The Untapped Benefits of DOE’s Other Transaction Authority (April 2026) examines how the U.S. Department of Energy (DOE) can use a flexible funding mechanism to accelerate American energy innovation. Nontraditional funding arrangements using the department’s Other Transaction (OT) Authority provide DOE with a more adaptable way to engage with private sector partners and move emerging technologies from research and development to real-world deployment.
Historically, DOE has relied on more conventional funding mechanisms such as grants, prizes, cooperative agreements, and contracts, all of which are governed by the Federal Acquisition Regulation (FAR). While these approaches ensure consistency and oversight, the FAR-governed process can be too restrictive and protracted for innovators of emerging energy technologies.
OT agreements operate outside of FAR constraints, enabling DOE to structure contracts with greater flexibility, collaborate more effectively with industry, and support innovative projects that may not align with conventional funding models. OT agreements have historically been underutilized by DOE, other than when explicitly directed by Congress. However, under the second Trump administration, DOE has increased its use of OT agreements for energy innovation projects. As DOE’s mission increasingly prioritizes commercial-scale deployment, flexibility in award structures becomes ever more critical.
This report highlights the limitations of traditional federal award processes and DOE’s opportunity to better leverage OT agreements to bring cutting-edge innovations to market. It outlines the brief history of OT agreements within DOE, compares them to standard funding approaches, and demonstrates how they can facilitate more market-aligned energy innovation. By fully leveraging the power of its OT authority, DOE can strengthen public-private partnerships, design more commercially relevant funding structures, and improve the overall efficiency and impact of its investment strategies.
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