prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 1.



Report 2: The Department of Defense (DOD) obligates more than $300 billion annually to pay for goods and services (including research and development)  Most of these acquisitions are governed by numerous statutes and regulations found in Title 10 of the United States Code, the Federal Acquisition Regulation (FAR), and the Defense Federal Acquisition Regulation Supplement (DFARS)  DOD can also enter into certain transactions without triggering most of the standard acquisition statutes and regulations by using other transaction (OT) authorities  In recent years, Congress has expanded these authorities and DOD is increasingly using OTs for research, prototyping, and production  This report examines (1) how OTs work, (2) why they were established, (3) potential benefits and risks of using OTs, and (4) whether there are data available against which to measure their effectiveness  Appendix A provides a legislative history of DOD's other transaction authorities  On October 4, 1957, the Soviet Union triggered a space race with the United States when it successfully launched Sputnik I into orbit, becoming the first nation to send a man-made satellite into space  Congress, concerned that the United States was falling behind in space, held a series of hearings on an "emergency" effort to respond to the Soviet launch of Sputnik  At the same time, a bill was introduced in the Senate to create an agency with the means to quickly and efficiently develop a national space program  These efforts led to passage of the National Aeronautics and Space Act of 1958 (Space Act, P L  85-568) in July 1958, which established the National Aeronautics and Space Administration (NASA)  In an effort to give the new agency "the necessary freedom to carry on research, development, and exploration     to insure the full development of these peaceful and defense uses without unnecessary delay," the Space Act granted NASA broad authority to "enter into and perform such contracts, leases, cooperative agreements, or other transactions as may be necessary" to accomplish its mission of research and exploration (emphasis added)  Congress extended different variations of OT authorities to other select agencies, granting the authority to DOD in the FY1990 & 1991 National Defense Authorization Act (NDAA, P L  101-189 )  For an analysis of which non-DOD agencies can use OTs and how the authorities differ by agency, see Appendix B   Other transactions are legally binding contracts that are generally exempt from federal procurement laws and regulations such as the Competition in Contracting Act and the Federal Acquisition Regulation  In contrast, traditional procurement contracts must adhere to the procurement rules set forth in statute and regulation  Generally, DOD can use other transaction authorities for three purposes: 1  conduct research, 2  develop prototypes, or 3  contract for follow-on production of a successful prototype project  DOD's other transaction authorities are found in two sections of law: 10 U   S   C   2371 grants DOD the authority to use other transactions to carry out basic, applied, and advanced research projects  DOD regulations treat these projects as financial assistance instruments, not as contracts  10 U   S   C   2371b permits the use of other transactions to conduct prototype projects and follow-on production  OTs can only be used for prototypes if one of the following applies: at least one nontraditional defense contractor significantly participating in the project; all significant participants are small businesses or nontraditional defense contractors; at least one-third of the total cost of the prototype project is provided by nongovernment participants; or the senior procurement acquisition official provides in writing an explanation of the exceptional circumstances justifying an OT  Follow-on production can only be conducted when the underlying prototype OT was competitively awarded, and the prototype project was successfully completed  10 U   S   C   2373 , while generally not considered an o ther t ransaction authority , allows DOD to buy certain items and designs for experimental or test purposes without having to adhere to the procurement laws set forth in Chapter 137 of Title 10  OT authorities grant government officials the flexibility to include, amend, or exclude contract clauses and requirements that are mandatory in traditional procurements (e g , termination clauses, payments, audit requirements, intellectual property, and contract disputes)  OTs can be structured in numerous ways, including a direct relationship between a single government agency and a single provider; joint ventures; partnerships; multiple agencies joining together to fund an agreement encompassing multiple providers; or through a consortium  One common application of OTs is to forge an agreement with a consortium  A consortium is an organized group— it can consist of nonprofits, academic institutions, or contractors— focusing on a specific technology area  Generally, a lead entity coordinates and directs a consortium's activities  Consortia have consisted of a handful to as many as 1,000 members  Consortia can act to facilitate multiparty agreements whereby each member is akin to its own co-prime contractor with the government  In such a case, the government articulates the need or problem it is trying to solve, and the various members of the consortium can submit white papers for consideration  In this scenario, OTs can serve as an efficient way for all members to send unsolicited technology suggestions and solutions to solve a defined challenge  Consortia can also be used to develop an ecosystem of entities working together on a project, whereby members of a consortium pool resources and collaborate with DOD  A number of analysts argue that using consortia in this way gives the federal government a unique ability to leverage and pool the technological expertise and innovation of multiple entities in a particular sector, thereby strengthening and advancing a sector of the industrial base that may have defense applications  Seen like this, OTs can be considered a mechanism to promote defense technology and the defense industrial base, with the potential added benefit of advancing the domestic commercial technology base  Some analysts, however, have argued that many of today's consortia do not operate as collaborative organizations, but function more like managed multiple award task order contracts  These analysts argue that DOD should seek to foster more collaboration in consortia  Some analysts have argued that consortia reduce competition, since only members of the consortium under contract can participate in the project or submit white papers for consideration and funding  Others counter that even when an OT is signed with a single consortium, competition could be increased, since all members of the consortium are notified of the opportunity (expanding the pool of potential competitors aware of the opportunity), and the OT will foster internal competition among consortium members  OTs are not procurement contracts and thus are exempt from numerous procurement statutes and regulations, including the statutes in Chapter 137 of Title 10 ( Procurement Generally )  They are, however, bound by standard contract and other select laws and regulations  Examples of laws that do not apply include the Truth in Negotiations Act, Competition in Contracting Act, Cost Accounting Standards, Contract Disputes Act, and select intellectual property statutes such as the Bayh-Dole Act  A number of these laws are aimed at oversight and protecting the interests of taxpayers  While the Competition in Contracting Act does not apply, 10 U S C  2371b requires that research and prototype projects be competed "to the maximum extent practicable " DOD policy mirrors the statutory language, stating "[C]ompetition is a good thing  It helps keep prices low, quality high, and gives the government leverage in negotiations " To the extent that OTs induce nontraditional contractors to work with DOD, OTs can be viewed as promoting competition among (and within) entities that would not normally compete for DOD contracts  However, the lack of explicitly defined competition requirements could result in less competition for certain OTs  OTs are not free from all legislative and regulatory requirements  Generally, statutes and regulations that are not procurement-specific apply, including the Trade Secrets Act, (18 U S C  1905); the Economic Espionage Act (18 U S C  1831-39); elements of the Freedom of Information Act (5 U S C  552); and fiscal and property laws, such as the Anti-deficiency Act (31 U S C  1341); and the Tucker Act (28 U S C  1491)  As can be seen by these citations, many of these statutes are not located in the procurement titles of Title 10 or Title 41  The Government Accountability Office (GAO) has held that OTs are not procurement contracts, and therefore it will not review protests of such an award or solicitation  However, GAO will review "a timely protest that an agency is improperly using its other transaction authority " OT contracts can be protested to the Court of Federal Claims, although there is debate as to the extent of the court's jurisdiction  The limited protest jurisdiction of GAO is appealing to many government procurement officials  One senior Air Force official reportedly stated that OTs are "just so much faster and so much more attuned to getting something that we want today and not have to spend a couple of years going through a protest, going through this huge process to get something we wanted two years ago " It generally does not take that long to go through a GAO protest  By statute, GAO must issue an opinion on a protest within 100 days of the protest being filed, and 70% of cases are resolved in less than 60 days  While exempt from GAO bid protests, OTs are not exempt from GAO audits  Generally, OTs that include government payments exceeding $5 million are required to include a clause granting GAO the right to examine the records of any related party  However, this requirement has a number of limitations  Used properly, OTs can provide significant benefits to DOD  Along with the potential benefits come certain risks  Some of the potential benefits to OTs highlighted by analysts and officials include providing a mechanism to pool R&D resources with industry to facilitate development of, and obtain "the latest state-of-the-art, dual use technologies"; attracting nontraditional contractors with promising technological capabilities to work with DOD; lowering costs by eliminating requirements associated with the Federal Acquisition Regulations (i e , costs associated with required reporting and administrative activities) or sharing costs with industry; and "speeding up" the acquisition process  A number of experts argue that OTs provide a unique mechanism for DOD to invest in, and influence the direction of, technology development even when the end result is not directly tied to a military capability  As one observer noted, the real benefit to DOD may be that [t]he R&D has been accomplished and is available to the technical and scientific communities  As a result, a subsequent phase of research can begin or a particular approach can be demonstrated to be of no value  Some argue that OTs have particular import today  Drawing parallels to the space race, these analysts argue that DOD is engaged in a defense technology race  According to the 809 Panel: DoD is now in a period during which the time a particular technology is a dominant force on the battlefield is getting increasingly shorter, disruptive technologies are emerging at a faster pace, and these technologies are more widely dispersed…In a world with rapidly changing technology, time is a valuable resource that must not be taken for granted  It is difficult to predict what capabilities DoD will need 5 to 10 years from now—biotechnology, nanotechnology, artificial intelligence, robotics, or a new technology area not even known today  It also is unclear on what plane the military will conduct warfare—traditional battlefields, space, cyberspace, or some other domain  The current acquisition system lacks the agility needed to adapt to new paradigms  These analysts argue that OTs and similar rapid acquisition authorities are critical for DOD to compete in such a fast-paced global environment where technology and innovation are no longer driven by DOD, but by industry and foreign competitors  In 1960, the United States accounted for 69% of global R&D, with U S  defense-related R&D alone accounting for more than one-third of global R&D  The federal government funded approximately twice as much R&D as U S  business  However, from 1960 to 2016, the U S  share of global R&D fell to 28%, and the federal government's share of total U S  R&D fell from 65% to 24%, while business's share more than doubled from 33% to 67%  As a result of these global, national, and federal trends, federal defense R&D's share of total global R&D fell to 3 7% in 2016  Given the shift in the global R&D landscape, and the diminishing influence of DOD as a market mover, analysts suggest that the current procurement system is overburdened by regulations and bureaucratic processes that slow the system, increase costs, and dissuade companies from doing business with DOD  In contrast, OTs are viewed as faster, attracting companies that would otherwise forgo working with DOD and promoting broader investment in critical defense capabilities  As one analyst wrote: OTAs are currently the only way to remove the barriers necessary to get these nontraditional sources of innovation to do business with the military  Properly constructed, OTAs help speed up the process, respect a company's IP through negotiation rather than regulatory fiat, and result in contracting under commercial terms and conditions  Congress also appears to have shifted its view on appropriate use of other transactions  In the FY1999 conference report, Congress stated that [OT] authority should only be used in the exceptional cases where it can be clearly demonstrated that a normal contract or grant will not allow sufficient access to affordable technologies  By comparison, in the FY2018 NDAA, Congress expanded OT authorities and stated the following: In the execution of science and technology and prototyping programs, the Secretary of Defense shall establish a preference, to be applied in circumstances determined appropriate by the Secretary, for using transactions other than contracts, cooperative agreements, and grants  Along with the potential benefits come potential risks, including that of diminished oversight and exemption from laws and regulations designed to protect government and taxpayer interests  Some analysts, while acknowledging the important role of OTs, raise concerns over transparency and how these agreements are being employed  As one industry official stated, OTs are a contracting method, not a substitute for good acquisition practices  Discussing a particular OT for cloud services that was protested and ultimately cancelled by DOD, one observer argued The cloud contract provides a teachable moment for procurement reform-minded officials in the Pentagon and Capitol Hill  The problem was not with the OTA mechanism, which remains an essential element of reforming Pentagon procurement  Rather, the problem was with a lack of transparency with how the mechanism was employed  Scott Amey, general counsel of the Project on Government Oversight, cautioned We have to seriously consider how we are using [OTs]; whether we are using them as intended, whether we are getting the goods and services that we really want and need, whether we are getting them at the best cost and process, and we are using this procurement vehicle as a way to just circumvent the rules and have contractors not have the administration and oversight they need to hold them accountable  I'm just afraid this is going to result in a lot of waste, fraud, and abuse in the future  Congress has expressed repeated concerns that OTs could be used to circumvent congressional intent  In the FY1999 NDAA, the committees emphasized that the authority should only be used in a limited manner  The conference report stated the following: The conferees are especially concerned that such authority not be used to circumvent the appropriate management controls in the standard acquisition and budgeting process  Congress echoed a similar concern in the FY2019 NDAA  According to the House report: The committee also urges the Department to reiterate through established guidelines that OTA is not a means for circumventing appropriate use of the Federal Acquisition Regulations, and that full and open competition should be used to the maximum extent possible to maintain a sense of integrity, fairness, and credibility in the Federal Procurement process  Other transactions are also exempt from many of the socioeconomic policies put in place by Congress to promote public policies, including some Buy America requirements  Some analysts have raised concerns that OTs are a way to circumvent many of the public policies enshrined in the acquisition process  A number of analysts and officials have raised concerns that if DOD uses OTs in ways not intended by Congress—or is perceived to abuse the authority—Congress could clamp down on the authority  Under Secretary of the Army Ryan McCarthy reportedly stated that the military department is "trying to be very judicious about this authority so we don't lose it " Some analysts argue that Congress is already clamping down on the use of OTs  These analysts point to language in the FY2019 NDAA and FY2019 appropriations legislation ( P L  115-245 ) requiring additional reporting and notification (see Appendix A )  Such notification and reporting requirements, however, are not new; when Congress expanded OT authorities in the past, reporting and notification requirements were commonly included  The reporting requirements may also be a result of congressional frustration with a lack of transparency and data on how DOD uses OTs  DOD lacks authoritative data that can be used to assess OT effectiveness and better understand broader trends associated with these agreements  The most frequently cited source for such data is the Federal Procurement Data System-Next Generation (FPDS-NG), which is the primary source for tracking data on contract obligations, including other transactions for prototypes and follow-on production  FPDS-NG is configured to track data on cost-sharing, other transaction award type, and prevalence of nontraditional contractors  Obligations connected to OTs for research are tracked