RSG#329: How To Audit Government Other Transaction Agreements

Resistance Survival Guide #329

The federal government has contracts. It has grants. It has cooperative agreements. Then it has Other Transaction Agreements, a category whose name sounds as though somebody forgot to finish the form.

Other Transaction Agreements can help agencies develop prototypes, conduct research, work with companies that avoid traditional federal contracting, and move promising technology into production more quickly. They can also replace standard contract clauses with individually negotiated terms, complicate public spending data, limit ordinary bid protest options, and place consortium managers between the government and the companies performing the work.

Flexibility is not automatically corruption. It is, however, where accountability must become more precise.

This Resistance Survival Guide explains how to audit government Other Transaction Agreements by tracing statutory authority, competition, participants, consortium structures, costs, intellectual property, milestones, payments, modifications, and follow on production awards. The goal is to determine whether an agency used its flexibility to solve a legitimate problem or merely invited ordinary oversight to wait outside without a coat.

What Is an Other Transaction Agreement

An Other Transaction Agreement is a legal instrument that a federal agency may use when Congress has granted that agency specific statutory authority. It is distinct from a conventional procurement contract, grant, or cooperative agreement.

There is no single governmentwide authority allowing every agency to create these agreements for any purpose it chooses. The available authority depends on the agency and the statute.

The Defense Department has broad authority for research and prototype transactions. NASA uses Space Act Agreements. The Transportation Security Administration, Department of Homeland Security, Department of Health and Human Services, Department of Energy, and certain other agencies possess different forms of statutory authority.

The name alone tells you very little. You must identify the agency, statute, permitted purpose, agreement type, and conditions governing that particular transaction.

Other Transaction Agreements are frequently called OT agreements or OTAs. This guide uses both terms because government databases, agency documents, and congressional reports may use either version.

Why Agencies Use Other Transaction Agreements

Traditional federal contracts operate under the Federal Acquisition Regulation and related agency rules. Those rules provide established procedures for competition, pricing, cost accounting, contract clauses, modifications, protests, records, and oversight.

Those protections can also make federal contracting slow and expensive for businesses unfamiliar with the system. A commercial technology company may not possess a government approved accounting system. It may resist standard intellectual property clauses. It may find months of proposal preparation unattractive when private customers can move more quickly.

Other Transaction Agreements allow agencies and participants to negotiate terms suited to a particular project. That flexibility can help the government attract nontraditional companies, test emerging technologies, create prototypes, and collaborate with private partners.

However, flexibility transfers more responsibility to agency officials. A traditional contract arrives with a library of standard requirements. An OT agreement begins much closer to a blank page.

If the agreement officer forgets an important protection, the missing protection does not leap heroically into the document by itself.

The Defense Department’s Main Authorities

The Defense Department’s research transaction authority under 10 U.S.C. section 4021 permits certain Defense officials to enter transactions other than contracts, cooperative agreements, and grants for basic, applied, and advanced research projects.

The department’s prototype transaction authority under 10 U.S.C. section 4022 covers qualifying prototype projects directly relevant to improving Defense Department mission effectiveness or relevant platforms, systems, components, or materials.

Section 4022 requires the use of competitive procedures to the maximum extent practicable. It also establishes conditions concerning nontraditional defense contractors, nonprofit research institutions, small businesses, private cost contributions, or written findings of exceptional circumstances.

A qualifying prototype may lead to a follow on production agreement or contract without another competitive process if the statutory conditions are satisfied. That transition is one of the most important parts of the audit because a flexible prototype agreement can become the bridge to a much larger production commitment.

The prototype is the appetizer. Production is where the government discovers whether it has ordered dinner for eight people or an aircraft carrier.

Why These Agreements Need Public Scrutiny

A September 2025 Government Accountability Office investigation found that Defense Department obligations for prototype and production OT agreements grew from $1.8 billion in fiscal year 2016 to more than $18 billion in fiscal year 2024.

Prototype obligations accounted for more than $16 billion in fiscal year 2024. Production OT agreements accounted for approximately $2 billion.

