a deep dive into 10 U.S.C. § 2808a and the potential for broader opportunities to compete for defense construction and repair work through faster, more flexible OTA procedures.
From Limited Pilot Program to Expanded Construction Authority
Before 10 U.S.C. § 2808a, MILCON contractors had only a limited ability to perform under OTAs via a pilot program under 10 U.S.C. § 4022(i), which permitted each service to use OTAs to prototype the design, development, or demonstration of new construction technologies, provided each service participated in no more than two projects per year and the aggregate value of all OTAs under the pilot program did not exceed $300 million.
The FY26 NDAA greatly expands the pilot program by enacting 10 U.S.C. § 2808a, “Facility construction or repair: transactions other than contracts and grants.” The section states: “Subject to the requirements of section 2853 of this title, the Secretary concerned may enter into transactions (other than contracts, cooperative agreements, or grants) to carry out repair and construction projects for facilities, including the planning, design, engineering, prototyping, piloting, and execution of such repair and construction projects.” (Emphasis added).
What the Expanded Authority Means for Contractors
- Broad authority will create more opportunities. MILCON operations, maintenance, research and development, testing, planning, design, engineering, prototyping, piloting, and final execution are all permitted to proceed as OTAs under the new authority, whereas the previous pilot program under 10 U.S.C. § 4022(i) was limited to only “prototype projects” that are directly relevant to enhancing the ability of [DOW] to prototype the design, development, or demonstration of new construction techniques or technologies to improve military installations or facilities.” (Emphasis added).
- Innovation encouraged but not required. 10 U.S.C. 2808a creates an independent, MILCON-focused OTA that corresponds with DOW’s prototype authority under 10 U.S.C. § 4022. Its reference to “prototyping” is construction-specific and will still encompass innovations (e.g., 3D printing) but, unlike the pilot program, it is not limited to new construction techniques or technologies. 10 U.S.C. § 2808a may be used for any facility repair or construction project.
- Implementation will vary. Although the new authority no longer imposes a dollar cap or limits the number of OTA projects the military may undertake, other constraints A defense agency proceeding under 10 U.S.C. § 2808a must inform Congress of the project title, description, location, estimated cost, source of funding, contractor, and rationale for using the section rather than standard MILCON procedures under 10 U.S.C. Subtitle A, Part IV, Chapter 169, Subchapter I. Like any MILCON procurement, an OTA under 10 U.S.C. § 2808a is subject to available funding, applicable fiscal law, DOW policy, and 10 U.S.C. § 2853. Contractors should not expect programs to navigate these constraints or implement 10 U.S.C. § 2808a uniformly.
- Successful projects may qualify for noncompetitive follow-on production awards. 10 U.S.C. 2808a permits a follow-on production contract or OTA without further competition when the original transaction used competitive procedures and produced a complete and usable facility or facility improvement. The process is very similar to 10 U.S.C. § 4022(f), in that an initial OTA can progress into a larger program. Accordingly, negotiating favorable follow-on language with clear standards for deliverables and performance metrics should be front of mind for MILCON contractors entering into an OTA under 10 U.S.C. § 2808a.
Key Takeaway
10 U.S.C. § 2808a gives DOW a powerful tool to move military construction and repair projects beyond the traditional FAR framework, creating meaningful opportunities for both established MILCON contractors and nontraditional firms. But flexibility does not eliminate risk: congressional notice is required, implementation will vary across programs, and each transaction may allocate compliance, performance, and financial obligations differently. Contractors should therefore position their projects as suitable for an OTA—for example, by offering innovation from nontraditional performers, meeting critical and urgent warfighter needs, or advancing modernization—and carefully evaluate solicitation and agreement terms, particularly the standards for successful completion and eligibility for follow-on awards. Those that engage early and negotiate with the full project lifecycle in mind—from establishing an OTA in the first place to securing a follow-on award—will be best positioned to capitalize on this expanded authority.
If you have questions about Other Transactions Authority or government contracts in general, please contact Cy Alba, Josie Farinelli, Krissy Crallé, or another member of PilieroMazza’s Government Contracts practice group.
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