by the Defense Assistance Awards Data System, which is primarily used to track grants and cooperative agreements  This bifurcation of how OT data are tracked makes it more difficult to get a consolidated view of OT data  According to DOD, all OT data will be reported through FPDS-NG starting in late 2019  The procurement data in FPDS-NG are not fully reliable  There are quality issues relating to accuracy, completeness, and timeliness of data  CRS reviewed FPDS-NG data for prototype OT agreements signed or modified between FY2015 and FY2017 and found similar data inconsistencies  DOD officials acknowledge that they do not have sufficiently reliable data upon which to conduct analysis on the use of OTs and are taking steps to try to improve the data  The analyses below reflect CRS's effort to analyze DOD's use of other transaction authority based on the best available data  According to FPDS-NG, in FY2017, DOD obligated $2 1 billion—and received $360 million in cost-share contributions—on prototype other transaction agreements, representing less than 1% of DOD's total FY2017 contract obligations (approximately $320 billion)  Despite the small percentage of obligations, OTs are growing quickly and are expected to continue to grow at a rapid pace  From FY2013 to FY2017, the number of new prototype agreements increased from 12 to 94, an increase of over 650% (see Table 1 )  DOD's Defense Innovation Unit (DIU, formerly known as the Defense Innovation Unit Experimental, or DIUx) was involved with approximately half of the prototype agreements executed in 2017  DOD officials have stated their intent to further increase the department's use of OTs  Officials say that this increase is due to Congress expanding the statutory authority  The Army executed more than 66% of the prototype OT agreements between FY2013 and FY2017, often on behalf of other military departments and components (see Table 2 )  Army Contracting Command-New Jersey at Picatinny Arsenal executes many of these agreements  DIU currently uses Picatinny Arsenal to execute all of its other transaction agreements  A number of private sector companies do not pursue federal government contracts because they are unwilling to forfeit intellectual property rights or adhere to some of the procurement regulations  One of the goals of OTs is to expand the defense marketplace by creating a mechanism for access to technologies and services of companies that would not otherwise work with DOD, particularly startups and companies developing innovative technology  As one industry representative stated: Because they are "outside" the FAR, OT agreements do not require such cumbersome oversight and audit requirements such as those imposed by the Truth in Negotiations Act, cost and pricing data or an expensive Cost Accounting System (CAS) qualified financial system  CAS compliant financial systems can cost a company millions of dollars to implement and maintain — and are therefore a significant, if not potentially fatal, barrier to government market entry for startups and small, innovative companies  These requirements tend to reinforce the "legacy advantage" of large traditional contractors, who can afford to hire and staff these requirements with large staffs of accountants and lawyers  A number of nontraditional companies told CRS that they are more likely to work with DOD because of the department's other transaction authorities  Despite these claims, some observers question whether OTs are effectively bringing nontraditional contractors into the defense marketplace  A DOD Inspector General report examining other transactions from FY1994 to FY2001 found that OTs did not attract significant numbers of nontraditional defense contractors to do business with DOD  The report found that of the 209 prototype agreements examined, traditional defense contractors received 95% of the $5 7 billion in funds awarded  A recent analysis of FPDS-NG data by Federal News Network had similar findings  According to the report, from FY2015 to FY2017, while nontraditional defense contractors were awarded most of the new OTs (66% vs  33% for traditional defense contractors), the dollar value of the OTs favored traditional contractors ($20 8 billion vs  $7 4 billion for nontraditional contractors)  Some observers have questioned the accuracy of the data published by Federal News Network  According to Charlie McBride, president of Consortium Management Group (which manages two consortia working with DOD through OTs), 88% of the total dollar value of awards to CMG Group has gone to nontraditional prime contractors, and nontraditional entities have participated in the remaining 12%  This debate highlights the lack of authoritative data on OTs  The currently available data may not accurately reflect the extent to which nontraditional contractors are engaged in OT agreements  FPDS-NG does not collect data regarding subcontractors or consortia composition, making it difficult to determine the nature and extent to which nontraditional defense contractors and entities may be working under OT agreements with DOD directly or as subcontractors  When Congress extended OT authority to DOD, it authorized inserting a clause requiring a person or entity to make payments to DOD as a condition of receiving support under the agreement  Such funds were to be merged into an account dedicated to support DARPA advanced research projects  The intent of this provision was to permit DARPA to "recoup the fruits of such arrangements, when there is a 'dual use' potential for commercial application" and reinvest the funds to develop other technologies  In addition to the recoupment authority, DOD can share costs with other parties under an OT  Using this approach, the amount of each party's share is negotiated and incorporated into the agreement  Congress believed that OTs and cooperative agreements were ideal vehicles for promoting DOD-industry collaboration in developing dual-use technologies  For example, the FY1992 & 1993 NDAA ( P L  102-190 ) authorized DOD to enter into cooperative and other transaction agreements to develop critical dual-use technologies as set forth in the Defense Critical Technologies Plan  According to the Senate report:     the United States tends to underinvest in dual-use technologies  National security requirements alone often do not justify major DOD support, and market prospects alone often appear to be too long-term or high risk to justify US industry carrying the entire development burden     The committee encourages use of cooperative agreements and other transactions in lieu of grants or contracts     The provision would require that at least 50 percent of funding over the life of a partnership derive from non-federal sources but would allow for a smaller industry share at the start  In the 1990s, some DARPA OTs required participants to share costs because the types of work completed generally involved R&D that was mutually beneficial to government needs and industry commercial goals  In certain instances, present-day OTs have cost-sharing requirements that foster collaborative research  Some analysts believe that DOD is not always realizing all the benefits that OTs have to offer, such as sufficiently leveraging private capital or forming true consortia of multiple parties pooling resources  Some of these analysts believe that DOD does not sufficiently use consortia to leverage private investment through the pursuit of collaborative, mutually beneficial, dual-use technologies  Some observers argue that as the legislation on OTs has evolved, the cost-sharing provision for prototype projects has come to create an unfair playing field biased against traditional defense contractors  For prototype projects, traditional contractors generally are required to assume one-third of costs whereas nontraditional defense contractors and small businesses generally do not have to cost share  From a fairness perspective, these observers argue that traditional contractors should not have a mandatory cost share  These observers also point out that some nontraditional defense contractors are companies with billions of dollars of revenue that should not be granted a competitive cost advantage  Putting traditional defense contractors at a competitive disadvantage could deny DOD access to those companies with the most experience working on defense products, potentially depriving the military of access to leading defense-related research and technology  Other observers argue that the cost share as currently structured is appropriate: traditional defense contractors hold a significant competitive edge in their understanding of, and have the systems in place to manage, traditional contracts  In contrast, nontraditional and small businesses, which generally cannot compete with the traditional defense contractors, need the exemption from the cost-share requirement to be able to work with DOD  These observers also argue that traditional contractors are awarded the majority of dollars obligated to OTs, proving how difficult it is for nontraditional suppliers to break into the defense marketplace  Additionally, traditional contractors could avoid the cost-sharing requirement by teaming with a nontraditional contractor  DOD has not effectively tracked data on cost sharing  A 2017 report to Congress indicated that in FY2016 DOD obligated $1 billion for prototype agreements and received $68 million in cost-share contributions  A CRS review found numerous concerns with the data underlying the report, and with DOD's analytical conclusions  See Appendix C for further discussion  A number of analysts and industry officials have raised concerns that DOD could use OTs to avoid competitions, as OTs are exempt from the Competition in Contracting Act  According to statute, follow-on production using other transaction authority can only be awarded if the underlying R&D agreement was competed  In addition, 10 U S C  2371b states that "to the maximum extent practicable" OTs must be competed  Determining whether OTs are being used to circumvent competition requires a two-step analysis: 1  Are OTs competed less often that traditional contracts? 2  Is there a benefit to these OTs being competed? Available FPDS-NG data suggest that DOD is broadly complying with 10 U S C  2371b's competition mandate  Between FY2013 and FY2017, approximately 89% of all new OT prototype agreements were competed in some fashion  Many observers and analysts believe that OT agreements can be executed substantially faster, sometimes in a matter of weeks, compared to the months or years it typically takes to execute traditional contracts  Based in part on this belief, some officials and analysts are touting OTs as a new model for conducting acquisitions and the answer to many of the problems in defense acquisition  These analysts argue that in a world of increasingly fast technology development, DOD acquisitions must go faster or risk being left behind  Many acquisition professionals argue that OT contracts are not inherently faster than traditional contracting; instead, they are executed faster because they are not encumbered by the reviews, protests, and bureaucratic layers that have been overlaid on traditional contracting  According to these officials, OTs take just as long as traditional contracts if the same execution and oversight processes are applied  And because all terms are negotiable, complex negotiations could make OTs take longer to execute than traditional contracts that have required, nonnegotiable conditions  The Other Transactions Guide states The OT award process will not always be faster than the traditional procurement processes and sometimes can be as long or longer  The speed of award is tied to many factors, many of which are internal to the organization  DOD has not tracked data on the relative time it takes to execute OTs vs  traditional contracts, making it impossible to objectively assess these claims  Analysts and officials generally agree that the workforce plays a critical role in determining the success or failure of an acquisition  Because there are fewer predefined requirements, OTs can be more difficult to negotiate than traditional contracts, putting DOD at greater risk of not getting what it wants at a reasonable price  The complexity and difficulty of negotiations is particularly high when there are intellectual property/patent rights issues, as is the case with most OTs  Given these challenges, OTs often require more experienced and capable government representatives to ensure implementation of agreements that are in the government's best interest  Some analysts question the extent to which the workforce is sufficiently trained and equipped to negotiate OTs  In response to this concern, in the FY2018 NDAA, Congress required workforce education and training for OTs, and required DOD to establish a cadre of intellectual property experts to advise, assist, and provide resources to program offices that are developing intellectual property strategies for contracts and agreements (see Appendix A )  DOD officials acknowledge that more training and education is required  Given the complexity of OTs and the limited extent to which they are used, some analysts and industry officials suggested that there may be a benefit to establishing a centralized office within DOD responsible for executing or overseeing all other transaction agreements  Such a structure could help ensure that those members of the acquisition workforce engaged in other transactions are sufficiently experienced, trained, and qualified  A number of analysts have argued that DOD should take steps to improve its use of OTs  Many of these analysts have suggested that data are not consistently and accurately tracked, regulations and guidance on when and how to use OTs are vague or insufficient, and the workforce is not sufficiently prepared to effectively use OTs  A number of officials have acknowledged these shortcomings and DOD is reportedly taking steps to address them  For example, in December 2018, DOD issued an updated Other Transactions Guide , a comprehensive guide containing best practices, case studies, and a clarification of myths related to other transaction authorities  In addition, Defense Acquisition University developed new course materials addressing OTs and is working to expand its offerings of relevant training and classes  However, numerous acquisition officials question whether it is possible, or even desirable, to try to quickly implement training aimed at preparing the thousands of DOD acquisition officials to execute OTs  Some of these officials have suggested it might be appropriate to only allow a limited and vetted number of acquisition professionals to be OT agreements officers  Some argue that OTs are just one "tool in the tool box," appropriate for only specific types of contracts, and should not be used to avoid the statutory and regulatory framework or to try to accelerate the process just for the sake of speed  Others have suggested that OTs should be used to cut through bureaucracy, speed up the acquisition process, avoid regulations and bid protests, and perhaps eventually supplant the regular FAR-based contracting process  Given the benefits and risks associated with OTs, questions for Congress include the following: 1  To what extent and in what circumstances do the potential benefits of OTs in terms of cost, schedule, and added capabilities outweigh concerns over potential fraud, waste, abuse, diminished oversight, and other public policy objectives? 2  Should OT authorities be extended further, curtailed, or maintained? The FY2019 NDAA required DOD to submit a report annually through 2021, summarizing DOD's use of OTs, including organizations involved; number of transactions; amounts of payments; and purpose, description, and status of projects  The NDAA also required the Defense Innovation Unit to submit a report to Congress, to include the number of traditional and nontraditional defense contractors with DOD contracts or other transactions resulting directly from the unit's initiatives  The conference report for the FY2019 defense appropriations bill included language expressing the conferees' "[concern] with the lack of transparency surrounding the employment of OTA, particularly for follow-on production " The conferees directed DOD to provide quarterly reports to the House and Senate appropriations committees listing each active OT, and to include additional information for each agreement  The conferees also directed GAO to review DOD's use of OTs to determine whether the "employment of this authority conforms to applicable statutes and guidelines, to include the identification of any potential conflicts " GAO was also required to report on the extent to which OTs have been used since FY2016  The multitude of reporting requirements, and the questionable reliability of the available data, raise a number of questions that Congress may wish to explore, such as the following: 1  To what extent, if any, should the current reporting requirements be consolidated to create a more streamlined and consistent flow of information to Congress? 2  What specific data does Congress need in these reports to effectively conduct oversight? For example, what percentage of research OTs result in prototype projects and follow-on production? 