GAO found that the department could not systematically determine how often prototype agreements led to production contracts governed by the Federal Acquisition Regulation. It also found problems identifying the consortium members actually performing work.

In some records, the consortium management organization appeared as the vendor even though another company performed the project.

A public database can therefore contain a technically real recipient name that is not the company building the technology, receiving most of the money, or owning the resulting intellectual property.

This is less a breadcrumb trail than a breadcrumb committee.

Step by Step Guide

Step One: Confirm That the Instrument Is an Other Transaction Agreement

Begin with the award notice, solicitation, agreement, spending record, agency announcement, or congressional document identifying the transaction.

Record the complete agreement number, agency, issuing office, agreement officer, recipient, consortium, award date, stated value, period of performance, project title, and agreement type.

Do not assume every flexible partnership is an Other Transaction Agreement. Agencies also use cooperative research agreements, Space Act Agreements, technology investment agreements, partnership agreements, cooperative agreements, grants, contracts, and prizes.

Search the document for the exact statutory authority. An authentic OT agreement should identify the legal authority permitting the agency to use that instrument.

If the agency calls something an OT agreement but cannot identify its statutory authority, the investigation has already located a rather important loose thread.

Step Two: Identify the Exact Statutory Authority

Find the United States Code provision, appropriations language, or agency specific law cited in the agreement.

Read the entire provision, including definitions, conditions, approval thresholds, reporting duties, expiration dates, competition requirements, audit rights, and limitations.

Do not rely solely on an agency guide. Guidance explains how officials interpret their authority. The statute defines what Congress authorized.

Record whether the authority covers research, prototypes, production, facilities, public health response, space partnerships, transportation security, or another specified purpose.

Then create a plain language statement explaining what the agency was legally allowed to do.

For example, a Defense prototype transaction should involve a prototype project directly relevant to the statutory mission described in section 4022. It should not become a convenient label pasted onto routine goods or services merely because the ordinary contract process looked emotionally demanding.

Step Three: Determine the Agreement Type

Classify the transaction as research, prototype, production, consortium, or another agency specific form.

A research agreement may support basic, applied, or advanced research. A prototype agreement may develop or demonstrate a technology, process, system, component, or operational concept. A production agreement may manufacture or deliver a capability following successful prototype completion.

Do not combine these categories in your analysis. Their statutory requirements and oversight risks differ.

Record whether the agency changed the classification over time. A project may begin as research, become a prototype, and later enter production. Each transition should have an identifiable legal and documentary basis.

A project does not become a prototype merely because officials used the word innovative several times and placed a photograph of a circuit board in the presentation.

Step Four: Find the Original Opportunity

Search SAM.gov contract opportunities, agency innovation portals, consortium websites, broad agency announcements, commercial solutions openings, requests for white papers, notices for prototypes, and industry day materials.

Save the original notice, amendments, questions and answers, submission instructions, evaluation criteria, deadlines, and award announcement.

Some OT opportunities are announced through a consortium rather than directly through SAM.gov. Identify where membership, project calls, and proposal instructions were published.

Record how long potential participants had to respond and whether consortium membership required fees, agreements, or advance enrollment.

A competition is not meaningfully open if the public notice appears after the most likely winner has spent six months discussing the requirement with the government.

Step Five: Test Why the Agency Used Other Transaction Authority

Locate the acquisition strategy, planning memorandum, determination, market research, approval document, or decision record explaining why officials selected an OT agreement.

Record the stated advantages. Common reasons include faster awards, flexible intellectual property terms, collaboration with commercial companies, reduced administrative burdens, or access to nontraditional participants.

Then compare those justifications with the actual award.

Did a nontraditional company participate? Did the agreement produce a faster timeline? Did officials negotiate materially different terms? Did the project require experimentation? Or did the agency award most of the money to familiar federal contractors using a flexible instrument that supplied fewer standard protections?

The question is not whether the agency was allowed to use an OT agreement. The question is whether the stated reason survives contact with the evidence.

Step Six: Test the Statutory Participation Conditions

For a Defense prototype agreement, determine which condition under 10 U.S.C. section 4022 allowed the agency to proceed.

