Bye, FAR. Hello, OTAs & CSOs: The Agile Evolution in DoD Contracting
As the Pentagon fast-tracks innovation, traditional procurement rules are being sidelined—ushering in a new era of flexible, high-speed contracting. But is this bold move fueling innovation… or weakening oversight?
As the landscape of defense procurement rapidly evolves, a new wave of “agile contracting” is gaining momentum—and July 2025 marks a pivotal moment in the debate.
Fueled by a recent Trump-era Executive Order and reinforced by a Department of Defense (DoD) memorandum, the use of Commercial Solutions Openings (CSOs) and Other Transaction Agreements (OTAs) is accelerating. These tools are designed to bypass traditional FAR (Federal Acquisition Regulation) procedures, giving the government greater flexibility to procure innovative solutions from non-traditional vendors.
But with speed comes scrutiny.
What Are CSOs and OTAs?
CSOs allow agencies to rapidly evaluate and procure innovative commercial technologies without the constraints of FAR-based solicitations.
OTAs are legally binding agreements—used primarily by DoD, NASA, and DHS—that are not governed by FAR, enabling experimentation and prototyping without conventional red tape.
Together, they are reshaping how the U.S. government engages with private sector innovation, particularly in high-tech sectors like AI, cybersecurity, and advanced manufacturing.
Why the Surge Now?
The recent Executive Order and DoD guidance have:
Expanded the scope and authority for agencies to use these tools,
Encouraged more flexible evaluation and award processes,
And prioritized speed and innovation over traditional procurement protocol.
July is significant: many of these reforms are entering active implementation phases, and contractors are closely watching how agencies interpret and apply the changes.
The Benefits: Speed, Access, and Innovation
Agencies, especially within the DoD, cite several key advantages:
Faster Procurement: Awards through OTAs and CSOs often take weeks instead of months or years.
Encouraging Non-Traditional Vendors: Startups and commercial tech companies, who typically avoid FAR due to complexity, are now participating.
Fostering Innovation: These tools are ideal for prototyping emerging technologies in fields like AI, drone tech, and quantum computing.
The Risks: Oversight and Equity
However, watchdogs and policymakers have voiced growing concerns:
Lack of Transparency: Unlike FAR contracts, OTAs are not subject to the same public disclosure or protest rules.
Accountability Gaps: With fewer checks, there’s increased potential for favoritism or performance risk.
Barriers for Traditional Contractors: Small firms accustomed to FAR compliance may find the OTA/CSO process opaque and exclusionary if they’re not prepared.
What This Means for Contractors
If you’re a small business or emerging tech firm:
You may now have greater access to DoD opportunities—but need to learn a different playbook.
Understand how to engage through CSO solicitations and prepare for OTAs without relying on the FAR.
Watch for hybrid models where OTAs are used for prototyping, with traditional contracts awarded later for full production.
If you’re already FAR-compliant:
Don’t get left behind. Many agencies are shifting portions of their R&D or pilot budgets to OTA vehicles.
Consider partnering with innovative firms already engaged through these vehicles to stay competitive.
What’s Next?
In the coming months, Congress and the GAO are expected to:
Review oversight procedures for OTA usage.
Issue new guidance on reporting and performance tracking.
Evaluate the balance between innovation and integrity in agile acquisition.
The question remains:
Can the government scale innovation without sacrificing transparency?
July is a turning point as the DoD refines its agile acquisition playbook—and sets a precedent other agencies may follow.
Final Thought
Whether you're an AI developer, drone manufacturer, or procurement professional—understanding CSOs and OTAs is no longer optional. It’s the future of agile contracting, and July 2025 is shaping up to be its most defining chapter yet.