3  To what extent are the data sufficiently reliable, and will such data be easily retrievable in the future, to allow Congress to conduct effective, timely, and ongoing oversight? If the data are not sufficiently reliable or accessible in the future, what other data collection and tracking methods could Congress mandate to ensure ongoing access to reliable data? 4  How are OTs being used? Where and when in the acquisition lifecycle is the authority being used? To what extent is the requirements process being circumvented when DOD awards an OT follow-on production contract for a major system? One analyst suggested that "no efficiency is lost if only the most able personnel are authorized to procure and administer" OT agreements and further argued that expanding the use of OTs would increase the training costs by expanding the number of people who can "weave complex agreements in a relatively unstructured environment " Congress may consider whether DOD should establish an acquisition innovation lab or center of excellence responsible for overseeing, executing, and approving all OTs across the department  Such a lab or center could be staffed and supported by a cadre of professionals with experience across the acquisition lifecycle who have a willingness and ability to embrace new ideas and rethink existing practices  Alternatively, such labs or centers could be established in the military departments  Having centers in each organization could allow for consideration of the different missions and business approaches of the departments and help educate the workforce on a more systematic basis  Proponents argue that such an office would help ensure that only experienced and capable officials, with the appropriate training, use OT authorities  Such an office could also help protect against layering internal DOD policies and bureaucracies onto OTs by placing OTs outside of the traditional bureaucratic acquisition process  Proponents could further argue that such an office could better propagate best practices and ensure that OTs are used appropriately and are consistent with guidance and legislation  Having a single office responsible for executing or approving all OTs could also help ensure more timely and accurate information, giving Congress more visibility into DOD's use of other transaction authorities  To the extent that a single, high-level official is responsible for managing and overseeing all OTs, Congress might wish to consider repealing or modifying existing statutory approval requirements  If such an office was able to provide timely and accurate information, Congress might also consider some of the current reporting requirements unnecessary, and may choose to repeal some of the reporting requirements  Opponents of such a proposal argue that centralizing OTs would have the opposite effect, increasing bureaucracy by adding yet another office within DOD  Opponents also argue that such an office could make it more time-consuming to get a project underway and may discourage program offices from attempting or suggesting OTs  Some also argue that a single office may not have the resources to execute and approve agreements in a timely manner, and would inhibit spreading expertise on how to execute OT agreements more broadly across the acquisition workforce  Even proponents who might in theory support establishing such an office could raise significant concerns regarding how such an office would function in practice  A number of alternative options could be pursued to address concerns raised by opponents of establishing a centralized office  Some of these alternative options include the following: Granting such an office primary, but not exclusive, authority to execute OTs  For example, agreement officers specifically authorized to do so could execute OTs, with the centralized office conducting a peer review  Under this construct, the office could also be charged with providing information and expertise/consulting services on the use of OTs to program offices contemplating using the authorities  Establishing centers within each military department, with a designated office in OSD serving a coordinating function (with nondelegable approval authority residing in the military department office designated for OTs)  Creating the office as a pilot program for three years, to help DOD manage OTs until such time as the workforce becomes more experienced and proficient in using these agreements  Appendix A  Legislative History Other transaction authority first appeared in the National Aeronautics and Space Act of 1958  Since then, Congress has extended OT authorities to 11 federal agencies and a number of other federal offices (see Appendix B for information on other federal entities with similar authorities)  This appendix traces the legislative history of OT authorities and select related statutes applicable to DOD  To read the full text of the three statutory provisions related to OTs (10 U S C  2371, 2371b, and 2373), see Appendix D   National Aeronautics and Space Act of 1958 (P L  85-568) Creation of Other Transaction Authority On July 29, 1958 President Dwight D  Eisenhower signed into law the National Aeronautics and Space Act (P L  85-568), which established the National Aeronautics and Space Administration (NASA)  The purpose of the act included the expansion of human knowledge, preservation of the role of the United States as a leader in space science and technology, and pursuing the most effective utilization of the scientific and engineering resources of the United States  Section 203(b)(5) of the Space Act provided NASA the authority (emphasis added) to enter into and perform such contracts, leases, cooperative agreements, or other transactions as may be necessary in the conduct of its work and on such terms as it may deem appropriate, with any instrumentality of the United States     or with any person, firm, association, corporation, or educational institution  To the maximum extent practicable and consistent with the accomplishments of the purpose of this Act, such contracts, leases, agreements, and other transactions shall be allocated by the Administrator in a manner which will enable small-business concerns to participate equitably and proportionately in the conduct of the work of the Administration  Intellectual Property Rights The Space Act specifically addressed NASA's "property rights in inventions " Section 305 stated that any invention made in the performance of any work under any contract is the exclusive property of the United States "unless the Administrator waives all or any part of the rights " This was true even when the person who created the invention "was not employed or assigned to perform research, development, or exploratory work, but the invention is nevertheless related to the contract" and was made during working hours, or with a contribution of the government  The act granted the Administrator wide latitude to "waive all or any part of the rights of the United States under this section" if doing so was deemed to be in the best interests of the United States  When such rights were waived, NASA retained an irrevocable, nonexclusive, nontransferable royalty-free license by or on behalf of the United States  National Defense Authorization Act for FY1990 & FY1991 ( P L  101-189 ) The FY1990 & FY1991 NDAA granted DARPA temporary authority to enter into "cooperative agreements and other transactions" for the purpose of conducting advanced research projects  The statute clarified that OTs should only be used when "the use of standard contracts or grants is not feasible or appropriate " Congress restricted funding for OTs and cooperative agreements to $25 million of appropriated funds for FY1990 and FY1991, and set the authority to expire on September 30, 1991  Cost Sharing The FY1990 & FY1991 NDAA permitted OTs (or cooperative agreements) to include a clause requiring a person or entity to make payments to DOD as a condition of receiving support under the agreement  Such funds were to be merged into an account dedicated to supporting DARPA advanced research projects using cooperative agreements and other transactions  The act required, to the extent practicable, that funds provided by the government not exceed the total amount provided by the other parties to the project  According to the Senate report, one of the intents of the cost-sharing provision was to permit DARPA to "recoup the fruits of such arrangements, when there is a 'dual use' potential for commercial application" and to reinvest the funds to develop other technologies  Reporting Requirements The FY1990 & FY1991 NDAA required DOD to submit an annual report on the use of OTs and cooperative agreements, to include a description of each agreement and the technologies involved, the potential military and commercial utility of the technology, the reasons a contract or grant was not feasible to support the research, and the amount of payments, if any, received by the federal government under the agreement  National Defense Authorization Act for FY1991 ( P L  101-510 ) Section 244 increased the funds authorized for cooperative agreements and OTs from $25 million to $50 million  However, no such funding was appropriated  Reporting and Notification Requirements The conference report required DOD to submit to Congress a report listing the cooperative agreements and consortia intended to be used in FY1991-1992  The conference report also required DOD to provide the armed services and appropriations committees 30 days' notice prior to DOD signing a cooperative agreement or agreement with a consortia under OT authority  The Senate report focused on consortia as a method to pool resources, share research among numerous participants, and promote critical dual-use technology  Department of Defense Appropriations Act, 1992 ( P L  102-172 ) Limitations on the Use of OTs Section 8113A of P L  102-172 placed temporary limitations on the use of agreements undertaken pursuant to 10 U S C  2371: Section 8113A limited the use of OTs and cooperative agreements exclusively to DARPA (to the exclusion of the rest of DOD) for FY1992  Section 8113A limited DARPA to obligating or expending no more than $37 5 million in FY1992 for cooperative agreements or OTs undertaken pursuant to 10 U S C  2371  Section 8113A further established that no more than $75 million could be obligated or expended by DARPA in FY1992 for DOD dual-use critical technology partnerships  National Defense Authorization Act for FY1992 & FY1993 ( P L  102-190 ) Expanded Authority Section 826 extended other transaction authority to the military departments, and established separate fund accounts in each department for cost sharing  Section 826 also repealed the sunset for cooperative agreements and OTs, making the authorities permanent  Section 821 authorized DOD to enter into cooperative and other transaction agreements to develop critical dual-use technologies as set forth in the Defense Critical Technologies Plan  According to the Senate report   
Report 2:  States must use this information when setting actuarially sound capitation rates  Through contracts with MCOs, states must also require MCOs to report specific data, information, and documentation  In addition, the MCO’s chief executive officer or authorized representative must certify the accuracy and completeness of the reported data, information, and documentation  States must enroll MCO providers that are not otherwise enrolled with the state to provide services to enrollees in Medicaid FFS, and revalidate the enrollment at least once every 5 years  Initially this requirement was to start for MCO contracts beginning on July 1, 2018  Subsequently enacted legislation codified this requirement in statute and moved the implementation to January 1, 2018  It is too early to know if these regulations will assure better oversight of MCO payments to providers and the data used to set future capitation rates  The above program integrity requirements only went into effect recently—for contracts starting on or after July 1, 2017, and January 1, 2018  In addition, CMS issued a notice in June 2017 stating that the agency will use its enforcement discretion to assist states that are unable to implement new requirements by the required compliance date  Also, CMS has delayed issuance of implementing guidance for certain provisions until the agency completes its review, a step that may further delay states’ implementation  The agency has designated Medicaid managed care for “deregulatory action” and plans to propose a new rule, but has not indicated which of these provisions, if any, would be revised  Focused Program Integrity Reviews  In fiscal year 2014, CMS implemented its Focused Program Integrity Reviews in order to target high-risk program integrity areas in each state, including managed care  As we previously reported, these focused reviews are narrower in scope than the prior reviews conducted by CMS, but they still involve on-site visits to states  In its focused reviews of managed care, CMS found that several states had incomplete oversight of MCO payments to providers, even though the agency relies on states to verify reported MCO overpayments and to ensure the overpayments are excluded from the data used to set capitation rates  In the 27 focused reviews of managed care from 2014 to 2017, CMS found that MCOs in 17 states reported fewer overpayments to their state Medicaid agencies than CMS would expect  For example, MCOs in at least 5 states reported that overpayments were less than 0 1 percent of their total managed care expenditures; while CMS noted in 1 focused review that overpayments typically equal 1 to 10 percent of total expenditures in managed care  CMS also found that 5 of the 27 states did not verify that MCOs excluded overpayments from these data, and 1 state did not exclude overpayments from the capitation rate setting  This is consistent with our March 2017 report in which we noted that CMS commonly found that MCOs reported low amounts of recovered overpayments and conducted few reviews to identify overpayments  Also, officials from three of the five states we interviewed for that report said the focused reviews gave them leverage in dealing with MCOs or led MCOs to focus more on program integrity  We also reported that CMS officials recommended states take steps to improve their oversight of MCOs, based on the focused review findings  The findings from CMS’s focused reviews of managed care also highlight the need for greater federal oversight of states  Without these reviews, it is unclear if states would independently identify MCOs’ reporting of overpayments or work to strengthen MCO reporting  Yet, CMS has not yet published the focused reviews of managed care in 13 states, and it may only conduct a focused review in a state once every three or more years  Given CMS’s timeline for the focused reviews, it may take years to determine if corrective actions result in improved program integrity in services delivered through managed care  Collaborative audits  CMS has expanded the federal-state collaborative audits beyond FFS, and has begun to engage states to participate in collaborative audits of MCOs and providers under contract to MCOs  As a part of the collaborative audit process, the state volunteers to jointly develop the audit processes the federal contractors follow  CMS officials told us that federal contractors have completed 14 collaborative audits of providers under contract to MCOs in three states—Arizona, the District of Columbia, and Tennessee  Only the audit of Trusted Healthcare, an MCO in the District of Columbia, has been published  That audit identified $129,000 in overpayments in a sample of MCO payments to providers, which, if generalized to all of the MCO’s payments over 6 months, would equate to over $4 million in overpayments  According to CMS, three additional states—Louisiana, Nebraska, and New Hampshire—have shown interest in collaborative audits of their MCOs, although such audits require states to prepare data files for the federal contractor and commit staff time  In our March 2017 report, we found that states’ participation in FFS collaborative audits varied and some states reported barriers to their participation  Expanding collaborative audits in managed care will require commitment from and coordination with states  State monitoring of overpayments in managed care  States are required to report overpayments they have identified and recouped along with state expenditures on a quarterly basis  However, based on the responses of the program integrity officials in 13 of the 16 states we contacted, most officials were unable to define the magnitude of overpayments in their managed care programs, which may signify a need for greater federal oversight or coordination  Specifically, officials in 7 of the 13 states could not or did not identify the share of total reported Medicaid overpayments that occurred in managed care  In 11 of the 13 states, officials responded that they did not directly monitor MCO payments to providers  Of those 11 states, officials in 4 said they depend on MCOs to report overpayments and exclude the overpayments from the data used to set capitation rates  As long as states are not taking action to identify overpayments in managed care, they cannot be assured that they are accurately paying MCOs for medically necessary services provided to enrollees  Federal internal control standards call for agency management to identify, analyze, and respond to risks  CMS has taken some steps to identify, analyze, and respond to risks through its regulations, Focused Program Integrity Reviews, and collaborative audits  However, key CMS and state oversight efforts fall short of mitigating the limitations of the PERM estimates of improper payments for managed care, because they do not ensure the identification and reporting of overpayments to providers and unallowable MCO costs  Without addressing these key risks, CMS and states cannot ensure the integrity of Medicaid managed care programs  The 0 3 percent improper payment rate for Medicaid managed care, as measured by the PERM, is significantly lower than the improper payment rate of 12 9 percent for Medicaid FFS  However, this difference does not signal better oversight; rather, it represents differences in the review criteria between FFS and managed care, which result in a less complete accounting for the program integrity risks in managed care  The PERM does not account for key program integrity risks in Medicaid managed care: specifically, unidentified overpayments and unallowable costs  One federal investigation of an MCO operating in nine states resulted in a settlement of $137 5 million to resolve allegations of false claims that were not captured in the national Medicaid improper payment rate estimate  Further, CMS found that MCOs and states do not provide sufficient oversight in Medicaid managed care to address the risks that are not accounted for in the PERM, findings that are reinforced by our reports on Medicaid managed care program integrity  CMS has taken steps to improve its oversight of Medicaid managed care, yet these efforts fall short of ensuring that the agency and states will be able to identify and address overpayments to providers and unallowable MCO costs  Without better measurement of program risks—particularly as expenditures for Medicaid managed care continue to grow—CMS cannot be certain that the low improper payment rate for managed care, as measured by the PERM, accurately reflects lower risks in managed care  The Administrator of CMS should consider and take steps to mitigate the program risks that are not measured in the PERM, such as overpayments and unallowable costs; such an effort could include actions such as revising the PERM methodology or focusing additional audit resources on managed care  (Recommendation 1) We provided a draft of this report to the Department of Health and Human Services (HHS) for comment  In its written comments, HHS concurred with our recommendation, and indicated that it will review regulatory authority and audit resources to