Small companies entering defense work tend to apologize for what they lack: no long contract history, no cost accounting infrastructure, no incumbent program. Under the law, part of that list is an asset.
What the term means
A nontraditional defense contractor is defined at 10 U.S.C. 3014. In plain terms, it is an entity that is not performing, and has not performed for at least the one-year period before the solicitation, any Department contract or subcontract that is subject to full coverage under the Cost Accounting Standards. Many small businesses and commercial technology firms meet the definition without knowing it. It is a status you hold by fact, not a certification you apply for.
Prototype Other Transactions
Under 10 U.S.C. 4022, the Department can award Other Transactions for prototype projects outside much of the traditional acquisition framework. The statute sets conditions for using that authority. One of them, at 4022(d)(1)(A), is met when at least one nontraditional defense contractor participates to a significant extent in the prototype project. When that condition is met, the project does not need the one-third cost share that would otherwise apply. For a program office, a nontraditional participant is a way to use the authority. For a traditional prime, it is a reason to team with you.
Follow-on production
Section 4022(f) allows a follow-on production contract or transaction to be awarded without further competition when the prototype was competitively awarded and successfully completed. A prototype is not a science project. Done properly, it is the front door to production.
Commercial Solutions Openings and SBIR
10 U.S.C. 3458 provides authority for Commercial Solutions Openings, a competitive path for acquiring innovative commercial products and services through a general solicitation and peer review of proposals. SBIR and STTR, under 15 U.S.C. 638, remain the most familiar entry point for small technology firms. The common thread is that you answer a problem statement or a solution brief, not a 300-page request for proposal.
Commercial procedures
If what you sell is a commercial product or service, FAR Part 12 procedures apply: simpler terms, commercial pricing, and no requirement to build a cost accounting system to sell software you already sell commercially.
What to do with it
- Confirm that you meet the definition, and say so plainly in your capability statement. Program offices and primes look for it.
- Read solicitations for the authority being used. An OT or a CSO is evaluated differently from a FAR Part 15 source selection, and the response should be written differently.
- When a traditional prime approaches you about a prototype, understand what your participation is worth to them before you negotiate workshare.
- Do not take on cost-type work that triggers full CAS coverage without understanding that it changes your status.
Layered Intel is a nontraditional defense contractor. It is the first line of our government capability statement, on purpose.
This article is general information, not legal advice. Confirm how these authorities apply to your company and your opportunity with counsel or your contracting officer.