Federal contractors are facing a major change in how military construction projects can be awarded. For years, prototype construction Other Transaction Authorities (OTAs) were limited to two projects per military service each year, which kept OTAs focused on a small number of test projects. Section 2808a of the fiscal year 2026 National Defense Authorization Act removed that limit and expanded the authority to include general facility construction and repair, opening the door for OTAs to be used on much larger programs.
This isn’t a marginal shift. The Army’s $169.1 million award for Joint Base Lewis-McChord (JBLM)’s facilities modernization program and its $986 million Facilities, Operations, Readiness, Growth and Experience (FORGE) II award at Anniston Army Depot show how quickly things are changing. Both awards bundle years of construction and repair work under a single contract. The JBLM program includes 19 projects, while the Anniston program includes four new facilities and 19 consolidated repair projects. This shows that the government is treating OTA as a primary delivery vehicle for major installations, not a side door for occasional experimentation.
For federal contractors, the opportunity comes with a new challenge. Companies that have spent decades working under the Federal Acquisition Regulation (FAR) now have to compete and perform under agreements that may follow very different rules. Firms are discovering that OTAs remove many of the standard FAR requirements, but they do not remove the need for strong processes, clear terms and proven qualifications. Instead, more responsibility shifts to the parties creating the agreement. What used to be handled by regulation now has to be built and demonstrated by each firm on its own, in the terms it negotiates, the certifications it holds and the relationships it brings to the table before a solicitation ever drops.
For firms pursuing federal construction programs, understanding how to prepare for this new delivery environment could become an important part of staying competitive. (Download the OTA Readiness Self-Assessment for free!)
What Changed Under Section 2808a?
Two statutes are shaping how OTAs can be used for federal construction. For contractors pursuing this work, understanding the difference is vitally important.
- 10 U.S.C. § 4022 – Prototype OTAs: Used when the facility or delivery method is itself a prototype or pilot with technical uncertainty and learning objectives.
- 10 U.S.C. § 2808a – Facility Construction and Repair OTAs: Authorizing end-to-end planning, design, engineering and construction of facilities using transactions other than contracts or grants.
What Section 2808a Means for Federal Contractors
Section 2808a greatly expands where OTAs can be used. With the two-project-per-service cap gone and prototyping no longer a prerequisite, government facilities can now use OTAs for a much wider range of construction and repair needs outside the FAR.
Ultimately, this changes how contractors need to prepare. OTA opportunities may no longer be limited to unusual pilot projects. Firms pursuing federal construction may need to understand this acquisition path, build the right qualifications and develop relationships before an opportunity reaches the market.
It is also important to understand what an OTA does and does not change. An OTA is an acquisition authority, not a construction delivery method. A project can still use familiar delivery concepts including progressive design development, early contractor involvement, phased pricing and collaborative decision-making.
The simplest way to think about the shift is: non-FAR does not mean no rules. It means the agreement itself becomes much more important in establishing the rules.
How Do OTA Agreements Differ From FAR Contracts?
OTAs can give the government more speed, fewer protest risks and access to companies that may avoid traditional federal contracts because of the compliance burden. But that flexibility creates a different set of responsibilities for contractors.
Under the FAR, many protections are already built into the contracting process. Those can include requirements for how scope changes are handled, how contractors are paid and how disputes are resolved. With an OTA, contractors cannot assume those same protections will apply. If a firm wants certain terms or protections, they need to be negotiated directly into the agreement.
That’s why the firms winning these awards are prepared well before a solicitation drops, rather than scrambling once one appears Requirements such as bonding capacity, staffing, internal processes and the ability to respond to a faster procurement schedule are not assembled in the weeks after an opportunity appears. For contractors, success may depend on having the right capabilities, relationships and internal systems in place well before the government goes to market.
Why OTA Construction Requires a Contractor Built for Speed
That preparedness continues after award. While one of the primary attractions of OTAs is speed, a faster acquisition process does not automatically produce faster project delivery. The advantage only materializes when the organizations involved can make decisions, develop design, validate pricing, engage trade partners, evaluate risk and mobilize resources at the same pace.
