SpaceX, Palantir, Anduril — these companies are defining a new era of defense contracting. These so-called “neoprimes” disrupted a calcified defense industry by bringing software expertise, speed, and a startup ethos to a field long dominated by slow-moving giants like Boeing and Lockheed Martin. But their rise wasn’t just a story of entrepreneurial grit. It was made possible by a little-known procurement tool called Other Transactions Authority, or OTA.
OTA allows the U.S. Department of Defense (and other federal agencies that have this authority) to bypass the dense thicket of Federal Acquisition Regulations in favor of faster, more flexible procurement agreements. It opens the door to non-traditional firms that could never have survived the ordinary contracting gauntlet. The result: more competition, more innovation, and better outcomes for taxpayers.
It’s time to apply that same logic to federal education research.
A System Stuck in the Past
The Institute of Education Sciences (IES) is the federal government’s primary education research agency. It funds the data and studies that inform education policy at every level, from school districts to states to the nation. Yet IES contracting looks nothing like the agile procurement that has revitalized defense R&D. Instead, it remains dominated by the same small circle of entrenched incumbents that it has worked with for decades.
These organizations have spent years building the compliance machinery, proposal infrastructure, and agency relationships needed to win IES contracts. That’s not a criticism of their work, it’s a description of the system’s structural bias. Competing for a major IES contract can require multi-million-dollar bid investments and procurement cycles that can stretch 18 months or more. The result is a moat that keeps out new entrants and insulates incumbents from meaningful competition.
The regulatory architecture reinforcing this moat has three pillars. FAR Part 15 governs most major IES awards and creates a paperwork-heavy sourcing process that only firms with dedicated contracting teams can navigate. The Truth in Negotiations Act (TINA) requires contractors to submit and certify detailed cost data, creating legal and financial exposure that deters first-time entrants. And Cost Accounting Standards (CAS) demand specialized, government-compliant accounting systems that can take years and significant resources to build — infrastructure that incumbents put in place over many contracts and over many years, but that a startup simply cannot afford to develop for a single contract.
The system doesn’t just slow things down. It actively rewards incumbents, handicaps new entrants, and punishes innovation.
A Rare Window for Reform
The Trump administration’s aggressive overhaul of federal contracting, including mass cancellations of IES contracts, a series of executive orders streamlining acquisition rules, and a new IES redesign report, has created a genuine opening for structural reform. The February 2026 report Reimagining the Institute of Education Sciences called out the agency’s contracting rigidities directly, recommending a shift to performance-based contracts that tie incentives to results rather than process compliance.
That’s a meaningful step — but by no means enough. The report doesn’t address the deeper structural problem: the contracting machinery itself.
The most powerful reform available is also one of the simplest: extending Other Transactions Authority (OTA) to IES.
What OTA Would Actually Do
OTA is a targeted flexibility that allows agencies to form agreements outside the FAR framework when traditional procurement fails to serve the mission. Congress has already extended it to NIH, the CDC, ARPA-H, ARPA-E, and — through the CHIPS and Science Act — NSF’s Technology, Innovation, and Partnerships (TIP) Directorate.
The rationale that justified OTA for those agencies applies equally to IES. Education research increasingly requires engagement with commercial technology firms, AI developers, and learning scientists who operate entirely outside the government contracting ecosystem. A firm that has built a new evidence-based intervention for schools shouldn’t need to spend two years building CAS-compliant accounting systems before IES can work with them.
With OTA, IES could open its doors to new, innovative partners — moving faster on urgent questions like the efficacy of AI classroom tools, attracting nontraditional talent, and reducing the cost and timeline of core research programs like NAEP.
Culture Matters Too
Contracting reform alone won’t be enough. IES also needs to change who it hires as program managers. Congress can grant IES flexible hiring authorities, like in the New Essential Education Discoveries (NEED) Act, to accomplish this. A modern applied research agency should recruit from engineering, the learning sciences, and AI, not just from the narrow slice of academic disciplines that have historically fed its staff pipeline.
Following the DARPA model, it should also bring in entrepreneurial project managers on defined terms, ensuring they stay connected to the cutting edge of their fields.
Looking Ahead
The legal path to OTA for IES is straightforward — a sentence or two added to statute, either through a reauthorization of the Education Sciences Reform Act or a new standalone bill. The policy case is strong. The political window is open.
The neoprime revolution in defense didn’t happen by accident. It happened because someone changed the rules to facilitate innovation. It’s time to do the same for American education research.
This post is an abridged version of an article originally published by AEI.