determine the best way to account for Medicaid program risks that are not accounted for in the PERM  However, HHS stated that the PERM is not intended to measure all Medicaid program integrity risks, and utilizing the PERM measurement in that way would be a misunderstanding and misuse of the reported rate  HHS also commented that a review of payments from MCOs to providers is outside the scope of IPIA  In addition, HHS asserted that including such a review would diminish the value of PERM reporting—because it would require significant assumptions about the amount of federal share in MCO payments to providers  Further, HHS maintained that such a review also would result in a measurement that was not comparable to other programs or agencies, which would diminish the value of government- wide improper payment rate reporting  We acknowledge that the current PERM methodology has been approved by OMB  However, we maintain that the PERM likely underestimates program integrity risks in Medicaid managed care  To ensure the appropriate targeting of program integrity activities, CMS needs better information about these risks  Given the size of the Medicaid program, its vulnerability to improper payments, and the growth in managed care, it is critical to have a full accounting of program integrity risks in managed care in order to best ensure the integrity of the whole Medicaid program  In its written comments, HHS also summarized several activities it uses to oversee and support states’ Medicaid program integrity efforts, including state program integrity reviews; collaborative audits conducted by federal contractors; Medicaid Integrity Institute training for state employees; and the Medicaid Provider Enrollment Compendium  HHS also provided technical comments, which we incorporated as appropriate  HHS’s comments are reprinted in appendix II  As agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date  At that time, we will send copies to the Secretary of Health and Human Services, the Administrator of CMS, appropriate congressional committees, and other interested parties  In addition, the report will be available at no charge on the GAO website at http://www gao gov  If you or your staff members have any questions about this report, please contact me at (202) 512-7114 or at yocomc@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff that made key contributions to this report are listed in appendix III  We reviewed 16 federal and state audits and 11 notices of investigations of Medicaid managed care organizations (MCO) and providers issued from January 2012 to September 2017  As the findings below show, the audits and investigations represent a limited number of reviews that, in many cases, focused on individual states and individual providers or MCOs within that state  Given the limited scope and number of states reviewed, the amount of the overpayments and unallowable costs occurring nationwide is unknown  These audits and investigations show cases of MCO overpayments to providers or unallowable costs, which are not accounted for by the Centers for Medicare & Medicaid Services’ Payment Error Rate Measurement (PERM) ; errors in capitated payments (e g , capitated payments made for deceased individuals), which are accounted for in the PERM; and gaps in managed care oversight  When reporting overpayments and unallowable costs identified in the audits and investigations, we only include amounts specifically attributed to MCOs in our total  This total does not include the following: overpayments and unallowable costs identified in those audits and investigations that did not distinguish between the amounts attributable to MCOs, Medicaid fee-for-service, or Medicare; overpayments and unallowable costs identified in criminal proceedings that are not yet resolved; and errors in capitated payments, as those payments would be reviewed by the PERM  As a result, the total amount of overpayments and unallowable costs and capitated payment errors in this appendix exceed what we report  In addition to the contact named above, Leslie V  Gordon (Assistant Director), Pauline Adams (Analyst-in-Charge), Erika Huber, and Drew Long made key contributions to this report  Also contributing were Muriel Brown and Jennifer Whitworth 

ground_truth: This report examines the Small Business Administration's (SBA's) appropriations (new budget authority, minus rescissions and sequestration) over time, focusing on developments and trends since FY2000. It also provides total available funding (which includes carryover from the prior fiscal year, carryover into the next fiscal year, account transfers, rescissions, and sequestration) and, for entrepreneurial development noncredit programs, actual and anticipated expenditures for comparative purposes. SBA appropriations, as a whole, have varied significantly from year to year since FY2000 and across all three of the agency's major spending categories: disaster assistance, business loan credit subsidies, and "other programs," a category that includes salaries and expenses, business loan administration, the Office of Inspector General, the Office of Advocacy, and entrepreneurial development programs. Overall, the SBA's appropriations have ranged from a high of $2.359 billion in FY2018 to a low of $571.8 million in FY2007. Much of this volatility is due to significant variation in appropriations for disaster assistance, which ranged from a high of $1.7 billion in FY2006 to a low of $0 in FY2009. This variation can be attributed primarily to supplemental appropriations provided to address disaster needs arising from the impact of major hurricanes, such as Hurricanes Katrina and Sandy, and more recently, Hurricanes Harvey, Irma, and Maria. The SBA's appropriations for business loan credit subsidies have also varied since FY2000, ranging from a high of $319.7 million in FY2013 ($337.3 million before sequestration and rescission) to a low of $1.3 million in FY2006 and FY2007. This variation is due to the impact of changing economic conditions on the SBA's guaranteed loan portfolios. During good economic times, revenue from SBA fees and collateral liquidation is typically sufficient to cover the costs of purchasing guaranteed loans that have defaulted. During and immediately following recessions, however, that revenue is typically insufficient to cover the costs of purchasing guaranteed loans that have defaulted. The SBA's appropriations for other programs, as a collective, have also varied since FY2000, ranging from a high of $1.6253 billion in FY2010 to a low of $455.6 million in FY2007. This variation is primarily due to congressional response to changing economic conditions. For example, Congress approved significant, temporary increases in appropriations for the SBA's other programs spending category in FY2009 and FY2010. Overall, since FY2000, appropriations for other programs have increased at a pace that exceeds inflation. This report provides appropriations for all five major components of the other programs spending category, including the SBA's entrepreneurial development programs. The SBA's appropriations for FY1954 through FY1999 are provided in the Appendix.

prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 2.

Report 1: The Small Business Administration (SBA) currently administers several types of programs to support small businesses, including loan guaranty and venture capital programs to enhance small businesses' access to capital; contracting programs to increase small businesses' opportunities in federal contracting; direct loan programs for businesses, homeowners, and renters to aid in their recovery from natural disasters; and small business management and technical assistance training programs to assist in business formation and expansion  Congressional interest in these programs has increased in recent years, primarily because small businesses are viewed as a means to stimulate economic activity and create jobs  Many Members of Congress also regularly receive constituent inquiries about the SBA's programs  This report examines appropriations for the SBA (new budget authority, minus rescissions and sequestration) over time, focusing on developments and trends since FY2000  This report also provides total available funding (which includes carryover from the prior fiscal year, carryover into the next fiscal year, account transfers, rescissions, and sequestration) and, for comparative purposes, actual and anticipated expenditures for the SBA's entrepreneurial development noncredit programs  SBA appropriations, as a whole, have varied significantly from year to year since FY2000 and across all three major SBA spending categories: appropriations for disaster assistance, business loan credit subsidies, and "other programs," a spending category that includes appropriations for salaries and expenses, business loan administration, the Office of Inspector General, the Office of Advocacy, and entrepreneurial development noncredit programs  The variation in appropriations for disaster assistance since FY2000 is largely due to supplemental appropriations provided to address disaster needs arising from the impact of major hurricanes  Business loan credit subsidies represent the net present value of cash flows to and from the SBA over the life of the agency's loan portfolios  For guaranteed loans, the net present value of cash flows is affected by several factors, but it is primarily the difference between the cost of purchasing loans that have defaulted and the revenue generated from fees and collateral liquidation  For direct (Microloan) lending, it is primarily the cost of offering below-market interest rates to Microloan intermediaries  The variation in appropriations for SBA business loan credit subsidies since FY2000 is primarily due to the impact of changing economic conditions on the SBA's guaranteed loan portfolios  During good economic times, revenue from SBA fees and collateral liquidation is typically sufficient to cover the SBA's cost of purchasing guaranteed loans that have defaulted  During and immediately following economic slowdowns, however, revenue from SBA fees and collateral liquidation is typically insufficient to cover the SBA's cost of purchasing guaranteed loans that have defaulted  The shortfall occurs because the SBA's cost of purchasing guaranteed loans tends to increase when the economy slows (primarily because guaranteed loans are more likely to default during and immediately following recessions) and revenue from loan liquidation tends to be constrained during slow economic times (primarily because commercial real estate values typically fall during and immediately following recessions)  As a result, additional appropriations are needed to cover these expenses, which are guaranteed by the "full faith and credit of the United States " Since FY2000, the variation in appropriations for the other programs spending category is attributable primarily to congressional response to changing economic conditions  As the report will discuss, appropriations for this spending category have generally increased at a pace that exceeds inflation  In addition, Congress approved significant, temporary increases in appropriations for SBA programs in the other programs spending category in FY2009 and FY2010  It approved these temporary increases primarily as a means to enhance small businesses' access to capital, which had become constrained during and immediately following the Great Recession (December 2007 to June 2009)  The SBA's appropriations for FY1954 through FY1999 are provided in the Appendix   As shown in Table 1 , the SBA's appropriations have varied significantly since FY2000, ranging from a high of $2 359 billion in FY2018 to a low of $571 8 million in FY2007  Much of this volatility is due to significant variation in appropriations for disaster assistance, which ranged from a high of $1 7 billion in FY2006 to a low of $0 in FY2009  This variation is attributable primarily to supplemental appropriations provided to address disaster needs arising from the impact of major hurricanes, such as Hurricanes Katrina, Sandy, Harvey, Irma, and Maria  In addition, as shown in Table 1 , appropriations for business loan credit subsidies have varied significantly since FY2000, ranging from a high of $319 7 million in FY2013 ($337 3 million before sequestration and rescission) to a low of $1 3 million in FY2006 and FY2007  As mentioned previously, the variation in appropriations for business loan credit subsidies results primarily from the impact of changing economic conditions on the SBA's loan portfolios  During good economic times, revenue from fees and collateral liquidation is typically sufficient to cover the costs of purchasing defaulted loans  During and immediately following recessions, revenue from fees and collateral liquidation is typically not sufficient to cover those costs  As shown in Table 1 , appropriations for the all other programs category have also varied since FY2000, ranging from a high of $1 6253 billion in FY2010 to a low of $455 6 million in FY2007  Much of this variation resulted from significant, temporary increases in appropriations for the SBA's other programs in FY2009 ($724 0 million) and FY2010 ($962 5 million)  These additional appropriations were approved primarily as a means to enhance small businesses' access to capital, which had become constrained during and immediately following the Great Recession  As mentioned previously, from FY2000 to FY2019, appropriations for the SBA's other programs spending category, as a whole, have exceeded the rate of inflation  For comparative purposes, Table 1 also presents the SBA's total available funds  As indicated in the table, the SBA's carryovers and account transfers tend to reduce variation in its budget from one fiscal year to the next  Much of this "evening out" process is due to disaster assistance appropriations, which are provided in one fiscal year and then typically spent over several fiscal years  The following section examines appropriations and total available funding for FY2000-FY2019 for the five main components of the SBA's other programs spending category: (1) salaries and expenses, (2) business loan administration, (3) the Office of Inspector General (OIG), (4) the Office of Advocacy (Advocacy), and (5) entrepreneurial development (ED) noncredit programs  The SBA's salaries and expenses account currently provides funding for the following: office operating budgets, which are used by program and administrative offices for daily operations, such as travel, supplies, and contracted services; agency-wide costs, such as rent and telecommunications, which are managed centrally; employee compensation and benefits, which are also managed centrally; and reimbursable expenses for programs for which the SBA receives reimbursable budget authority from other federal government agencies  Several adjustments were made to the SBA's reported appropriations for its salaries and expenses account to enable meaningful comparisons over time  For example, prior to FY2014, appropriations for the SBA's ED programs were included in the salaries and expenses account  They now have their own, separate appropriations account  Therefore, to allow for meaningful comparisons with current appropriations, Table 2 lists and deducts the reported appropriations for ED programs prior to FY2014 from the reported appropriations for salaries and expenses  In addition, the SBA previously included appropriations for congressional initiatives (earmarks) under the salaries and expenses account  Therefore, to allow for meaningful comparisons with current appropriations and focus the comparison on administrative expenses, appropriations for earmarks are deducted from the reported appropriations for salaries and expenses  Prior to FY2012, Advocacy was funded through the salaries and expenses' executive direction subaccount  Advocacy now has its own, separate appropriations account  To allow for meaningful comparisons with current appropriations, Table 2 lists Advocacy's funding provided through the salaries and expenses' executive direction subaccount prior to FY2012 and deducts that amount from the reported appropriation s for salaries and expenses   As discussed in greater detail below (see "Office of Advocacy"), data concerning Advocacy's funding provided through the salaries and expenses' executive direction subaccount are not available for FY2006-FY2010  However, in FY2003, FY2004, and FY2005, Advocacy's funding provided through the salaries and expenses' executive direction subaccount was 79% of its reported total cost  The estimates provided in the table for FY2006-FY2010 were derived by multiplying Advocacy's total program cost reported for each of those fiscal years by 79%  As shown in Table 2 , the SBA's appropriations for salaries and expenses have varied from year to year, with increases in some years and decreases in others  Overall, appropriations for the SBA's salaries and expenses have increased from $176 490 million in FY2000 to $267 500 million in FY2019  This increase has exceeded the rate of inflation  The SBA has statutory authorization to transfer appropriations from the business loan administration account into the salaries and expenses account  As evidenced by the amounts listed in the total available funds column in the table, the SBA exercised that authority in every fiscal year from FY2000 to FY2018 (and is expected to do so again in FY2019), transferring the entire appropriation for business loan administration into the salaries and expenses account in each of those fiscal years  Appropriations for the SBA's business loan administration account have varied since FY2000, increasing in some years and decreasing in others (see Table 3 )  Overall, appropriations for SBA business loan administration increased from $129 million in FY2000 to $155 150 million in FY2019  The program's recommended appropriations have not kept pace with inflation  As evidenced by the $0 0 balance in the total funds available column for the business loan administration account, the SBA has routinely transferred all business loan administration appropriations to the salaries and expenses account  The combined appropriations for SBA salaries and expenses and business loan administration increased from $305 490 million in FY2000 to $422 650 million in FY2019  This increase has not kept pace with inflation  According to the SBA, the OIG's mission is to "provide independent, objective oversight to improve the integrity, accountability, and performance of the SBA and its programs for the benefit of the American people " The office was created within the SBA by the Inspector General Act of 1978 ( P L  95-452 , as amended)  