News & Insights

The Federal Acquisition Regulation (FAR) is the primary regulation the federal government uses to acquire products and services with appropriated funds. While the FAR process is effective for most of the needs of the federal government, using alternative procurement strategies may be best when:  

• The government is seeking creative and more sustainable solutions 
• Appropriated funds are not available and/or the procurement approach is unclear 
• The requirement is new and/or the solution is not pre-defined 
• Requirements are time-sensitive and speed of delivery is critical 
• Potential partners have resources and similar requirements  
• Government-owned assets may be leveraged to offset costs

In these situations, the government can use a variety of unconventional transactional tools which enable greater contracting flexibility and access to alternative sources of funding through public and private partnerships. 

Salas O’Brien provides our federal clients with industry-leading experience and expertise to develop innovative, cost-effective, and enduring solutions that enhance resiliency and mission readiness. Here are three of the tools we have used to team with government agencies to successfully deliver affordable, comprehensive, and expedited results through alternative procurement strategies.  

Other Transaction Authority (OTA) 

What happens when the government has a requirement, but they don’t know what the solution looks like?  

This is where Other Transaction Authority (OTA) comes in. Rather than prescribe the solution through a detailed scope of work in a Request for Proposal, OTA is a non-FAR procurement tool which allows the government to partner with industry experts to develop a prototype using innovative technologies, processes, and/or systems. 

At the start of the OTA process, the government issues a Request for White Paper (RWP), soliciting proposed solutions to address their requirement. The government selects their preferred solution and awards a contract. The OTA process enables the government to collaborate with the awardee to: create a diverse team of experts; drive innovation; and determine the funding level. Of note, the OTA can be funded with any combination of funding, including appropriated, private, and grants. An OTA contract can be awarded in as little as 120 days because — unlike FAR-based procurements — the specifics of the team, scope, and funding are finalized after an industry partner is selected.         

We are working with the US Army Corps of Engineers (USACE) Vicksburg District and Marine Design Center to resolve an operational risk to one of its most important civil works missions — the maintenance of navigational waterways critical to national defense and economic security. For decades, one of USACE’s most hazardous projects has been controlling and mitigating naturally occurring erosion along the banks and levees of the vital Mississippi River. USACE is leveraging the flexibility of the OTA to design, test, and build a first-of-its-kind robot.  When complete, the robot will be the largest in the world and capable of performing the mission of nearly 200 laborers in half the time and with a large cost savings.      

This innovative project prototype — now known as ARMOR ONE — will increase safety, productivity, and sustainability of military, civil and private river operations for decades to come. And its applicability to other navigable waterways facing similar erosion problems is being explored throughout America. Importantly, this project demonstrates the necessity for contracting tools that encourage and enable greater collaboration between our government, academia, private industry, and commercial enterprise to imagine and implement creative solutions to complex challenges.   

Questions?  Please contact us to learn more about the use cases for OTA, the procurement process, and the use of its “production clause” to unlock the cost and schedule benefits of scale.    

Enhanced Use Leases (EUL) 

Can the government monetize underutilized assets to offset funding gaps for other requirements?  

The short answer is yes. The Enhanced Use Lease (EUL) authority allows a military installation to out grant a parcel of “non-excess, underutilized” land to a non-federal tenant.  Advantages of an EUL include the ability to extend the lease term to 50 years and to receive all the lease payments (expressed as a net present value lump sum) in the form of in-kind consideration, 100% of which can be retained at the base. [Note: Typically, only 50% of cash payments may be retained at the base, with the remaining 50% remitted to the higher headquarters.]  Often a third-party developer will compete for the 50-year lease to secure favorable financing terms for capital improvements (facilities and infrastructure) that attract long-term tenants and achieve a market rate of return on the development investment. If executed correctly, EULs are an effective asset management tool with the potential to generate monetary value that can be applied to unfunded operational and capital improvement requirements on military installations.  

Knowing the requirements, resources, and market conditions necessary to develop an EUL is just as important as knowing how to close a successful EUL. This expertise differentiates our team and is why our government clients seek our assistance using this transactional approach. We successfully led and closed two of the largest Department of Defense (DoD) EULs. The Falcon Hill National Aerospace Research Park (NARP) at Hill Air Force Base (AFB), Utah is a 25-year agreement between the Air Force and Sunset Ridge Development Partners that enables commercial property development both on-and off-base to create a world-class research and development hub. This partnership provides for the investment in new construction, equipment, and improvements bringing industry to the State of Utah as well as modern and technologically advanced facilities for the Air Force that would not have been possible under existing base capital investment budgets.  

In addition, our team was specifically sought out by the Air Force to reattempt a failed energy resiliency development EUL at Edwards AFB, California that was marketed to private industry at an inflated fair market value and with unrealistic financial performance expectations. We methodically reengaged the market to assess and verify investment interest and attract developers with terms favorable to the Air Force and industry. This approach succeeded, and within 6 months Edwards AFB agreed to lease 4000 acres to Terragen to construct a 1,300 MW solar array, one of the largest in the world, bringing Edwards AFB significant remuneration in the form of in-kind consideration, including an advanced technology microgrid to enhance installation energy security and resiliency.  

Intergovernmental Support Agreements (IGSA) 

Can military installations partner with state and local government agencies to increase their base operations and capital investment buying power?

Yes. In fact, Intergovernmental Support Agreements (IGSAs) allow the military to work with communities and government agencies on a sole-source basis to pursue common requirements though shared resources–usually with faster and more cost-effective results. Notably, Congress is showing support for these innovative collaborations by expanding the applicability and flexibility of the IGSA authority and encouraging its use to help bases and surrounding communities overcome funding gaps for critical assets.  

Salas O’Brien worked with Fairchild AFB, Washington to develop a first-of-its-kind IGSA with Spokane County resulting in the construction of a new joint-use indoor firing range to meet each parties’ annual training, qualification, and proficiency requirements. The agreement made it possible for Spokane County to finance, construct, own and operate the range with enough capacity to meet Fairchild AFB’s requirements under a ten-year service contract. Through market outreach, our team attracted interest from other regional law enforcement agencies to maximize utilization of the range and minimize Spokane County’s investment risk. The Air Force is now considering this approach as a potential enterprise-wide solution to recapitalize existing outdoor firing ranges that are not expected to be funded in the foreseeable future.  

Another innovation in the use of this authority is the “blanket” or Regional IGSA that our team developed between multiple military installations and the City of San Antonio, Texas. Under this agreement, the city extended their landscaping services contracts to local military installations resulting in nearly 30% cost savings to the military compared to previous installation support contracts, and increased buying power for the City through the 10-year IGSA term. This approach takes advantage of greater economies of scale, making the acquisition of services more affordable. It is being replicated across several states with our team’s technical support. 

How Salas O’Brien can help with alternative procurements 

It’s important to have a trusted asset management advisory partner who can see opportunities and understand how to create long-term value using innovative solutions. Our team provides holistic, multi-disciplinary, technical advice backed by proven experience and disciplined insights.  

We work alongside our clients to help make sound planning decisions supported by comprehensive data-driven business case analytics and executable strategies. We carry out market due diligence using industry best practices while carefully considering environmental, social, and governance factors that move our clients forward with confidence towards a more sustainable future. 

Want to talk more about these services? Contact our contributors below.