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The Department of Defense (DOD), also known as the Department of War (DOW), is increasingly using Other Transaction Agreements (OTAs or OTs) as a mechanism for research, development, test & evaluation (RDT&E) and initial production activities. DOD’s OTA spending went from under $1 billion in FY 2015 to $18 billion in FY 2024. Issued in April 2025, Executive Order 14265: Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base, directs DOD to make a number of acquisitions reforms focused on improving speed and flexibility, including prioritizing OTAs and similar vehicles.

OTAs are meant to boost DOD’s ability to acquire innovative technologies, especially from nontraditional defense contractors and small businesses. OTAs, not subject to certain federal acquisition laws and requirements, are more agile contracting vehicles with more flexibility in the award process and contract terms and conditions. There are three types of OTAs: research OTAs, prototype OTAs, and follow-on production OTAs. Most are prototype OTAs, which offer a streamlined method for transitioning into production without further competition. All branches of DOD can use OTAs -. The Army has made the most use of OTAs by far, followed by the Air Force. (Some other federal agencies, such as NSF, have similar other transaction agreement authority.)

DOD can award OTAs to individual organizations (for-profit or non-profit) or to consortia—groups of organizations focused on specific technology areas. The majority are awarded through consortia. DOD awards consortia OTAs and directs the consortia to handle different aspects of the awards process for individual projects. An organization must be a member of the consortium to be eligible for project awards through that consortium. Examples of major DOD consortia include:

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