What are some OTA trends over the past 5 years? Let's dive in.
Hi All,
We're back with more charts taking a look at Federal spending. Today we're going to take a deeper look into the OTAs that have been awarded over the past five years. I'll include more info about source data at the bottom, but for now know that this data comes from sam.gov on the reported OTA data.
Image 1: All OTAs by Direct vs Consortium-Issued OTAs
Immediately evident is that OTA usage saw some growth between FY22 through 24, and flattened a bit in 25. What's interesting in this data is that Consortium-Issued OTAs went from virtually non-existent to making up about 1/4 of obligations. Now, here's where we need to be a little careful - this could be because OTAs were previously not required to be reported on until around 2018, and even then, data quality was pretty poor. So it might be that the data is simply missing as it wasn't reported on. However, don't let that stop us from having a good time. This data still has some insights we can draw
What is evident, is that consortiums are definitely an avenue to get OTA awards, especially with the ones that operate and issue awards in the domains where you operate. It's a good chance to get your foot in the door, because as we'll see later, consortiums drive most of the prototype spending.
Overall, it seems like OTAs through consortiums are becoming a bigger and bigger acquisition pathway
Image 2: All OTAs by Production vs Prototype
What we now see is that over time, Production OTA dollars have hovered around 10-13% of all OTAs issued. This is interesting because when looking at OTAs, they often start off as prototype OTAs (and then sometimes have language that offers potential for a production OTA should prototyping be successful). What this tells us is that some prototype OTAs are leading to production contracts. Here's how the percentages break out (note that FY26 is still incomplete, so take those with a grain of salt):
| Attribute | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | FY2026 |
|---|---|---|---|---|---|---|
| PRODUCTION | 8% | 11% | 13% | 11% | 12% | 16% |
| PROTOTYPE | 92% | 89% | 87% | 89% | 88% | 84% |
So that brings us to Image 3, where things start to get a little more juicy, because I'm sure you're wondering, who the heck is awarding all these OTAs?
Image 3: All OTA awards by sub-agency (think: not Dept of Defense, but rather Army, Navy, Air Force, etc.)
Now we start to see some interesting things. In all honesty, we probably knew most of these obligations would be driven by DoW agencies, but the data helps us see just how much and who.
Know what else is interesting? The Army's OTA obligations are shrinking (at a -14% CAGR) while almost all the other agencies are growing between '21 and '25. Did not expect to see that when pulling this data. However, virtually all the other agencies driving OTA dollars are growing (AF and Navy growing at 26% and 33% respectively).
One other thing that sticks out is Defense Health Agency. Their OTA obs went from ~$8M in FY2021 to over $300M by FY2025 (149% CAGR), and have spent ~$92M through FY26 so far (and this data likely is delayed by ~3 months btw as defense data is often delayed in reporting, so this number is likely higher).
So what's the real takeaway here? Well, it's evident that many agencies (especially those within DoW) are increasing their usage of OTAs, both from consortiums and direct awards (i.e., "outsourcing" this prototyping)
Image 4: Army OTAs broken down by Funding Office
Leading the way with the most obs over this time period is DEVCOM's Aviation & Missile Center (W1DF CCDC AV MISSILE CENTER). However, their spending seems pretty flat through all FYs, so they're not the drivers of the reduction. Who we really should be concerned with is Joint Program Executive Office for Chemical, Biological, Radiological, and Nuclear Defense (W6DZ JPMO CBD JPMO MCS (06)) - they see a steep drop from 21 to 22...however, I'm sure we can guess what that is given which office and the timing...and sure enough, it's contract #W15QKN2191003, which is a contract to Astrazeneca for Covid-19 related activities. If we remove that drop, we see that Army's OTA spend has actually hovered between $5-$6B annually and is relatively stable rather than contracting. We could dive deeper into this, but I think it's good for us to look at Air Force and Navy, which are other big drivers in the OTA data. So let's look at Image 6.
Image 5: Air Force OTAs broken down by Funding Office
Right away we can see that the USSF Space Development Agency Funding and Contracting offices drive the spending esp in '23-'25. But what contracts?
Image 6: Air Force (actually Space Force) SDA contracting & funding offices, breakdown by contract #
We see a good mix of contracts driving this spending. Good for you guys in space domain awareness. It means that there are seemingly lots of OTA awards to go around (easier said than done obviously). What exactly are they doing though? Let's look at the big ones, namely:
SDA Tracking/Transport Layers:
- FA24012490020: $738M obligated to L3Harris for Tranche 2 Tracking Layer
- FA24012490003: $628M obligated to Northrop Grumman for the Tranche 2 Transport layer
- FA24012490021: $621M obligated to Lockheed Martin...also for the Tranche 2 Tracking Layer
- FA24012390041: $528M obligated to Northrop Grumman for the Tranche 2....Tracking Layer Beta
- FA24012490022: $526M obligated to Sierra Space for the Tranche 2 Tracking Layer
Tons of OTAs for the SDA Tracking/Transport Layer, all of which are Prototype OTAs...We should look into this a little more, but instead we'll stop with the implication that if you're interested in getting OTA dollars with the Air Force/Space Force, you should probably have some capability that's relevant to the SDA Tracking/Transport layers. The core of it is largely being driven by major primes, however, smaller companies should take advantage of this. Rather than going after all the priming opportunities, attach to more of these "ecosystem" plays. Be the subsystem integration, software, payloads, and enabling capabilities inside larger OTA ecosystems.
We've covered quite a bit here, and this is getting kind of long, so let me leave you with some broader takeaways from this exercise:
- OTAs are increasingly becoming a strategic acquisition pathway, not just an experimentation tool
- The data suggests a consolidation of OTA spending around mission-critical domains (e.g., the SDA example above)
- Consortium growth may indicate agencies are more and more outsourcing acquisition for some of these more experimental / new capabilities
- While the OTA dollars are large and often going to larger primes, there's still a major play as a subsystem integrator/supplier/software/etc. as a smaller company by attaching to the ecosystems vs going after primes on your own as a small business
Feel free to chime in and correct me where I got things wrong, add color, etc...kind of wrote this as a stream of consciousness vs going through every detail. Hopefully you all enjoy!
Sources:
- govitra.com (my platform)
- sam.gov
- USASpending
- Good ol' fashioned internet research (seriously, didn't use an LLM)