Breaking Barriers: How OTAs and OTs Are Powering Small Business Innovation in National Defense

by Yolanda Goodloe | July 22,2025

In an era where global threats are increasingly sophisticated and the pace of innovation is accelerating; the United States government is turning to small businesses for answers and removing the red tape that has long kept them out. Other Transaction Agreements (OTAs) and Other Transactions (OTs) are transforming how the Department of Defense (DoD) collaborates with the commercial sector, especially with non-traditional contractors who possess the agility and innovation required for modern warfare.

Against the backdrop of a shifting political landscape and rising demand for operational efficiency, programs like the Department of Government Efficiency (DOGE) are championing bold reforms that seek to modernize defense acquisition. OTAs and OTs are at the heart of that movement, breaking the mold of traditional federal contracts and opening doors to businesses that may never have considered serving the federal government.

What Are OTAs and OTs?

Other Transaction Agreement (OTA) is a legally binding, yet highly flexible, instrument used by government agencies, especially the DoD, for research and development (R&D), prototype projects, and technology innovation. Unlike standard FAR-based contracts, OTAs are not burdened by many of the rules that often discourage small and emerging businesses from working with the government.

Similarly, Other Transactions (OTs) refer to the broader category of agreements that fall outside traditional procurement contracts. OTs are used to acquire prototypes and explore the feasibility or utility of new technologies, concepts, or systems that may serve the warfighter or national defense infrastructure.

What makes these tools so powerful? They are faster, lighter on regulation, and more accommodating to commercial business practices. Most importantly, they offer small businesses a real seat at the table.

Why Now? Why Small Businesses?

The current strategic and political climate demands innovation at the speed of relevance. In this environment, large bureaucracies often struggle to keep pace with technological advances. Meanwhile, small and non-traditional defense contractors, startups, emerging tech firms, and commercially focused manufacturers, are developing solutions in AI, cyber, energy, advanced materials, and autonomous systems. But these companies often lack the time, resources, or familiarity to navigate FAR-based contracting. OTAs remove those barriers, enabling the DoD to access cutting-edge solutions while allowing small businesses to focus on what they do best – innovate.

With DOGE pushing for streamlined procurement and rapid tech infusion, and with growing emphasis on near-peer competition and readiness, the government is not just welcoming small business innovation, it’s counting on it.

Here Are Six Ways to Get Plugged into the Business Innovation Ecosystem:

1. Identify Your Innovation and Its Defense Relevance: Review your products, services, and intellectual property through a defense lens. Could your drone tech improve reconnaissance? Could your AI solution power predictive maintenance? Align your capabilities with modernization priorities outlined in the National Defense Strategy, the DoD’s Technology Vision, or specific agency innovation roadmaps.

• Register with a Relevant OT Consortium: Many OTAs are issued through consortia, public-private partnerships organized around tech domains like energy, cybersecurity, aviation, or health. Joining a consortium is often required to access opportunities. These groups reduce barriers to entry and serve as conduits between the government and industry. Explore groups like:

• National Armaments Consortium (NAC)
• Advanced Technology International (ATI)
• CMG’s Medical Technology Enterprise Consortium (MTEC)
• Space Enterprise Consortium (SpEC)

• Develop a Streamlined Capabilities Package: OT solicitations often favor clarity and speed over bureaucracy. A two-page capability overview that highlights your technical differentiation, TRL (technology readiness level), and value to defense is often more effective than lengthy proposals. Clearly identify yourself as a non-traditional defense contractor, this often boosts your eligibility and appeal.

• Partner with a Prime Contractor: Teaming with a traditional defense contractor already performing on an OTA project is a smart path forward. Many OTs require participation from a non-traditional partner, creating demand for small tech firms to bring in niche innovations. Seek out subcontracting roles, tech demonstrations, or collaborative R&D efforts that position your product within larger defense ecosystems.

• Leverage Florida High Tech Corridor’s Federal and State Technology (FAST) Program: For businesses based in Central Florida or Tampa Bay, the Florida High Tech Corridor’s FASTProgram offers unparalleled support for small tech companies pursuing federal innovation funding, including SBIR/STTR and OTA projects. FAST provides proposal reviews, commercialization strategy coaching, and connections to research collaborators, all at no cost. Engaging this program can boost your competitiveness, sharpen your technical narrative, and open doors to funding and partnership pipelines aligned with DoD innovation priorities.

• Collaborate with a Manufacturing Innovation Institute (MII): The Manufacturing USA network includes over a dozen Manufacturing Innovation Institutes (MIIs), public-private partnerships dedicated to advancing emerging technologies in manufacturing. MIIs like America Makes, LIFT, and Advanced Robotics for Manufacturing (ARM) offer small businesses access to testbeds, workforce training, collaborative R&D, and prototype acceleration. Many MIIs also facilitate OTA pathways and can help bridge the gap between concept and scaled military application. Participating in MII-led projects increases your readiness to deliver DoD-relevant prototypes through streamlined channels.

The Time Is Now

In today’s defense and political climate, the rules are changing on purpose. OTAs and OTs are not loopholes; they are intentional mechanisms designed to bring agile innovators into the national security fold. If you’re a small business with a technology that solves hard problems, the government wants to talk to you, and it’s ready to do business on your terms. The barriers are lower. The timelines are faster. And the opportunities are greater than ever before. National security is no longer the exclusive domain of the defense industrial base. It’s a nation-wide effort, and your innovation could be the next game-changer.

As always, the Florida APEX Accelerator is here to help you achieve your government contracting goals. To find the Florida APEX nearest you, please click here.

Yolanda Goodloe is a government contracting consultant with the Florida APEX Accelerator at Pinellas County Economic Development (PCED). She assists local businesses in the Tampa Bay region (10-County Region) seeking government procurement opportunities.