$40m
First USACE Construction OTA Award
Fort Campbell, FY2024
38
Days From Initiation to Award
vs. 120–270 days under FAR
§ 4022
Statutory Authority
No FAR · No J&A Required
SEPT 30
FY2026 Hard Deadline
Last start date: Aug 15, 2026
Section 01
What Is Other Transaction Authority?
Other Transaction Authority (OTA) is a procurement mechanism that allows the Department of Defense to enter into agreements for prototype projects without being bound by the Federal Acquisition Regulation (FAR), the Defense Federal Acquisition Regulation Supplement (DFARS), or the cost accounting standards that govern traditional government contracts. It is not a contract — it is a transaction, negotiated directly between a DoD component and a qualifying contractor.
The authority was originally established to give DoD the flexibility to work with non-traditional defense contractors — companies that would not engage with the government under FAR's prescriptive requirements. Congress has since expanded both the scope of what qualifies as a prototype project and the types of contractors who can participate. The most significant expansion for construction professionals came with the FY2023 NDAA, which clarified that construction and facility renovation projects incorporating emerging technology or innovative approaches qualify as prototype projects under the statute.
OTA is not a loophole or a workaround. It is a Congressionally authorized acquisition mechanism codified at 10 U.S.C. § 4022. Its use is subject to written determinations by a warranted Agreements Officer and oversight by the cognizant DoD component. Used correctly, it is the most powerful legal tool available for obligating construction funds against time-sensitive requirements.
Section 02
The Statute: 10 U.S.C. § 4022
The governing statute is 10 United States Code, Section 4022, titled "Authority of the Department of Defense to carry out certain prototype projects." The statute authorizes the Secretary of Defense, and the secretaries of the military departments, to enter into transactions (other than contracts, cooperative agreements, and grants) for prototype projects that are directly relevant to enhancing the mission effectiveness of military personnel and the supporting platforms, systems, components, or materials proposed to be acquired or developed by the Department of Defense. Three elements are critical for construction practitioners. First, "prototype project" is not limited to technology — it encompasses any project that demonstrates or tests a solution relevant to military mission effectiveness. Second, "directly relevant to enhancing mission effectiveness" covers barracks, facilities, and infrastructure that enable operations. Third, the authority applies to all DoD components, including USACE.
Statutory Text — 10 U.S.C. § 4022(a)
"The Secretary of Defense, in accordance with this section, may enter into transactions (other than contracts, cooperative agreements, and grants) under this chapter for prototype projects that are directly relevant to enhancing the mission effectiveness of military personnel and the supporting platforms, systems, components, or materials proposed to be acquired or developed by the Department of Defense..."
The statute further specifies that at least one of three conditions must be met: (1) there is at least one non-traditional defense contractor participating to a significant extent; (2) all significant participants other than the Federal Government are small businesses or NDCs; or (3) the senior procurement executive determines in writing that exceptional circumstances justify the use of a transaction that provides for innovative business arrangements not feasible under a contract.
Section 03
The Three OTA Methods — and Why Only One Works for FY2026
DoD practice has evolved three distinct execution paths for OTA agreements. Understanding which method applies — and which is viable within FY2026's remaining timeline — is the most critical decision a Contracting Officer will make in this process.
Section 04
The NDC Requirement: Definition, Verification, and Common Misconceptions
The Non-Traditional Defense Contractor (NDC) requirement is the single most misunderstood element of OTA execution. Most Contracting Officers either overestimate its complexity — assuming NDC verification requires extensive legal review — or underestimate its importance, treating it as a checkbox rather than the foundational legal requirement that makes direct award possible.
Statutory Definition — 10 U.S.C. § 3014
"The term 'non-traditional defense contractor' means an entity that is not currently performing and has not performed, for a period of at least one year prior to the date of the relevant transaction, any contract or subcontract for the Department of Defense that is subject to full coverage under the cost accounting standards prescribed pursuant to section 1502 of title 41 and the regulations implementing such section."
In practical terms, a contractor qualifies as an NDC if they have not held a DoD contract subject to full Cost Accounting Standards (CAS) coverage for at least one year prior to the OTA award date. CAS full coverage applies to contracts exceeding $2 million that are not otherwise exempt. Most small and mid-size construction companies — particularly those whose work has been primarily commercial, residential, or in the civilian federal space — have never been subject to CAS full coverage and qualify as NDCs.
The Three-Step NDC Verification Process
Section 05
Case Study: The $40M Fort Campbell Construction OTA
In September 2024, USACE Louisville District executed what Army.mil described as the first construction agreement award in USACE history using Other Transaction Authority. The project — a renovation of Building 4067, a 44,106 square foot VOLAR barracks at Fort Campbell, Kentucky — was awarded September 25, 2024, five days ahead of the fiscal year deadline. The USACE team received the Excellence in Contracting Award — Innovative Team of the Year for this work.
The project was selected in late 2023 as a Congressional pilot program for OTA use in military construction. The facility had persistent mold growth, failed building systems, and spaces that no longer met current Army Barracks Standards. The 101st Airborne Division's soldiers were living in it. The OTA was used specifically because the mold remediation and facility reconfiguration required emerging technology solutions that FAR's prescriptive specifications would have constrained.
The Agreements Officer on the project, April Judd, became the first AO in the USACE Great Lakes and Ohio River Division to receive an unlimited AO warrant. In USACE's own reporting, she noted that the Non-Traditional Defense Contractor selected was a company that "would have never engaged with that project had it been procured using FAR-based methodology."
Section 06
The FY2026 Urgency Window
Federal fiscal year 2026 ends at midnight on September 30, 2026. Any unobligated one-year funds — including Facilities Sustainment, Restoration, and Modernization (SRM) funds, Military Construction (MILCON) funds, and Operations and Maintenance (O&M) funds — that are not awarded by that deadline expire. They do not roll over. They do not get extended. They are gone, and the mission need they were appropriated to address goes unmet for another budget cycle.
The Fort Campbell VOLAR Barracks project was driven by exactly this dynamic. The FY2024 SRM funds were one-year money. The requirement was real and urgent. FAR's minimum 120-day timeline for a $40 million construction procurement made it mathematically impossible to award before expiration. OTA — specifically Method A direct award — was the only legal path to obligation. The agreement was signed September 25, 2024. Five days to spare.
Section 07
Does Your Project Qualify? The Three-Question Test
Not every construction requirement qualifies for OTA. The authority is designed for prototype projects that demonstrate or test solutions relevant to military mission effectiveness, not for routine maintenance or standard construction. The following three questions provide a practical framework for evaluating whether a given requirement has a viable OTA path.
- OTA viability determination for your specific project
- NDC eligibility verification
- Execution timeline and path if OTA is viable
- Answers to your AO's legal and procedural questions
- No obligation — you keep everything discussed