IF OR value to be either a text string or dropdown list in same cell.

The data validation need is separate from the formulaic need. These two ideas can coexist, but under normal circumstanced, if a user ever uses the DROP DOWN in the cell to make a selection, the formula that was in the cell previously is gone, forever.

Of course, VBA can be used to watchdog everything going on in the sheet and put the formula back into the cell in certain circumstances, but employing VBA is a whole new level of plumbing that will need to be maintained in perpetuity. Not everyone can tolerate that extra level of maintenance, or simply can't allow macros to be running on their sheets at all. It's not for everyone.

So, just put together the formula you need and put that in the cell first.

I'm thinking:

=IF(OR(G14="POC", G14="COTS"),"N/A",IF(G14="Assembly","PDF","Select:"))

That formula will cause the word "Select:" to appear when the drop down is needed.

Then add your Data Validation. If you want it to be a one-time choice, and assuming this were placed on cell H14, use this formula as your DV source:

=IF(H14="Select:", ModelType)

Another route which allow you to use the drop down over and over again:
=IF(AND(H14<>"N/A", H14<>"PDF"), ModelType)