U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

1 

69–010 

" ! SENATE 110th Congress 

2d Session 

REPORT

2008

110–454 

Calendar No. 952 

AMENDING THE HOMELAND SECURITY ACT 

OF 2002 TO PROVIDE FOR A ONE-YEAR 

EXTENSION OF OTHER TRANSACTION AUTHORITY 

R E P O R T 

OF THE

COMMITTEE ON HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

TO ACCOMPANY

S. 3328 

AMENDING THE HOMELAND SECURITY ACT OF 2002 TO PROVIDE 

FOR A ONE-YEAR EXTENSION OF OTHER TRANSACTION AUTHORITY 

SEPTEMBER 11, 2008.—Ordered to be printed 


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(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

BARACK OBAMA, Illinois 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

SUSAN M. COLLINS, Maine 

TED STEVENS, Alaska 

GEORGE V. VOINOVICH, Ohio 

NORM COLEMAN, Minnesota 

TOM COBURN, Oklahoma 

PETE V. DOMENICI, New Mexico 

JOHN WARNER, Virginia 

JOHN E. SUNUNU, New Hampshire 

MICHAEL L. ALEXANDER, Staff Director 

KEVIN J. LANDY, Chief Counsel 

TROY H. CRIBB, Counsel 

NORA K. ADKINS, GAO Detailee 

BRANDON L. MILHORN, Minority Staff Director and Chief Counsel 

RICHARD A. BEUTEL, Minority Senior Counsel 

ERIC B. CHO, Minority GSA Detailee 

TRINA DRIESSNACK TYRER, Chief Clerk 


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C O N T E N T S 

Page 

I. Purpose and Summary .................................................................................. 1 

II. Background and Need for the Legislation ................................................... 2 

III. Legislative History ......................................................................................... 2 

IV. Section-by-Section Analysis .......................................................................... 2 

V. Evaluation of Regulatory Impact .................................................................. 3 

VI. Congressional Budget Office Cost Estimate ................................................ 3 

VII. Changes in Existing Law Made by the Bill, as Reported ........................... 4 


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Calendar No. 952 

110th Congress SENATE REPORT " ! 2d Session 110-454 

AMENDING THE HOMELAND SECURITY ACT OF 2002 TO 

PROVIDE FOR A ONE-YEAR EXTENSION OF OTHER 

TRANSACTION AUTHORITY 

SEPTEMBER 11, 2008.—Ordered to be printed 

Mr. LIEBERMAN, from the Committee on Homeland Security and 

Governmental Affairs, submitted the following 

R E P O R T 

[To accompany S. 3328] 

The Committee on Homeland Security and Governmental Affairs, 

to which was referred the bill (S. 3328) to amend the Homeland Security Act of 2002 to provide for a one-year extension of other 

transaction authority, having considered the same, reports favorably thereon and recommends that the bill do pass. 

I. PURPOSE AND SUMMARY

S. 3328 extends the Department of Homeland Security’s (DHS or 

the Department) ability to use Other Transaction Authority (OTA) 

by 1-year to September 30, 2009. An ‘‘Other Transaction’’ (OT) is 

an alternative procurement approach not based on the Federal Acquisition Regulation (FAR) and specifically authorized by Congress 

to accelerate prototyping of breakthrough technologies. Agencies 

with OTA are freer to negotiate provisions that are mutually acceptable to all parties, such as intellectual property provisions and 

indemnity provisions, because most laws and standards applicable 

to standard federal procurements, grants, and cooperative agreements, such as the Truth in Negotiations Act, Competition in Contracting Act, or Cost Accounting Standards are not applicable to 

contracts entered pursuant to OTA. This encourages nontraditional 

government contractors to offer to develop technologies that would 

otherwise be unavailable to the government. Primarily, DHS uses 

OTA to contract with cutting-edge, non-traditional government contractors to foster development of programs and technologies critical 

to homeland security needs. 


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To ensure proper use and oversight, S. 3328 requires DHS to 

produce guidance, increase training, and report on OTA usage during this interim 1-year extension period. The annual report would 

include, among other requirements, the extent to which use of OTA 

has contributed to a broadening of the technology and industrial 

base that supports national security, the rationale for using OTA, 

including an explanation of why grants or FAR-based contracts 

were not used, the extent of competition, and the amount expended 

for each project. 