That has significant implications for contractors accustomed to the more predictable sequencing of traditional federal procurements. Internal review processes that take weeks may no longer fit the procurement timeline. Legal, estimating, design management, operations, procurement and executive leadership may need to work concurrently rather than sequentially.
How Contractors Can Differentiate in an OTA Procurement
Federal contractors are used to proving they can meet detailed rules and requirements. Under an OTA, that is still important, but it may not be enough to win the work. Technical qualifications, safety, security and applicable federal requirements remain important. But agencies using an OTA may also be looking for a team that can demonstrate how its approach improves the outcome, particularly through speed, collaboration, innovation and risk reduction.
For contractors, innovation can mean finding practical ways to deliver facilities faster and with greater certainty. That could include early trade partner engagement, prefabrication or modularization, alternative materials or systems, digital design coordination, streamlined design reviews, supply-chain planning, early procurement of long-lead equipment, phased construction or packaging multiple facility projects into a coordinated program.
The question becomes less about “Can we comply?” and more about “What can our team do differently to help the government achieve its mission sooner?”
How Contractors Can Pursue OTA Opportunities
There are a few routes into an OTA, and they carry different implications for how a firm positions itself:
- Consortium relationships are increasingly the practical route in. A consortium is a group of companies, often organized around a shared capability area, that manages the OTA procurement among its members. This means the relevant question for a prime isn’t “can we bid this?” but “are we positioned in the right consortium already?”
- Joint venture or partnerships allow multiple firms to jointly hold the agreement.
- Bilateral agreements provide direct, one-to-one negotiation between the government and a single company.
- The U.S. Army Corps of Engineers (USACE) Progressive Design-Build with OTA Playbook illustrates how USACE is leveraging OTA to support collaborative delivery, open-book estimating and risk-sharing to ultimately drive better project outcomes.
What Stays the Same Under an OTA?
For all the attention surrounding OTAs, the fundamentals of successful construction remain remarkably familiar. Contractors still need to understand the owner’s mission, manage design, control cost and schedule, maintain safety and quality, develop a capable trade partner network, manage risk and deliver what they promise. The procurement vehicle may change, but the execution standard does not. In many ways, OTAs place even greater emphasis on those fundamentals because contractors may have fewer prescribed processes telling them how to get there.
An OTA also does not change Congress’ role in federal construction. Projects still need to be authorized and funded for their intended purpose, and applicable statutory limits and reporting requirements still apply. What changes is how the government acquires the work.
The Growing Role of OTAs in Federal Construction
OTAs are giving the government another way to bring construction opportunities to market faster and with fewer traditional procurement steps. That could become especially important in a competitive construction market, where contractors are selective about which opportunities they pursue. A faster, more flexible process may help agencies attract strong teams at the right time.
The Army, Navy and Air Force are already moving in this direction. Various (NAVFAC) localities have issued Areas of Interest (AOIs) to identify potential teams and approaches for upcoming work. USACE is following in their footsteps and the Air Force is moving forward with multiple projects such as the U.S. Space Command headquarters project in Huntsville, Alabama, and the Cyber Intelligence Center at Joint Base San Antonio-Lackland. As more agencies adopt this model, one of the biggest questions is how the competitive landscape will change. Small businesses have long relied on set-aside programs and other protections built into FAR-based contracting. It is not yet clear how those opportunities will carry over as OTA use grows. That makes this an important topic for contractors of every size to watch. The rules, expectations and competitive environment are still developing, and firms that understand those changes early will be better prepared to decide where and how to compete. Learn more about Hensel Phelps’ Federal and Defense experience to better understand how the company supports complex government construction programs.
Is Your Team Ready for an OTA Opportunity?
OTA procurements can move fast. The best time to identify gaps in OTA readiness is before an opportunity reaches the market. Download the OTA Readiness Self-Assessment to evaluate your team across legal and commercial terms, cybersecurity, bonding and staffing, partnerships, delivery strategy and client positioning. Then see where you may need to strengthen your approach before pursuing the work.