The inspector general, who is nominated by the President and confirmed by the Senate, directs the office  The Inspector General Act provides the OIG with the following responsibilities: promote economy, efficiency, and effectiveness in the management of SBA programs and supporting operations; conduct and supervise audits, investigations, and reviews relating to the SBA's programs and support operations; detect and prevent fraud, waste, and abuse; review existing and proposed legislation and regulations and make appropriate recommendations; maintain effective working relationships with other governmental agencies and nongovernmental entities regarding the inspector general's mandated duties; keep the SBA administrator and Congress informed of serious problems and recommend corrective actions and implementation measures; comply with the comptroller general's audit standards; avoid duplication of Government Accountability Office activities; and report violations of federal criminal law to the U S  attorney general  As shown in Table 4 , the OIG's appropriations have increased from $11 405 million in FY2000 to $21 900 million in FY2019  This increase has exceeded the rate of inflation  The OIG typically receives a transfer of appropriations from the disaster assistance account for auditing expenses  It was also provided additional appropriations in FY2006, FY2013, and FY2018 for expenses related to the review of SBA disaster loans following major hurricanes (e g , Hurricanes Katrina, Rita, and Wilma in 2005, Hurricane Sandy in 2012, and Hurricanes Harvey, Irma, and Maria in 2018) and in FY2009 to conduct reviews and audits of $730 million provided to the SBA by P L  111-5 , the American Recovery and Reinvestment Act of 2009  The SBA indicates that its Office of Advocacy is "an independent voice for small business within the federal government " The chief counsel for Advocacy, who is nominated by the President and confirmed by the Senate, directs the office  Advocacy's mission is to "encourage policies that support the development and growth of American small businesses" by intervening early in federal agencies' regulatory development processes on proposals that affect small businesses and providing Regulatory Flexibility Act compliance training to federal agency policymakers and regulatory development officials; producing research to inform policymakers and other stakeholders on the impact of federal regulatory burdens on small businesses, document the vital role of small businesses in the economy, and explore and explain the wide variety of issues of concern to the small business community; and fostering two-way communication between federal agencies and the small business community  As shown in Table 5 , Advocacy's funding has increased from $5 620 million in FY2000 to $9 120 million in FY2019  This increase has exceeded the rate of inflation  P L  111-240 , the Small Business Jobs Act of 2010, enhanced Advocacy's independence by ending the practice of funding Advocacy through the SBA's salaries and expenses' executive direction subaccount  Instead, P L  111-240 requires the President to provide a separate statement of the appropriations request for Advocacy, "which shall be designated in a separate account in the General Fund of the Treasury " The act also requires the SBA administrator to provide Advocacy with "appropriate and adequate office space at central and field office locations, together with such equipment, operating budget, and communications facilities and services as may be necessary, and     necessary maintenance services for such offices and the equipment and facilities located in such offices " In addition, Congress has provided Advocacy its own, separate appropriations amount since FY2012  As mentioned previously, prior to FY2012, the SBA reported Advocacy's total program cost, which includes funding provided through the salaries and expenses' executive direction subaccount, agency-wide overhead costs (rent, telecommunications, etc ), and other support costs (e g , management and administrative support, including human resources support)  From FY2000 to FY2005, the SBA provided relatively detailed information concerning Advocacy's budget, including the amount of funding Advocacy received through the salaries and expenses' executive direction subaccount  Also, Advocacy's FY2013 congressional budget justification document included the amount of funding Advocacy received through the salaries and expenses' executive direction subaccount in FY2011  However, those data are not available for FY2006-FY2010, and it was therefore necessary to estimate Advocacy's funding from the salaries and expenses' executive direction subaccount for those years  The estimates provided in the table were derived by multiplying Advocacy's total program cost for each of those fiscal years by 79%, which was the proportion of Advocacy's total program costs provided from the salaries and expenses' executive direction subaccount in FY2003, FY2004, and FY2005  The SBA's entrepreneurial development (ED) noncredit programs provide a variety of management and training services to small businesses  Congress provides appropriations for eight management and technical assistance training programs: Small Business Development Centers, the Microloan Technical Assistance Program, Women Business Centers, SCORE, the Program for Investment in Microentrepreneurs (PRIME), Veterans Programs (including Veterans Business Outreach Centers, Boots to Business, Boots to Business: Reboot, Veteran Women Igniting the Spirit of Entrepreneurship [VWISE], and Entrepreneurship Bootcamp for Veterans with Disabilities), the 7(j) Technical Assistance Program, and the Native American Outreach Program; two relatively long-standing nontraining programs: the National Women's Business Council and HUBZone administration; three initiatives: the Entrepreneurial Development Initiative (Clusters), the Entrepreneurship Education Initiative, and Growth Accelerators; and the Step Trade and Export Promotion (STEP) Pilot Grant program  Initially, the SBA provided its own management and technical assistance training programs  Over time, however, the SBA has increasingly relied on third parties to provide that training  The SBA reports that more than 1 million aspiring entrepreneurs and small business owners receive training from an SBA-supported resource partner each year  Congress specifies appropriations in appropriations acts for the Small Business Development Center (SBDC) program, the Microloan Technical Assistance program, and the STEP program  Congress provides an overall appropriation for the SBA's ED programs and recommends appropriations for the SBA's other ED programs, typically in the conference agreement or "Explanatory Statement" accompanying the appropriations act  As a result, the following tables refer to appropriations for the SBDC and Microloan Technical Assistance programs and recommended appropriations for other ED programs  Although not legally binding, the SBA has traditionally adhered to these recommended funding amounts  SBDCs provide free or low-cost assistance to small businesses using programs customized to local conditions  SBDCs support small business in marketing and business strategy, finance, technology transfer, government contracting, management, manufacturing, engineering, sales, accounting, exporting, and other topics  They are funded by grants from the SBA and matching funds  There are 63 lead SBDC service centers, at least one in each state (with four in Texas and six in California), the District of Columbia, Puerto Rico, the Virgin Islands, Guam, and American Samoa  These lead SBDC service centers manage more than 900 SBDC outreach locations  As shown in Table 6 , appropriations for SBDCs have increased from $84 179 million in FY2000 to $131 000 million in FY2019  This increase has exceeded the rate of inflation  In addition, as shown in the table, SBDCs received an additional $50 million in temporary funding in FY2010, which was spent over two fiscal years  The SBA reports actual and anticipated expenditures for its ED programs in its annual budget justification document  SBDC expenditures in FY2000-FY2018 and anticipated SBDC expenditures in FY2019 are presented in the table's last column for comparative purposes  The SBA's Microloan lending program is designed to address the perceived disadvantages faced by women, low-income, veteran, and minority entrepreneurs and business owners in gaining access to capital for starting or expanding their business (see P L  102-140 , the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1992)  Under the Microloan program, the SBA provides direct loans to qualified nonprofit intermediary Microloan lenders who, in turn, provide "microloans" of up to $50,000 to small business owners, entrepreneurs, and nonprofit child care centers  The SBA's Microloan Technical Assistance program is part of the SBA's Microloan program but receives a separate appropriation  It provides grants to Microloan intermediaries to offer management and technical training assistance to Microloan program borrowers and prospective borrowers  There are currently 147 active Microloan intermediaries, serving 49 states, the District of Columbia, and Puerto Rico  As shown in Table 7 , the Microloan Technical Assistance program's appropriations have varied over the years  Overall, Microloan Technical Assistance Program appropriations have increased from $23 112 million in FY2000 to $31 000 million in FY2019  This increase has been less than the rate of inflation  Microloan Technical Assistance expenditures in FY2000-FY2018 and anticipated Microloan Technical Assistance expenditures in FY2019 are presented in the table's last column for comparative purposes  Women Business Centers (WBCs) provide financial, management, and marketing assistance to small businesses, including start-up businesses, owned and controlled by women  Since its inception, the program has targeted the needs of socially and economically disadvantaged women (see P L  100-533 , the Women's Business Ownership Act of 1988)  Currently, there are 121 WBCs located throughout most of the United States and the territories  As shown in Table 8 , WBC's recommended appropriations have increased from $8 966 million in FY2000 to $18 500 million in FY2019  This increase has exceeded the rate of inflation  WBC expenditures in FY2000-FY2018 and anticipated WBC expenditures in FY2019 are presented in the table's last column for comparative purposes  The SBA provides financial assistance to SCORE (formerly the Service Corps of Retired Executives) to provide in-person mentoring and online training to small business owners and prospective owners  SCORE's 320 chapters and more than 800 branch offices are located throughout the United States and partner with more than 11,000 volunteer counselors, who are working or retired business owners, executives and corporate leaders, to provide management and training assistance to small businesses "at no charge or at very low cost " As shown in Table 9 , SCORE's recommended appropriations have increased from $3 487 million in FY2000 to $11 700 in FY2019  This increase has exceeded the rate of inflation  SCORE expenditures in FY2000-FY2018 and anticipated SCORE expenditures in FY2019 are presented in the table's last column for comparative purposes  The Program for Investment in Microentrepreneurs (PRIME) provides grants to nonprofit microenterprise development organizations or programs that have "a demonstrated record of delivering microenterprise services to disadvantaged entrepreneurs; an intermediary; a microenterprise development organization or program that is accountable to a local community, working in conjunction with a state or local government or Indian tribe; or an Indian tribe acting on its own, if the Indian tribe can certify that no private organization or program referred to in this paragraph exists within its jurisdiction " As shown in Table 10 , PRIME's recommended appropriations have varied, starting at $14 964 million in FY2001 (the program's first recommended appropriation) and falling to $2 million in FY2006 and FY2007  PRIME has received $5 0 million since FY2015  PRIME expenditures in FY2001-FY2018 and anticipated PRIME expenditures in FY2019 are presented in the table's last column for comparative purposes  The Obama Administration argued that PRIME overlaps and duplicates the SBA's Microloan Technical Assistance program and recommended in its FY2012-FY2017 budget requests that PRIME receive no appropriations  As shown in the table, in FY2013, the Obama Administration eliminated PRIME's appropriation as part of the SBA's sequestration process  The Trump Administration recommended in its FY2018 and FY2019 budget requests that the PRIME program receive no appropriations  The SBA's Office of Veterans Business Development (OVBD) administers several management and training programs to assist veteran-owned businesses, including the Entrepreneurship Bootcamp for Veterans with Disabilities Consortium of Universities, which provides "experiential training in entrepreneurship and small business management to post-9/11 veterans with disabilities" at eight universities; the Veteran Women Igniting the Spirit of Entrepreneurship (V-WISE) program, which is administered through a cooperative agreement with Syracuse University, offers women veterans a 15-day, online course focused on entrepreneurship skills and the "language of business," followed by a 3-day conference (offered twice a year at varying locations) in which participants "are exposed to successful entrepreneurs and CEOs of Fortune 500 companies and leaders in government" and participate in courses on business planning, marketing, accounting and finance, operations and production, human resources, and work-life balance; the Operation Endure and Grow Program, which is administered through a cooperative agreement with Syracuse University, offers an eight-week online training program "focused on the fundamentals of launching and/or growing a small business" and is available to National Guard and reservists and their family members; the Boots to Business program (started in 2012), which is "an elective track within the Department of Defense's revised Training Assistance Program called Transition Goals, Plans, Success (Transition GPS) and has three parts: the Entrepreneurship Track Overview—a 10-minute introductory video shown during the mandatory five-day Transition GPS course which introduces entrepreneurship as a post-service career option; Introduction to Entrepreneurship—a two-day classroom course on entrepreneurship and business fundamentals offered as one of the three Transition GPS elective tracks; and Foundations of Entrepreneurship—an eight-week, instructor-led online course that offers in-depth instruction on the elements of a business plan and tips and techniques for starting a business"; the Boots to Business Reboot program (started in 2014), which assists veterans who have already transitioned to civilian life; and the Veterans Business Outreach Centers (VBOC) program, which provides veterans and their spouses management and technical assistance training at 15 locations, including assistance with the Boots to Business program, the development and maintenance of a five-year business plan, and referrals to other SBA resource partners when appropriate for additional training or mentoring services  Prior to FY2016, Congress recommended appropriations for VBOCs and, in FY2014 and FY2015, for the Boots to Business initiative ($7 0 million in FY2014 and $7 5 million in FY2015)  Funding for the OVBD's other veterans assistance programs were provided through the SBA's salaries and expenses account  Starting in FY2016, Congress has recommended appropriations for OVBD's programs as a whole: $12 3 million in FY2016, FY2017, and FY2018, and $12 7 million in FY2019  This increase has not kept pace with inflation  OVBD expenditures in FY2015-FY2018 and anticipated OVBD expenditures in FY2019 are presented in the table's last column for comparative purposes  Recommended appropriations for VBOCs from FY2000-FY2015 are presented in Table 12 for historical comparisons  As the data indicate, recommended appropriations for VBOCs increased from $0 613 million in FY2000 to $3 000 million in FY2015  This increase has exceeded the rate of inflation  OVBD expenditures in FY2000-FY2015 are presented in the table's last column for comparative purposes  The SBA's 7(j) Technical Assistance Program provides "a wide variety of management and technical assistance to eligible individuals or concerns to meet their specific needs, including: (a) counseling and training in the areas of financing, management, accounting, bookkeeping, marketing, and operation of small business concerns; and (b) the identification and development of new business opportunities " Eligible individuals and businesses include "8(a) certified firms, small disadvantaged businesses, businesses operating in areas of high unemployment, or low income or firms owned by low income individuals " As shown in Table 13 , recommended appropriations for the 7(j) Technical Assistance Program have varied since FY2000, with increases in some years and decreases in others  Overall, the SBA's 7(j) Technical Assistance Program's recommended appropriations have decreased from $3 584 million in FY2000 to $2 800 million in FY2019  7(j) Technical Assistance Program expenditures in FY2000-FY2018 and anticipated 7(j) Technical Assistance Program expenditures in FY2019 are presented in the table's last column for comparative purposes  The SBA's Native American Outreach (NAO) program provides management and technical educational assistance to American Indians, Alaska natives, native Hawaiians, and "the indigenous people of Guam and American Samoa … to promote entity-owned and individual 8(a) certification, government contracting, entrepreneurial education, and capital access " The program's management and technical assistance services are available to members of these groups living in most areas of the nation  As shown in Table 14 , the NAO program's recommended appropriations have varied somewhat since FY2003 (the first year it received recommended appropriations), ranging from $1 0 million to $2 0 million  The program's recommended appropriations have not kept pace with inflation  NAO program expenditures in FY2003-FY2018 and anticipated NAO expenditures in FY2019 are presented in the table's last column for comparative purposes  The National Women's Business Council (NWBC) is a bipartisan federal advisory council created to serve as an independent source of advice and counsel to the President, Congress, and the SBA on economic