II. BACKGROUND AND NEED FOR THE LEGISLATION

The Departments of Defense (DoD), Energy, and Transportation 

have used OTA, as have the FAA and NASA. Section 831 of the 

Homeland Security Act of 2002 (P.L. 107–296) provided DHS its 

initial 5-year grant of OTA, modeled after DoD’s OTA statute. The 

FY 2008 DHS Appropriations Act (P.L. 110–161, Div. E, Title V, 

572) extended the Department’s authority for an additional year 

through September 30th, 2008. OTA is used primarily by the 

Science and Technology (S&T) Directorate to contract with non-traditional government contractors with innovative solutions to further its mission of developing basic, applied, and advanced research 

and development on critical homeland security technologies. 

III. LEGISLATIVE HISTORY

On July 24, 2008, S. 3328 was introduced by Senator Collins and 

referred to the Senate Committee on Homeland Security and Governmental Affairs. The bill’s original co-sponsor was Senator 

Lieberman. On July 30, 2008, S. 3328 was reported favorably by 

the Committee by voice vote without amendment. Members present 

for the vote on the bill were Senators Lieberman, Akaka, Carper, 

Pryor, Landrieu, Tester, Collins, Stevens, and Voinovich. 

IV. SECTION-BY-SECTION ANALYSIS

Section 1. One-year extension of other transaction authority 

Section 1 amends Section 831 of the Homeland Security Act of 

2002 (6 U.S.C. 391(a)) to provide for a one-year extension of other 

transaction authority through September 30, 2009. This extension 

is conditioned upon the Secretary’s issuance of policy guidance by 

September 30, 2008, detailing the appropriate use of OTA and provision of mandatory training to each employee who has the authority to handle OTA. 

Section 1 also expands the annual OTA report required under 

Section 831(a)(1) of the Homeland Security Act of 2002 (Public Law 

107–296) by requiring that the report also include— 

(i) The technology areas in which research projects were conducted under other transactions; 

(ii) The extent of the cost-sharing among Federal and nonFederal sources; 

(iii) The extent to which use of the other transactions I) has 

contributed to a broadening of the technology and industrial 

base available for meeting the needs of the Department of 

Homeland Security; and II) has fostered within the technology 


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and industrial base new relationships and practices that support the national security of the United States; 

(iv) The total amount of payments, if any, that were received 

by the Federal Government during the fiscal year covered by 

the report; 

(v) The rationale for using other transaction authority, including why grants or Federal Acquisition Regulation-based 

contracts were not used, the extent of competition, and the 

amount expended for each such project. 

These reporting elements resemble those for Department of Defense OTA under 10 U.S.C. 2371(h) except for subparagraph (v), 

which requires an explanation, for each OTA transaction, why 

standard FAR-based procurement contracts or financial assistance 

instruments such as grants or cooperative agreements were not appropriate. This reflects the Committee’s belief that OTA serves a 

limited purpose and should only be used when these other well-established instruments are not appropriate. 

V. EVALUATION OF REGULATORY IMPACT

Pursuant to the requirements of paragraph 11(b) of rule XXVI of 

the Standing Rules of the Senate, the Committee has considered 

the regulatory impact of this bill. The Congressional Budget Office 

states that S. 3328 contains no intergovernmental or private-sector 

mandates as defined in the Unfunded Mandates Reform Act and 

would not affect the budgets of state, local, or tribal governments. 

The enactment of this legislation will not have significant regulatory impact. 

VI. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

AUGUST 12, 2008. 

Hon. JOSEPH I. LIEBERMAN, 

Chairman, Committee on Homeland Security and Governmental Affairs, U.S. Senate, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for S. 3328, a bill to amend the 

Homeland Security Act of 2002 to provide for a one-year extension 

of other transaction authority. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Mark Grabowicz. 

Sincerely, 

PETER R. ORSZAG. 

Enclosure. 

