OTAs vs. SBIRs: The Founder’s Guide to the New Warfighting Acquisition System

Donavan Moss, AJ Smith

On November 7th, Secretary of War Pete Hegseth announced sweeping changes to how the Department of War buys technology. The centerpiece: rebranding the Defense Acquisition System (DAS) as the Warfighting Acquisition System (WAS), with an explicit mandate to push authority downward and move faster. The old system was built around compliance and process. The new system treats acquisition as a warfighting function and prioritizes speed to fielded capability. As the memo puts it: “Speed to capability delivery is now our organizing principle.”

The reforms also introduce Portfolio Acquisition Executives (replacing the old PEO structure), incentive-based compensation tied to delivery timelines, and a stated preference for commercial solutions. For founders, the signal is clear: the Department wants to buy from you faster.

So in your next strategy meeting, you’re probably asking: “Should I focus on winning OTAs now instead of SBIRs?”

Here’s the bottom line.

OTAs are a powerful tool. They move faster than traditional contracts and can lead to sticky production agreements. But SBIRs remain the best entry point for most startups because they help founders learn how to sell into the Department—not just pitch to it. They force you to nail down a user, a requirement, and a mission. And they make it far easier to graduate into larger contracting instruments later.

Think of SBIR as the beachhead. OTA is the ramp. The goal is not to stack non-dilutive grants forever. The goal is to reach procurement money—and eventually O&M funds—as fast as possible. That’s where real scale and enduring revenue live.

What is an OTA, and why does it matter now?

An OTA (Other Transaction Authority) is a non-Federal Acquisition Regulation (FAR)-based contracting instrument. In plain terms, it allows the government to buy, prototype, and scale technology without the full weight of traditional acquisition rules.

OTAs matter because they can be awarded faster, allow more commercial-style deal structures, bridge prototype to production, and convert real demand into real dollars. They sit in that critical middle zone between pilot and full procurement, giving your early champion more leverage to pull you through the system.

Under the new WAS framework, OTAs are likely to become even more prominent as the Department leans into speed and flexibility.

But there’s a catch.

Sometimes a unit or program office will use an OTA to buy a single prototype for an upcoming exercise. On paper, that looks like a win. But if it’s your first engagement with the Department, you’ve landed in the deep end without scaffolding—no built-in transition support, no structured portfolio shepherding.

OTAs can absolutely work as a first touch point, especially if you have a government champion with real operational urgency. But SBIR offices have something OTAs don’t: a mandate to transition what they fund. They bring resources, contracting support, portfolio leads, and workflows designed to help companies mature inside the DoW ecosystem. Even if you enter through an OTA, you should leverage SBIR and innovation networks to connect with requirements owners, align to the right Program Elements (PEs), and build a transition plan that leads to actual procurement.

OTAs aren’t bad. You just usually need the support structure around them to turn a prototype sale into something enduring.

Why SBIR remains the best starting point

SBIR forces discipline. It requires you to define the specific operational pain, the exact end user, and how your capability maps to mission execution. It also gives you support infrastructure, contracting help, and transition-focused resources.

In short, SBIR teaches you how to sell inside the Department—not just pitch outside of it.

It de-risks and matures your product before it reaches the warfighter, and it gives you credibility with every other buyer and contracting pathway you’ll encounter.

SBIR is how you build the muscle memory of how Warfighting Acquisition actually works.

The PE problem most founders miss

Here’s something founders often overlook: the customer you’re talking to needs access to a Program Element (PE) with money aligned to your maturity level and use case. A PE is essentially a budget line that defines what Congress authorized that money to be spent on. If your champion doesn’t have the right PE, they literally cannot pay you—even if they want to.

This is why SBIR is so powerful early. It bypasses PE constraints because it’s congressionally carved-out RDT&E (Research, Development, Test & Evaluation) funding.

It’s also why founders often experience the Department as “interested” but not buying. They’re talking to officers and GS civilians who genuinely want the capability, but their PE is the wrong color of money at the wrong time of year.

Sequence matters

If you’ve never sold to the government, SBIR is the cleanest on-ramp.

If you already have validated demand and operational pull, OTAs can accelerate your path to production and procurement.

Here’s a simple framework for running your Warfighting Acquisition OODA Loop:

• Observe: Which units have real pain and urgency?
• Orient: Who owns the problem? Which PE funds capability in that domain?
• Decide: Which contracting vehicle makes the most sense given your stage?
• Act: You’re not chasing pilots. You’re contributing to American military dominance. Deliver capability that tips the balance in our favor.

SBIR is the ignition. OTA is the accelerant.

Use both.

Why Outlander VC?

We back pre-seed founders building for national security – and help them navigate their first DoW contracts. If you’re looking to raise outside capital, we’d love to chat. Apply here.