issues of importance to women business owners  The council's mission "is to promote bold initiatives, policies, and programs designed to support women's business enterprises at all stages of development in the public and private sector marketplaces—from start-up to success to significance " As shown in Table 15 , the recommended appropriation for the NWBC has increased from $0 598 million in FY2000 to $1 500 million in FY2019  This increase has exceeded the rate of inflation  NWBC expenditures in FY2000-FY2018 and NWBC anticipated expenditures in FY2019 are presented in the table's last column for comparative purposes  The HUBZone program helps small businesses located in designated Historically Underutilized Business Zones (HUBZones) to compete for federal contracts  Federal agencies may award contracts directly to HUBZone-certified small businesses through a sole-source contract, limit contact competitions to HUBZone-certified firms through a contract set-aside, or provide HUBZone-certified firms a price evaluation preference in full and open competitions  The HUBZone program was initially funded through the SBA's salary and expenses account  As shown in Table 16 , Congress started recommending an appropriation for the program in FY2004  This recommended appropriation remained relatively stable until FY2015, when it increased to $3 0 million  With this increase, the HUBZone program's recommended appropriations have exceeded inflation  The HUBZone program's expenditures in FY2000-FY2018 and the HUBZone program's anticipated expenditures in FY2019 are presented in the table's last column for comparative purposes  The SBA reports that "regional innovation clusters are on-the-ground collaborations between business, research, education, financing and government institutions that work to develop and grow a particular industry or related set of industries in a particular geographic region " The SBA has supported regional innovative clusters since FY2009, and the initiative has received recommended appropriations from Congress since FY2010  As shown in Table 17 , funding for the Entrepreneurial Development Initiative (Regional Innovation Clusters) has been reduced from a recommended appropriation of $10 0 million in FY2010 to $5 0 million in FY2019  The table's last column indicates that the SBA's expenditures for the initiative have often been less than the amount appropriated  The Trump Administration recommended in its FY2018 and FY2019 budget requests that the Entrepreneurial Development Initiative receive no appropriations  The SBA's Entrepreneurship Education initiative offers high‐growth small businesses in underserved communities "a seven‐month executive leader education series" consisting of "more than 100 hours of specialized training, technical resources, a professional networking system, and other resources to strengthen their business model and promote economic development within urban communities " At the conclusion of the training, "participants produce a three‐year strategic growth action plan with benchmarks and performance targets that help them access the necessary support and resources to move forward for the next stage of business growth " As shown in Table 18 , the Entrepreneurship Education initiative received its first recommended appropriation from Congress in FY2014 ($5 0 million), $7 0 million in FY2015, $10 0 million in FY2016, FY2017, and FY2018, and $3 5 million in FY2019  The SBA describes growth accelerators as "organizations that help entrepreneurs start and scale their businesses " Growth accelerators are typically run by experienced entrepreneurs and help small businesses access seed capital and mentors  The SBA claims that growth accelerators "help accelerate a startup company's path towards success with targeted advice on revenue growth, employee growth, sourcing outside funding and avoiding pitfalls " As shown in Table 19 , the Growth Accelerator initiative received its first recommended appropriation from Congress in FY2014 ($2 5 million), $4 0 million in FY2015, $1 0 million in FY2016, FY2017, and FY2018, and $2 million in FY2019  It provides $50,000 matching grants each year to universities and private sector accelerators "to support the development of accelerators and their support of startups in parts of the country where there are fewer conventional sources of access to capital (i e , venture capital and other investors) " The Trump Administration recommended in its FY2018 and FY2019 budget requests that the Growth Accelerator Initiative receive no appropriations 


Report 2:  the United States tends to underinvest in dual-use technologies  National security requirements alone often do not justify major DOD support, and market prospects alone often appear to be too long-term or high risk to justify US industry carrying the entire development burden     The committee encourages use of cooperative agreements and other transactions in lieu of grants or contracts     The provision would require that at least 50 percent of funding over the life of a partnership derive from non-federal sources but would allow for a smaller industry share at the start  The conference report stated that the partnerships should focus on programs that fit into the security needs within DARPA  The conference report also stated that OTs are appropriate for those cases where the "regulations applicable to the allocation of patent and data rights under the procurement statutes may not be appropriate to partnership arrangements in certain cases " National Defense Authorization Act for FY1993 ( P L  102-484 ) Cost Sharing Section 4221 established 10 U S C  2511, which required DOD to establish cooperative arrangements with industry, educational institutions, federal labs, and other entities, to pursue research, development, and application of dual-use technologies  The section authorized DOD to use grants, contracts, cooperative agreements, or OTs to create these partnerships, and that the Federal government should not contribute more than 50% of the costs related to projects under this authority  National Defense Authorization Act for FY1994 ( P L  103-160 ) Expanded Authority Section 827 established 10 U S C  2358, which gave the Secretary of Defense and the Secretaries of the military departments the authority to conduct basic, advanced, and applied research through the use of contracts, cooperative agreements, grants, and OTs  Previously, OTs were only authorized for advanced research  Prototype Authorities Section 845 granted DARPA the authority to use OTs for prototype projects directly related to weapons or weapon systems proposed to be acquired by DOD  Section 845 required that "to the maximum extent practicable," prototypes be competitively awarded  This authority was set to terminate after three years  Section 845 remained as a note to 10 U S C  2371 until separately codified as 10 U S C  2371b in the FY2016 NDAA ( P L  114-92 )  Federal Acquisition Streamlining Act of 1994 ( P L  103-355 ) Section 1301 redesignated the language in 10 U S C  2358 (granting the authority to use OTs) to 10 U S C  2371  Reporting Requirements Section 1301 also required DOD to submit an annual report to the armed services committees, to include a general description of the other transactions, including the technologies involved in the research, the potential military and, if any, commercial utility of such technologies, the reasons for not using a contract or grant to provide support for such research, and the amount of payments, if any, received during the fiscal year pursuant to a clause in the other transactions and to what accounts such payments were credited  National Defense Authorization Act for FY1997 ( P L  104-201 ) Section 203 required that a senior DOD official be designated in OSD, and that the officials' sole responsibility be developing policy related to, and ensuring implementation of, DOD's dual-use technology program  This section authorized DOD to use OTs (as well as contracts, cooperative agreements, and grants) for dual-use projects only if the project "is entered into through the use of competitive procedures " Section 743 granted DOD the authority to use OTs to conduct research on Gulf War Syndrome, to determine its relationship to possible exposures of members of the Armed Forces to chemical warfare agents and hazardous materials, and the use of inoculations and new drugs  Expanded Prototype Authorities Section 804 amended Section 845 of the FY1994 NDAA by extending to the military departments and officials designated by the Secretary of Defense, the authority to use OTs for certain prototype projects  This authority, originally granted solely to DARPA and set to expire after three years, was given a new termination date of September 30, 1999  Reporting Requirements Section 267 modified elements of the annual report to the armed services committees  National Defense Authorization Act for FY1998 ( P L  105-85 ) Section 832 amended 10 U S C  2371 by clarifying that certain information submitted to DOD (i e  a proposal, business plan, technical information) be protected from disclosure pursuant to 5 U S C  552 for a period of five years  Strom Thurmond National Defense Authorization Act for FY1999 ( P L  105-261 ) Section 241 extended the sunset day for the authority to use OTs for prototypes from September 30, 1999, to September 30, 2001  Section 817 amended Section 2371 of Title 10, United States Code, clarifying that information submitted by outside parties in cooperative agreements for basic, applied, and advanced research is protected from disclosure under Section 552 of Title 5, United States Code  Department of Defense Appropriations Act, 1999 ( P L  105-262 ) While the enacted FY1999 defense appropriations bill ( P L  105-262 ) did not include legislative language addressing OTs, H Rept  105-591 , which accompanied the House-reported version of H R  4103 , included language expressing the House Appropriations Committee's "serious reservations" regarding the Air Force's then-proposed use of an OT agreement—instead of a contract— to develop the Evolved Expendable Launch Vehicle (EELV) program  The committee noted that "under [OTs] traditional safeguards which protect the government's interest in large acquisition programs are largely absent," and required the Under Secretary of Defense for Acquisition, Technology, and Logistics (now the Under Secretary of Defense for Acquisition and Sustainment) and the DOD Inspector General to certify to the congressional defense committees that the use of an OT was appropriate for the EELV program, and that "adequate safeguards exist[ed] to protect the government's interest and monitor program performance " National Defense Authorization Act for FY2000 ( P L  106-65 ) Section 801 required that for prototypes using OT authorities, DOD ensure that GAO, under its audit authority, have access to records relating to other transaction prototype agreements exceeding $5 million  Section 801 allowed for a waiver to GAO access and exempted entities that over the last year have not entered into an agreement with DOD that provided for audit access by a government entity  According to the Senate report: Senior DOD officials have sought legislation to extend other transaction authority to production contracts  Under current authority, there is some debate about whether GAO has audit access to other transactions  As the size, costs, and complexity of programs being funded using other transactions increases, the committee wants to ensure that the GAO has audit access in relation to the higher levels of spending and added risks  Reporting Requirements The Senate report also addressed reporting requirements and congressional intent to review the use of OTs  The report stated the following: The committee is assessing the utility of other transaction prototype authority  The statement of managers accompanying the Strom Thurmond National Defense Authorization Act of 1999 directed the Secretary of Defense to report on the use of this authority to the congressional defense committees, no later than March 1, 1999  In addition, both the Department of Defense Inspector General and the General Accounting Office are reviewing the use of other transaction prototype authority and will report to Congress in the coming year  The committee is interested in the extent that new commercial firms are entering the DOD marketplace through the use of other transaction authority, as well as the degree of cost sharing between the government and non-federal government parties  The committee is also interested in any lessons learned from the broad exemptions to federal law provided by other transaction authority  For example, other transactions are exempt from the Competition in Contracting Act, Truth in Negotiations Act, Contract Disputes Act, Antikickback Act of 1986, Procurement Integrity Act, Service Contract Act, Buy American Act, and chapter 137 of title 10, United States Code  Questions have been raised about whether the government's interest is adequately protected in the absence of the applicability of these statutes  Conversely, advocates of the view that the government should take advantage of the flexibility of other transactions have championed proposals to extend other transaction authority to production  The committee directs the Secretary of Defense to provide a new report that updates information in the March 1999 report on the use of other transaction prototype authority to the congressional defense committees by February 1, 2000  National Defense Authorization Act for FY2001 ( P L  106-398 ) Limitations on the Use of OTs Section 803 limited the use of OTs for prototype projects to only those circumstances when at least one nontraditional defense contractor significantly participates in the project, one-third of the total cost of the project is paid out of funds provided by parties to the transaction other than the federal government, or the senior procurement executive determines in writing that exceptional circumstances justify use of an OT  Nontraditional defense contractor was defined as an entity that for a period of one year has not entered into or performed "any contract that is subject to full coverage under the cost accounting standards" or "any other contract in excess of $500,000 to carry out prototype projects or to perform basic, applied, or advanced research projects for a Federal agency, that is subject to the Federal Acquisition Regulation '' Section 803 also extended the authority to use OTs for prototypes from September 30, 2001, to September 30, 2004  According to the Senate report, the intent of using OTs for prototypes is to attract companies that typically do not do business with the Department of Defense and encourage cost sharing and experimentation in potentially more efficient ways of doing business with traditional defense contractors  Other transaction authority is an important acquisition tool that can facilitate the incorporation of commercial technology into military weapon systems  In an environment where, in many areas, commercial technology is now more advanced than defense technology, it is imperative that the Department continue to have the flexibility to use innovative contractual instruments that provide access to this technology  There are, however, improvements that can be made in managing and overseeing these contractual arrangements  Section 804 clarified the extent of GAO's access to records in instances where the party in question has only done business with the government in the preceding year through an OT or cooperative agreement  National Defense Authorization Act for FY2002 ( P L  107-107 ) Expanded Authority—Follow-on Production Section 822 of the FY2002 NDAA granted DOD the authority to award a follow-on production contract for prototype projects when at least one-third of the total cost of the prototype project is to be paid out of funds provided by non-federal government sources  Under this authority, such a follow-on contract could be awarded without competition if the prototype project was successfully completed, the number of units in the production contract does not exceed the number of units specified in the underlying prototype agreement, and the price for each unit does not exceed the price specified in the underlying transaction  Department of Defense and Emergency Supplemental Appropriations for Recovery from and Response to Terrorist Attacks on the United States Act, 2002 ( P L  107-117 ) Establishment of Army Venture Capital Initiative (AVCI) Section 8150 designated $25 million of the FY2002 funds made available for Army Research, Development, Test, and Evaluation (RDT&E) to be made available to the Secretary of the Army for the purpose of funding a venture capital investment corporation established pursuant to 10 U S C  2371  A 2014 RAND report stated that OT authorities were used only to form the AVCI, and were not used to acquire products or services: "While OT authorities were used to form [AVCI] itself, any volume of the Army's purchase of products and services from [AVCI] companies is conducted under the FAR " National Defense Authorization Act for FY2004 ( P L  108-136 ) Expanded Authority Section 847 of the FY2004 NDAA extended the authority to use an OT for developing prototypes to improve weapons or weapon systems currently in use by the Armed Forces  Previously, such authority was restricted to prototypes "directly relevant to weapons or weapon systems proposed to be acquired or developed" by DOD  Section 847 also established a pilot program for transitioning prototypes to follow-on contracts for production for nontraditional defense contractors  Under the pilot program, such a follow-on contract could be treated as a commercial item or an item developed with both federal and private sector funds (for purposes of negotiating intellectual property rights)  The pilot program was restricted to contracts with nontraditional defense contractors, where the value of the contract does not exceed $50 million (approximately $70 million in FY2018 dollars), and that are firm-fixed price or fixed price with economic adjustment  The pilot program was set to sunset September 30, 2008  Section 1441 authorized any agency that engages in basic, applied, or advanced research and development projects that facilitated defense against or recovery from terrorism or nuclear, biological, chemical, or radiological attack to exercise the same general authority given to DOD as found in 10 U S C  2371 (including for prototype projects)  Reporting Requirements Section 1031 sunset the annual reporting requirement for OT after the report covering FY2006 was submitted  National Defense Authorization Act for