S. 3328—A bill to amend the Homeland Security Act of 2002 to provide for a one-year extension of other transaction authority 

Current law permits the Department of Homeland Security 

(DHS) to waive the requirements of the Federal Acquisition Regulation (procedures that guide federal procurement actions) for certain research and development projects. DHS allocated about $400 

million for such projects over the 2004–2007 period, enabling the 

department to increase its use of small contractors for research and 

development activities. This authority (known as ‘‘other transaction 

authority’’) is scheduled to expire on September 30, 2008; S. 3328 

would extend it for one year. 


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Based on information from DHS about the department’s research 

and development plans, CBO estimates that implementing S. 3328 

would not significantly affect DHS spending for those activities. 

Enacting the bill would not affect direct spending or revenues. 

S. 3328 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would 

not affect the budgets of state, local, or tribal governments. 

The CBO staff contact for this estimate is Mark Grabowicz. This 

estimate was approved by Peter H. Fontaine, Assistant Director for 

Budget Analysis. 

VII. CHANGES TO EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with paragraph 12 of rule XXVI of the Standing 

Rules of the Senate, changes in existing law made by S. 3328 as 

reported are shown as follows (existing law proposed to be omitted 

is enclosed in øbrackets¿, new matter is printed in italic, and existing law in which no change is proposed is shown in roman): 

HOMELAND SECURITY ACT OF 2002 

Pub. L. 107–296, Title VIII, 831, Nov. 25, 2002; as amended by Pub. L. 110–161, 

Div. E, Title V, 572, Dec. 26, 2007. 

6 U.S.C. 391 

SEC. 831. RESEARCH AND DEVELOPMENT PROJECTS. 

(a) AUTHORITY.—If the Secretary issues policy guidance by September 30, 2008, detailing the appropriate use of other transaction 

authority and provides mandatory other transaction training to 

each employee who has the authority to handle procurements under 

other transaction authority, the Secretary may, before September 30, 

2009, carry out a programøUntil September 30, 2008, the Secretary 

may carry out a pilot program¿ under which the Secretary may exercise the following authorities: 

(1) IN GENERAL.—When the Secretary carries out basic, applied, and advanced research and development projects, including the expenditure of funds for such projects, the Secretary 

may exercise the same authority (subject to the same limitations and conditions) with respect to such research and projects 

as the Secretary of Defense may exercise under section 2371 of 

title 10, United States Code (except for subsections (b) and (f)), 

after making a determination that the use of a contract, grant, 

or cooperative agreement for such project is not feasible or appropriate. The annual report required under subsection 

(b)(1)øsubsection (b)¿ of this section, as applied to the Secretary by this paragraph, shall be submitted to the President 

of the Senate and the Speaker of the House of Representatives. 

(2) * * * 

(b) REPORTS.— 

(1) IN GENERAL.—ø(b) REPORT.—¿ Not later than 2 years 

after the effective date of this Act, and annually thereafter, the 

Comptroller General shall report to the Committee on Government Reform of the House of Representatives and the Committee on Governmental Affairs of the Senate on— 

(A) ø(1)¿ whether use of the authorities described in subsection (a) attracts nontraditional Government contractors and 

results in the acquisition of needed technologies; and 


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(B) ø(2)¿ if such authorities were to be made permanent, 

whether additional safeguards are needed with respect to the 

use of such authorities. 

(2) ANNUAL REPORT ON EXERCISE OF OTHER TRANSACTION AU- THORITY— 

(A) IN GENERAL.—The Secretary shall submit to the Committee on Homeland Security and Governmental Affairs of 

the Senate and the Committee on Homeland Security of the 

House of Representatives an annual report on the exercise 

of other transaction authority under subsection (a). 

(B) CONTENT.—The report required under subparagraph 

(A) shall include the following: 

(i) The technology areas in which research projects 

were conducted under other transactions. 

(ii) The extent of the cost-sharing among Federal and 

non-Federal sources. 

(iii) The extent to which use of the other transactions— 

(I) has contributed to a broadening of the technology and industrial base available for meeting 

the needs of the Department of Homeland Security; 

and 

(II) has fostered within the technology and industrial base new relationships and practices that 

support the national security of the United States. 

(iv) The total amount of payments, if any, that were 

received by the Federal Government during the fiscal 

year covered by the report. 

(v) The rationale for using other transaction authority, including why grants or Federal Acquisition Regulation-based contracts were not used, the extent of competition, and the amount expended for each such 

project. 

Æ 


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