These include  contracts, financial assistance mechanisms such as grants and  cooperative agreements, and cooperative research and development  agreements. The traditional mechanisms include the following:
Contracts. Under these  authorities, agencies may develop agreements that are not required to  follow a standard format or include terms and conditions that are typically  required when using traditional mechanisms. Agencies may use other transaction agreements for a variety of projects  and activities. This report includes  information on all agencies with other transaction authority. Eleven Federal Agencies Are Authorized to Use Other Transaction Agreements and Generally Have Guidance for Use

Congress has granted statutory authority to use other transaction  agreements to 11 federal agencies. The National Aeronautics and  Space Administration (NASA), which was granted the authority in 1958,  was the first agency to receive it (see fig. Over the next several  decades, the authority to use other transaction agreements was granted  to five federal departments—the Departments of Defense (DOD), Energy  (DOE), Health and Human Services (HHS), Homeland Security (DHS),  and Transportation (DOT). Congress also granted specific authority to  use other transaction agreements to several agencies within these  departments, including the Federal Aviation Administration (FAA) within  DOT and the Transportation Security Administration (TSA) and the  Domestic Nuclear Detection Office (DNDO) within DHS. Most agencies have limitations on their other transaction authorities,  although the extent and type of limitations or requirements laid out in the  agencies’ statutory authorities vary. For example, DOT’s statutory authority limits the agency’s use of  other transaction agreements to three types of RD&D projects that focus  on public transportation. To implement their authority, 10 of the 11 agencies have issued guidance  to govern their use of other transaction agreements. Other Transaction Agreements Offered Agencies Flexibility and Were Used by Most Agencies for RD&D Activities

Most agencies cited flexibility as a primary reason for their use of other  transaction agreements, specifically to meet the needs of the agency, or  the entities entering into these agreements with the agency. Officials from  most agencies told us the authority allowed them to develop customized  agreements that addressed concerns over requirements in traditional  mechanisms that entities viewed as potential obstacles to doing business  with a federal agency. Officials cited two areas of concern for  entities—protection of intellectual property rights and compliance with  government cost accounting standards—that other transaction  agreements allowed agencies to address. Most Agencies Used Other Transaction Agreements for RD&D Activities

Nine of the 11 agencies used other transaction agreements for RD&D  activities for fiscal years 2010 through 2014 (see table 1). Officials from two agencies—TSA and NASA—told us  the agencies used other transaction agreements for fiscal years 2010  through 2014 for an array of activities that were not related to RD&D or  prototype activities. Other Transaction Agreements Were a Small Proportion of Most Agencies’ Contracting and Financial Assistance Activities, and the Number of Agreements Was Generally Low

Most agencies used other transaction agreements sparingly compared to  traditional contracting and other financial assistance mechanisms,  generally because they identified few situations that justified or  necessitated the use of other transaction agreements, according to  officials. As a result, each of the component’s agreements took a  long time to develop. Specifically, 9 out of 11 agencies  managed 75 or fewer other transaction agreements in fiscal year 2010,  and the number of agreements used remained low by the end of fiscal  year 2014 (see table 2). In contrast, TSA and NASA—two agencies that used other transaction  agreements for projects and activities other than RD&D and prototypes— had the largest number of other transaction agreements in fiscal year  2010. In fiscal year 2010, TSA and NASA had about 400 and 2,220  agreements, respectively. By the end of fiscal year 2014, these agencies  had increased their use to about 640 and 3,220 agreements, respectively. Appendix I: Objectives, Scope, and Methodology

The report describes (1) which federal agencies are authorized to use  other transaction agreements and the extent to which agencies have  guidance to implement the authority, (2) why agencies used other  transaction agreements and for what types of activities, and (3) the extent  to which federal agencies used other transaction agreements for fiscal  years 2010 through 2014.
Why GAO Did This Study

Federal agencies use a variety of acquisition and financial assistance mechanisms, such as contracts, grants, and cooperative agreements, to help meet their missions. Some federal agencies have received authorization to use other transaction agreements, which allow an agency to enter into agreements other than traditional mechanisms, such as contracts. As a result, agencies can customize their other transaction agreements to help meet project requirements and mission needs. As GAO reported in May 2002, this authority carries risks, however, because such agreements may be exempt from the Federal Acquisition Regulation and other requirements that are intended to protect taxpayers' interests.
GAO was asked to review federal agencies' use of other transaction authority. This report describes (1) which agencies are authorized to use other transaction agreements and the extent to which agencies have guidance to implement the authority, (2) why agencies used other transaction agreements and for what types of activities, and (3) the extent to which agencies used other transaction agreements for fiscal years 2010 through 2014. GAO reviewed statutory authorizations, agencies' guidance, and information on agencies' other transaction agreements and use for fiscal years 2010 through 2014, and interviewed officials from each of the agencies authorized to use other transaction agreements.

What GAO Found

Congress has authorized 11 federal agencies to use other transaction agreements—which generally do not follow a standard format or include terms and conditions required in traditional mechanisms, such as contracts or grants—to help meet project requirements and mission needs. The National Aeronautics and Space Administration (NASA) first received this authority in 1958. Over the next several decades, five additional federal departments were given this authority—Defense (DOD), Energy (DOE), Health and Human Services (HHS), Homeland Security (DHS), and Transportation (DOT). Congress also granted authority to five agencies within these departments, including DOT's Federal Aviation Administration and DHS's Transportation Security Administration (TSA). The statutory authorities for most agencies include some limitations on the use of their agreements, although the extent and type of limitations vary. For example, DOT's authority limits use of other transaction agreements to research, development, and demonstration (RD&D) projects that focus on public transportation. Ten of the 11 agencies have issued guidance to implement their authority. The last agency—the National Institutes of Health (NIH)—is in the process of developing guidance.
Most agencies cited flexibility as a primary reason for their use of other transaction agreements, and used agreements mostly for RD&D activities. Officials from 7 agencies told GAO the authority allowed them to develop customized agreements that addressed concerns over requirements in traditional mechanisms that some companies viewed as potential obstacles to doing business with a federal agency. This flexibility allowed agencies to address concerns regarding intellectual property and cost accounting provisions that would otherwise need to be included when using traditional mechanisms, such as contracts. In addition, other transaction agreements allowed some agencies to tailor other terms and conditions of agreements as needed when working with other entities. Most agencies—9 of the 11—used other transaction agreements for RD&D activities for a range of projects from medical research to energy development research. Two of the 9 agencies—DOD and DHS—also used other transaction agreements for prototype activities. Three agencies, including TSA and NASA, used other transaction agreements for activities not related to RD&D or prototype development, including airport security and education and outreach.
Other transaction agreements were a small proportion of most agencies' contracting and financial assistance activities for fiscal years 2010 through 2014. Compared to traditional mechanisms, most agencies used other transaction agreements sparingly, according to officials. Most agencies had a small number of other transaction agreements—75 or fewer—in fiscal year 2010, and the number of agreements generally remained low by the end of fiscal year 2014. Officials cited budgetary and other reasons for this trend. In contrast, two agencies that used other transaction agreements for activities other than RD&D and prototypes—TSA and NASA—had larger numbers of agreements. In fiscal year 2010, TSA and NASA had about 400 and 2,220 agreements, respectively. By the end of fiscal year 2014, these agencies had increased their use to about 640 and 3,220 agreements, respectively.

What GAO Recommends

GAO is not making any recommendations in this report.