FY2006 ( P L  109-163 ) Restricted Authority and Notification Requirements Section 212 of the FY2006 NDAA directed the Army to procure the Future Combat System using contract procedures set forth in part 15 of the Federal Acquisition Regulation, in lieu of an OT  Section 823 extended ethics requirements to OT prototype authority and required the congressional defense committees be notified in writing at least 30 days before such authority is exercised  Certification Requirements Section 823 also amended Section 845 of the FY1994 NDAA, requiring a written determination by a senior procurement executive for other transaction prototype projects estimated between $20 million and $100 million, and for a written determination by the Under Secretary of Defense for Acquisition, Technology, and Logistics for prototype projects that exceed $100 million  According to the Senate report: Section 845 was intended to be used for limited prototype projects, particularly those in which the Department seeks to engage nontraditional defense contractors that may be averse to the requirements imposed by a standard Department procurement contract  For this reason, the statement of managers accompanying the Strom Thurmond National Defense Authorization Act for Fiscal Year 1999 (Public Law 105–261) states: The conferees continue to believe that the section 845 authority should only be used in the exceptional cases where it can be clearly demonstrated that a normal contract or grant will not allow sufficient access to affordable technologies  The conferees are especially concerned that such authority not be used to circumvent the appropriate management controls in the standard acquisition and budgeting process  …  The committee does not believe that the $20 9 billion agreement entered between the Army and the Lead Systems Integrator for the FCS program is consistent with the language and intent of section 845 authority  Section 845 authority is intended to be used for limited prototype projects, particularly those in which the Department of Defense seeks to engage nontraditional defense contractors that may be averse to the requirements imposed by a standard Department contract  Department of Defense Appropriations Act, 2007 ( H R  5631 ) Reporting Requirement The FY2007 defense appropriations bill ( P L  109-289 ) did not include language addressing OTs  The conference report ( H Rept  109-676 ) included language expressing the conferees' "[concern] with the continued use of OTA contracts by the Missile Defense Agency," as such contracts "lack the customary safeguards found under FAR-based contracts for organizational conflict of interest, truth in negotiations and submission of cost and pricing data " The conferees "strongly encourage[d]" the Missile Defense Agency to convert "large development and procurement contracts using OTA to FAR-based contracts," and directed the Missile Defense Agency to submit a report to the congressional defense committees on the use of OTs, to include the number, value, and justification for the use of such agreements  National Defense Authorization Act for FY2008 ( P L  110-181 ) Section 823 extended the authority for prototype projects for five more years, from September 30, 2008, to September 30, 2013  National Defense Authorization Act for FY2009 ( P L  110-417 ) Section 822 required DOD to issue guidance on rights in technical data under non-FAR agreements, including OTs  Section 822 also required that appropriate provisions relating to rights in technical data be included in non-FAR agreements, consistent with policy guidance  This requirements is in statute at 10 U S C  2320 note  Section 824 expanded the scope of the pilot program for transition to follow-on contracts for certain prototype projects to include research projects carried out under 10 U S C  2371  Authority to use the pilot program, set to expire September 30, 2008, was extended to September 30, 2010  Section 874 required OT data be included in the Federal Procurement Data System  National Defense Authorization Act for FY2011 ( P L  111-383 ) Section 866 changed the definition of nontraditional defense contractor, conforming the definition to that found in 10 U S C  2302(9)  National Defense Authorization Act for FY2013 ( P L  112-239 ) Section 863 extended the authority for using OTs for prototype projects from September 30, 2013, to September 30, 2018  Carl Levin and Howard P  "Buck" McKeon National Defense Authorization Act for FY2015 ( P L  113-291 ) Expanded Authority Section 812 expanded the authority to use OT for prototypes, to include those "directly related 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, or to improvement of platforms, systems, components, or materials in use by the Armed Forces " Prior to the FY2015 NDAA, OTs could only be used for prototypes relating to weapons or weapon systems proposed to be developed, or for the improvement of weapons or weapon systems currently in use  Reporting Requirements Section 1071 repealed the reporting requirement language found in 10 U S C  2371, relating to OTs for research projects  National Defense Authorization Act for FY2016 ( P L  114-92 ) Until the FY2016 NDAA, the prototyping and follow-on production authority established in Section 845 of the FY1994 NDAA (as amended) was found in 10 U S C  2371 note  Section 815 of the FY2016 NDAA simultaneously repealed Section 845 of the FY1994 NDAA and put the repealed language into the newly created 10 U S C  2371b  The FY2016 NDAA also modified 2371b by making the authority permanent  Expanded Authority and Small Business The authorities in Section 2371b were expanded to allow their use when "all significant participants in the transaction other than the Federal government are small businesses or nontraditional contractors" and when the agency determines that using an OT would expand the defense supply base in a manner that could not be accomplished through a contract  Section 815 eased the restriction on follow-on production contracts or transactions  Section 815 amended the definition of a nontraditional defense contractor found in 10 U S C  2302 to be an entity that is not currently performing, and for one year prior to an OT has not performed on any contract or subcontract that is subject to full coverage under the cost accounting standards pursuant to Section 1502 of Title 41, U S C  Section 815 also required DOD to update its guidance to reflect changes in the statute  The conference report stated that Congress believed OTs are an attractive option for firms and organizations that do not usually participate in government contracting due to typical overhead burdens and the "one size fits all" rules governing defense acquisition  The report also stated that OTs could support DOD's effort to access new sources of technological innovation, specifically with Silicon Valley startup firms and small commercial firms  National Defense Authorization Act for FY2018 ( P L  115-91 ) Expanded Authority Section 216 of the FY2018 NDAA authorized nonprofit research institutions to enter into OTs with DOD for prototype projects  Section 862 amended 10 U S C  2358, granting the Secretary of Defense and the military departments the authority to pursue basic research, applied research, advanced research, and development projects under the OT authorities granted in Sections 2371 and 2371b of Title 10  Workforce Section 802 required DOD to establish a cadre of intellectual property experts to advise, assist, and provide resources to program offices who are developing intellectual property strategies for contracts and agreements  Section 863 required training and education for personnel involved in OTs and other innovative contracting methods  Certification Requirements and Small Business Section 864 adjusted the language of the statute to state that the dollar threshold relates to the specific transaction for a prototype project and not for the value of the entire project  Section 864 defined a transaction for follow-on production to include "all individual prototype sub-projects awarded under the transaction to a consortium of United States industry and academic institutions " Section 864 also increased the dollar thresholds for required approvals and defined the term small business to include small businesses under Section 9 of the Small Business Act to ensure that companies participating in the Small Business Innovation Research and Small Business Technology Transfer programs were considered small businesses for the purposes of the cost-sharing requirements  Miscellaneous Section 867 required the Secretary of Defense to establish a preference for OTs in the "execution of science and technology and prototyping programs " Section 1711 required DOD to carry out a pilot program to "assess the feasibility and advisability of increasing the manufacturing capability of the defense industrial base " Pursuant to the pilot, Section 1711 authorized DOD to use OTs to support production capabilities in small and medium-sized manufacturers  John S  McCain National Defense Authorization Act for FY2019 ( P L  115-232 ) Section 211 of the FY2019 NDAA clarified that follow-on production of a prototype or subproject within a consortium may occur if the individual prototype or subproject is complete; all projects associated with the consortium do not need to be completed before follow-on production of a specific prototype  Expanded Authority The FY2019 NDAA authorized the use of OTs to develop enhanced personal protective equipment (Section 226) and to carry out research under the Explosive Ordnance Disposal Defense Program (Section 311)  Reporting Requirements Section 244 required the Defense Innovation Unit to submit a report to Congress, to include the number of traditional and nontraditional defense contractors with DOD contracts or other transactions resulting directly from the unit's initiatives  Section 873 required DOD to submit an annual report through 2021, summarizing DOD's use of OTs, including organizations involved; number of transactions; amounts of payments; and purpose, description, and status of projects  Department of Defense Appropriations Act, 2019 ( P L  115-245 ) Reporting Requirements While the enacted FY2019 defense appropriations bill did not include legislative language addressing OTs, the conference report included language expressing the conferees' "[concern] with the lack of transparency surrounding the employment of OTA, particularly for follow-on production " The conferees directed DOD to provide quarterly reports to the House and Senate appropriations committees listing each active OT, and to include the following information on each agreement: funding military service or DOD component; major command (if applicable); contracting activity; appropriation title; budget line item; minimum and maximum award value; vendor; obligations and expenditures to date; product service code; period of performance; and indication if the OT agreement included an option for follow-on production (with a description of the scope of anticipated follow-on production)  The conferees also directed GAO to review DOD's use of OTs to determine whether the "employment of this authority conforms to applicable statutes and guidelines, to include the identification of any potential conflicts " GAO was also required to report on the extent to which OTs have been used since FY2016  Notification Requirements The House report to accompany H R  6157 acknowledged OTs as an "important tool to provide flexibility and agility for cutting-edge research and development projects and prototypes " However, the report stated its concern "with the lack of transparency on the use of OTA authority for follow-on production procurements," and directed that no funds could be obligated or expended for a follow-on production contract or a transaction carried out under 10 U S C  2371b, until 30 days after the Secretary of Defense provides the congressional defense committees with a notification of the proposed contract or transaction, to include a justification of why an OT is being used for production  Appendix B  Non-DOD Federal Agencies with Agency-Wide OT or Related Authorities A number of agencies have varying other transaction or similar authorities, as reflected in Table B-1   The table below is not a comprehensive or definitive listing of every federal government entity with OT or related authorities  In some instances, offices, agencies, commissions, and other federal government entities have OT or related authorities that are only associated with certain programs or projects, such as the National Institutes of Health (which has OT authority for such specific activities such as the National Heart, Blood Vessel, Lung, and Blood Diseases and Blood Resources Program [42 U S C  §285b-3] and the Cures Acceleration Network [42 U S C  §287a])  Appendix C  Reliability of Data on Other Transactions All data have imperfections and limitations  FPDS-NG data can be used to identify broad trends and produce rough estimates, or to gather information about specific contracts  Some observers say that despite their shortcomings, FPDS-NG data are substantially more comprehensive than what is available in most other countries in the world  Understanding the limitations of government procurement data—including knowing when, how, and to what extent to rely on data—can help policymakers incorporate FPDS-NG data more effectively into their decisionmaking process  FPDS-NG OT Data Quality and Accuracy Issues Decisionmakers should be cautious when using data from FPDS-NG to develop policy or otherwise draw conclusions, especially with respect to OTs  In some cases, the data themselves may not be reliable  In other instances, a query for particular data may return differing results, depending on the parameters and timing of the analysis  In particular, all DOD data entered into FPDS-NG are subject to a 90-day delay, and updates to "data, including new actions, modifications, and corrections are made on a regular basis," which could result in changes to "data     for current and/or prior fiscal years " Inconsistencies in FPDS-NG Data Within FPDS-NG, two primary collections of obligation data exist: one associated with standard government procurement contracts or modifications to such contracts, and the other associated with prototype OT agreements or modifications to such agreements  FPDS-NG's collection of prototype OT data allows for the input of additional data elements—such as nongovernment dollars associated with cost-share prototype OT agreements—not included in FPDS-NG's collection of standard government procurement contract data  More consequentially, FPDS-NG's prototype OT data include two similar data elements that allow users to identify the fiscal year a prototype OT agreement was signed or modified  One, labeled in the database as "Fiscal Year," appears to allow users entering data into the system to manually assign a fiscal year to a transaction  FPDS-NG users entering data into the system appear to have interpreted this data element in various, conflicting ways  For example, a Department of the Air Force OT agreement was signed in February 2016 for the development of rocket propulsion system prototypes under the Evolved Expendable Launch Vehicle (EELV) program  FPDS-NG records an obligation of $115 million in FY2020 for this agreement  Fiscal law bars DOD from obligating money now for future fiscal years that have not yet occurred  The second, labeled "Contract Fiscal Year," appears to be based on the date the prototype OT agreement was signed or modified  See Table C-1 for a comparison of the "Fiscal Year" and "Contract Fiscal Year" elements for selected new prototype OT agreements signed between FY2013 and FY2017  If a user selects the Fiscal Year data element when attempting to review high-level data on recent trends in the use of prototype OT agreements within DOD—such as the total amount obligated for prototype OT agreements on an annual basis—that user will obtain a substantially different result than if he or she selects the Contract Fiscal Year data element for a similar analysis  See Table C-2 for a comparison of action obligations and nongovernment contributions using the Fiscal Year and Contract Fiscal Year data elements for new prototype OT agreements signed between FY2013 and FY2017  DOD OT Data Analysis Methodological Issues in Congressional Reports A March 2017 report to Congress entitled "An Assessment of Cost-Sharing in Other Transaction Agreements for Prototype Projects," completed by the Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics indicated that In FY2016, DOD obligated (Note: Two outliers in 2016 excluded) $1 billion in section 2371b awards and received $68 million in cost-share contributions after excluding two significant trend outliers  DOD cited FPDS-NG as the source for its analysis, and defined the "significant trend outliers" excluded as "two $40 million OTAs with total cost-share of $270 million," likely referring to two DARPA prototype OT agreements conducted on a cost-share basis initiated in FY2016  However, a CRS analysis of the same FPDS-NG data identified numerous inconsistencies in DOD's methodological approach  Recreation of DOD Methodology Specifically, DOD appears to have conducted its analysis using the "Fiscal Year" data element referenced in this report's discussion of FPDS-NG OT data quality and accuracy issues, which would attribute some prototype OT activities to the wrong fiscal year for the purposes of comparative trend analysis  DOD also compared two disparate transaction types: the reported "$1 billion in Section 2371b awards" includes all action obligations associated with ongoing prototype OT activities in FY2016, including transactions associated with prototype OT indefinite delivery contracts, while the "$68 million in cost-share contributions" includes only cost-share contributions associated with new prototype OT agreements  If DOD used the "Contract Fiscal Year" data element, excluded the identified "trend outliers," and focused on all action obligations and cost-share contributions associated with ongoing prototype OT activities, it would have found instead that the department obligated $1 4 billion for prototype OT agreements in FY2016, with an additional $313 5 million in cost-share contributions from the private sector  On the other hand, if DOD used the "Contract Fiscal Year" data element, excluded the identified "trend outliers," and focused on only action obligations and cost-share contributions associated with new prototype OT agreements, it would have found instead that the department obligated $400 million for prototype OT agreements in FY2016, with an additional $272 1 million in cost-share contributions from the private sector  Appendix D  Other Transaction Authority Statutes 10 U S C  §2371  Research projects: transactions other than contracts and grants (a) ADDITIONAL FORMS OF TRANSACTIONS AUTHORIZED — The Secretary of Defense and the Secretary of each military department may enter into transactions (other than contracts, cooperative agreements, and grants) under the authority of this subsection in carrying out basic, applied, and advanced research projects  The authority under this subsection is in addition to the authority provided in Section 2358 of this title to use contracts, cooperative agreements, and grants in carrying out such projects  (b) EXERCISE OF AUTHORITY BY SECRETARY OF DEFENSE — In any exercise of the authority in subsection (a), the Secretary of Defense shall act through the Defense Advanced Research Projects Agency or any other element of the Department of Defense that the Secretary may designate  (c) ADVANCE PAYMENTS — The authority provided under subsection (a) may be exercised without regard to Section 3324 of Title 31  (d) RECOVERY OF FUNDS — (1) A cooperative agreement for performance of basic, applied, or advanced research authorized by Section 2358 of this title and a transaction authorized by subsection (a) may include a clause that requires a person or other entity to make payments to the Department of Defense or any other department or agency of the Federal Government as a condition for receiving support under the agreement or other transaction  (2) The amount of any payment received by the Federal Government pursuant to a requirement imposed under paragraph (1) may be credited, to the extent authorized by the Secretary of Defense, to the appropriate account established under subsection (f)  Amounts so credited shall be merged with other funds in the account and shall be available for the same purposes and the same period for which other funds in such account are available  (e) CONDITIONS — (1) The Secretary of Defense shall ensure that- (A) to the maximum extent practicable, no cooperative agreement containing a clause under subsection (d) and no transaction entered into under subsection (a) provides for research that duplicates research being conducted under existing programs carried out by the Department of Defense; and (B) to the extent that the Secretary determines practicable, the funds provided by the Government under a cooperative agreement containing a clause under subsection (d) or a transaction authorized by subsection (a) do not exceed the total amount provided by other parties to the cooperative agreement or other transaction  (2) A cooperative agreement containing a clause under subsection (d) or a transaction authorized by subsection (a) may be used for a research project when the use of a standard contract, grant, or cooperative agreement for such project is not feasible or appropriate  (f) SUPPORT ACCOUNTS — There is hereby established on the books of the Treasury separate accounts for each of the military departments and the Defense Advanced Research Projects Agency for support of research projects and development projects provided for in cooperative agreements containing a clause under subsection (d) and research projects provided for in transactions entered into under subsection (a)  Funds in those accounts shall be available for the payment of such support  (g) EDUCATION AND TRAINING —The Secretary of Defense shall— (1) ensure that management, technical, and contracting personnel of the Department of Defense involved in the award or administration of transactions under this section or other innovative forms of contracting are afforded opportunities for adequate education and training; and (2) establish minimum levels and requirements for continuous and experiential learning for such personnel, including levels and requirements for acquisition certification programs  (h) REGULATIONS — The Secretary of Defense shall prescribe regulations to carry out this section  (i) Protection of Certain Information From Disclosure -(1) Disclosure of information described in paragraph (2) is not required, and may not be compelled, under Section 552 of Title 5 for five years after the date on which the information is received by the Department of Defense  (2)(A) Paragraph (1) applies to information described in subparagraph (B) that is in the records of the Department of Defense if the information was submitted to the Department in a competitive or noncompetitive process having the potential for resulting in an award, to the party submitting the information, of a cooperative agreement for performance of basic, applied, or advanced research authorized by Section 2358 of this title or another transaction authorized by subsection (a)  (B) The information referred to in subparagraph (A) is the following: (i) A proposal, proposal abstract, and supporting documents  (ii) A business plan submitted on a confidential basis  (iii) Technical information submitted on a confidential basis  10 U S C  §2371b  Authority of the Department of Defense to carry out certain prototype projects (a) AUTHORITY — (1) Subject to paragraph (2), the Director of the Defense Advanced Research Projects Agency, the Secretary of a military department, or any other official designated by the Secretary of Defense may, under the authority of Section 2371 of this title, carry out 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, or to improvement of platforms, systems, components, or materials in use by the armed forces  (2) The authority of this section- (A) may be exercised for a transaction (for a prototype project) that is expected to cost the Department of Defense in excess of $100,000,000 but not in excess of $500,000,000 (including all options) only upon a written determination by the senior procurement executive for the agency as designated for the purpose of Section 1702(c) of Title 41, or, for the Defense Advanced Research Projects Agency or the Missile Defense Agency, the director of the agency that- (i) the requirements of subsection (d) will be met; an d (ii) the use of the authority of this section is essential to promoting the success of the prototype project; and (B) may be exercised for a transaction (for a prototype project) that is expected to cost the Department of Defense in excess of $500,000,000 (including all options) only if- (i) the Under Secretary of Defense for Acquisition, Technology, and Logistics determines in writing that- (I) the requirements of subsection (d) will be met; an d (II) the use of the authority of this section is essential to meet critical national security objectives; and (ii) the congressional defense committees are notified in writing at least 30 days before such authority is exercised  (3) The authority of a senior procurement executive or director of the Defense Advanced Research Projects Agency or Missile Defense Agency under paragraph (2)(A), and the authority of the Under Secretary of Defense for Acquisition, Technology, and Logistics under paragraph (2)(B), may not be delegated  (b) EXERCISE OF AUTHORITY — (1) Subsections (e)(1)(B) and (e)(2) of such Section 2371 shall not apply to projects carried out under subsection (a)  (2) To the maximum extent practicable, competitive procedures shall be used when entering into agreements to carry out projects under subsection (a)  (c) COMPTROLLER GENERAL ACCESS TO INFORMATION — (1) Each agreement entered into by an official referred to in subsection (a) to carry out a project under that subsection that provides for payments in a total amount in excess of $5,000,000 shall include a clause that provides for the Comptroller General, in the discretion of the Comptroller General, to examine the records of any party to the agreement or any entity that participates in the performance of the agreement  (2) The requirement in paragraph (1) shall not apply with respect to a party or entity, or a subordinate element of a party or entity, that has not entered into any other agreement that provides for audit access by a Government entity in the year prior to the date of the agreement  (3) (A) The right provided to the Comptroller General in a clause of an agreement under paragraph (1) is limited as provided in subparagraph (B) in the case of a party to the agreement, an entity that participates in the performance of the agreement, or a subordinate element of that party or entity if the only agreements or other transactions that the party, entity, or subordinate element entered into with Government entities in the year prior to the date of that agreement are cooperative agreements or transactions that were entered into under this section or Section 2371 of this title  (B) The only records of a party, other entity, or subordinate element referred to in subparagraph (A) that the Comptroller General may examine in the exercise of the right referred to in that subparagraph are records of the same type as the records that the Government has had the right to examine under the audit access clauses of the previous agreements or transactions referred to in such subparagraph that were entered into by that particular party, entity, or subordinate element  (4) The head of the contracting activity that is carrying out the agreement may waive the applicability of the requirement in paragraph (1) to the agreement if the head of the contracting activity determines that it would not be in the public interest to apply the requirement to the agreement  The waiver shall be effective with respect to the agreement only if the head of the contracting activity transmits a notification of the waiver to Congress and the Comptroller General before entering into the agreement  The notification shall include the rationale for the determination  (5) The Comptroller General may not examine records pursuant to a clause included in an agreement under paragraph (1) more than three years after the final payment is made by the United States under the agreement  (d) APPROPRIATE USE OF AUTHORITY — (1) The Secretary of Defense shall ensure that no official of an agency enters into a transaction (other than a contract, grant, or cooperative agreement) for a prototype project under the authority of this section unless one of the following conditions is met: (A) There is at least one nontraditional defense contractor or nonprofit research institution participating to a significant extent in the prototype project  (B) All significant participants in the transaction other than the Federal Government are small businesses (including small businesses participating in a program described under Section 9 of the Small Business Act (15 U S C  638)) or nontraditional defense contractors  (C) At least one third of the total cost of the prototype project is to be paid out of funds provided by sources other than other than the Federal Government  (D) The senior procurement executive for the agency determines in writing that exceptional circumstances justify the use of a transaction that provides for innovative business arrangements or structures that would not be feasible or appropriate under a contract, or would provide an opportunity to expand the defense supply base in a manner that would not be practical or feasible under a contract  (2) (A) Except as provided in subparagraph (B), the amounts counted for the purposes of this subsection as being provided, or to be provided, by a party to a transaction with respect to a prototype project that is entered into under this section other than the Federal Government do not include costs that were incurred before the date on which the transaction becomes effective  (B) Costs that were incurred for a prototype project by a party after the beginning of negotiations resulting in a transaction (other than a contract, grant, or cooperative agreement) with respect to the project before the date on which the transaction becomes effective may be counted for purposes of this subsection as being provided, or to be provided, by the party to the transaction if and to the extent that the official responsible for entering into the transaction determines in writing that- (i) the party incurred the costs in anticipation of entering into the transaction; and (ii) it was appropriate for the party to incur the costs before the transaction became effective in order to ensure the successful implementation of the transaction  (e) Definitions —In this section: (1) The term "nontraditional defense contractor" has the meaning given the term under Section 2302(9) of this title  (2) The term "small business" means a small business concern as defined under Section 3 of the Small Business Act (15 U S C  632)  (f) FOLLOW-ON PRODUCTION CONTRACTS OR TRANSACTIONS — (1) A transaction entered into under this section for a prototype project may provide for the award of a follow-on production contract or transaction to the participants in the transaction  A transaction includes all individual prototype subprojects awarded under the transaction to a consortium of United States industry and academic institutions  (2) A follow-on production contract or transaction provided for in a transaction under paragraph (1) may be awarded to the participants in the transaction without the use of competitive procedures, notwithstanding the requirements of Section 2304 of this title, if - (A) competitive procedures were used for the selection of parties for participation in the transaction; and (B) the participants in the transaction successfully completed the prototype project provided for in the transaction  (3) Contracts and transactions entered into pursuant to this subsection may be awarded using the authority in subsection (a), under the authority of Chapter 137 of this title, or under such procedures, terms, and conditions as the Secretary of Defense may establish by regulation  (g) AUTHORITY TO PROVIDE PROTOTYPES AND FOLLOW-ON PRODUCTION ITEMS AS GOVERNMENT-FURNISHED EQUIPMENT — An agreement entered into pursuant to the authority of subsection (a) or a follow-on contract or transaction entered into pursuant to the authority of subsection (f) may provide for prototypes or follow-on production items to be provided to another contractor as Government-furnished equipment  (h) APPLICABILITY OF PROCUREMENT ETHICS REQUIREMENTS — An agreement entered into under the authority of this section shall be treated as a Federal agency procurement for the purposes of Chapter 21 of Title 41  10 U S C  §2373  Procurement for experimental purposes (a) AUTHORITY — The Secretary of Defense and the Secretaries of the military departments may each buy ordnance, signal, chemical activity, transportation, energy, medical, space-flight, and aeronautical supplies, including parts and accessories, and designs thereof, that the Secretary of Defense or the Secretary concerned considers necessary for experimental or test purposes in the development of the best supplies that are needed for the national defense  (b) PROCEDURES — Purchases under this section may be made inside or outside the United States and by contract or otherwise  Chapter 137 of this title applies only when such purchases are made in quantities greater than necessary for experimentation, technical evaluation, assessment of operational utility, or safety or to provide a residual operational capability 

ground_truth: The Department of Defense (DOD) obligates more than $300 billion annually to buy goods and services, and to support research and development. Most of these acquisitions are governed by procurement statutes and regulations found in Title 10 (and parts of other select titles) of the United States Code, the Federal Acquisition Regulation (FAR), and the Defense Federal Acquisition Regulation Supplement. Under certain circumstances, DOD can enter into an other transaction (OT) agreement instead of a traditional contract. OT agreements are generally exempt from federal procurement laws and regulations. These exemptions grant government officials the flexibility to include, amend, or exclude contract clauses and requirements that are mandatory in traditional procurements (e.g., termination clauses, cost accounting standards, payments, audit requirements, intellectual property, and contract disputes). OT authorities also grant more flexibility to structure agreements in numerous ways, including joint ventures; partnerships; consortia; or multiple agencies joining together to fund an agreement encompassing multiple providers. Other transaction agreements are legally binding contracts; they are referred to as agreements to distinguish them from the traditional procurement contracts governed by the FAR and procurements laws. Other transaction authorities are set forth in two sections of law: 10 U.S.C. 2371—granting authority to use OTs for basic, applied, and advanced research projects. 10 U.S.C. 2371b—granting authority to use OTs for prototype projects and follow-on production. Under this authority, a prototype project can only be conducted if at least one nontraditional defense contractor significantly participates in the project; all significant participants are small businesses or nontraditional defense contractors; at least one-third of the total cost of the prototype project is provided by nongovernment participants; or the senior procurement acquisition official provides a written justification for using an OT. Follow-on production can only be conducted when the underlying prototype OT was competitively awarded, and the prototype project was successfully completed. OTs have the potential to provide significant benefits to DOD, including attracting nontraditional contractors with promising technological capabilities to work with DOD, establishing a mechanism to pool resources with other entities to facilitate development of, and obtain, state-of-the-art dual-use technologies, and offering a unique mechanism for DOD to invest in, and influence the direction of, technology development. A number of analysts warn that along with the potential benefits come significant risks, including potentially diminished oversight and exemption from laws and regulations designed to protect government and taxpayer interests. In FY2017, DOD obligated $2.1 billion on prototype OT agreements, representing less than 1% of contract obligations for the year. However, the use of OTs is expected to grow at a rapid pace, due in part to recent statutory changes expanding other transaction authorities. A number of analysts and officials have raised concerns that if DOD uses OTs in ways not intended by Congress—or is perceived to abuse the authority—Congress could clamp down on the authority. Generally, DOD lacks authoritative data that can be used to measure and evaluate the use of other transaction authorities.