The project may include meaningful participation by a nontraditional defense contractor or nonprofit research institution. Alternatively, all significant participants other than the government may be small businesses or nontraditional contractors. Another option requires private sources to pay at least one third of the total prototype cost. Finally, a senior procurement executive may issue a written determination that exceptional circumstances justify the arrangement.

Obtain the record identifying the condition used.

If the agency relied on nontraditional participation, determine which participant qualified, how officials defined meaningful participation, what work the participant performed, and how much funding it received.

A small company appearing on a team chart does not prove meaningful participation. Sometimes a participant is invited to the accountability party and handed a decorative canapé.

Step Seven: Identify Every Participant

Create a participant register that includes the named recipient, consortium manager, consortium, project performer, prime participant, team members, subcontractors, universities, nonprofit research institutions, traditional defense contractors, nontraditional contractors, and small businesses.

Record each organization’s legal name, Unique Entity Identifier, parent company, subsidiaries, business type, location, role, and funding.

Use the SAM.gov entity search to confirm registration and identifiers. Search USAspending.gov for the organization’s other federal awards.

Do not stop with the company named on the main agreement. The most visible recipient may be managing an umbrella arrangement while project awards go to other members.

The recipient line is the beginning of the investigation, not the moment everyone packs up and declares the money found.

Step Eight: Map the Consortium

A consortium is a group of organizations assembled around a technology or mission area. The government may establish an umbrella agreement with a consortium or its management organization. Individual projects are then awarded to consortium members.

Obtain the consortium agreement, membership rules, dues, management contract, project announcement procedures, evaluation process, conflict policy, fee schedule, and current membership list.

Identify the consortium management organization. Record who selected it, what services it provides, how it is compensated, and whether its fee is fixed, based on project value, charged to members, or paid by the government.

Determine whether the manager helped prepare solicitations, collect proposals, screen applicants, communicate evaluations, negotiate terms, distribute payments, or recommend project awards.

A private manager may perform useful administrative work. It should not quietly acquire influence over inherently governmental decisions because everybody appreciated how nicely it organized the shared drive.

Step Nine: Find the Companies Actually Performing the Work

Search Federal Procurement Data System records, USAspending transactions, agency award files, consortium project pages, company announcements, congressional reports, and agreement officer records.

A 2021 GAO investigation of coronavirus response agreements found that public data could identify a consortium management firm as receiving billions of dollars even though the firm distributed nearly all of that money to pharmaceutical companies.

Later system changes improved the ability to report consortium members. However, a 2025 GAO analysis of Defense agreement data still found records that incorrectly identified management organizations instead of the companies performing the work.

Match every project award to the performer and amount received. Flag records where the public recipient, actual performer, and payment recipient differ.

A database that names the middle office instead of the company receiving the project is not transparency. It is bureaucratic witness protection.

Step Ten: Obtain the Complete Agreement File

Request the signed base agreement, statement of work, technical proposal, milestones, payment schedule, budget, cost share plan, intellectual property terms, data rights, audit provisions, termination clauses, dispute procedures, security requirements, modifications, approvals, invoices, progress reports, acceptance records, and closeout documents.

Ask for the agreement file index or record checklist. That can reveal documents even when the agency withholds some contents.

Request the agreement in its original electronic format. Searchable text is essential when the file contains hundreds of pages, layered attachments, and modifications that quietly replace earlier terms.

Create a modification log showing the date, amount, purpose, performance change, schedule change, and approving official for each amendment.

The base agreement tells you what officials promised at the beginning. The modifications explain what the government eventually bought.

Step Eleven: Audit the Competition

Defense prototype authority requires competitive procedures to the maximum extent practicable.

Identify how the opportunity was announced, how many responses were received, which proposals advanced, who evaluated them, what criteria were applied, and who approved the selection.

Request evaluator names, scoring sheets, technical assessments, conflict disclosures, recommendation memoranda, negotiation records, and unsuccessful proposal notices.

Determine whether requirements changed after submissions arrived. Compare the final project with the published opportunity.

Look for competition among individual companies as well as competition among consortia. An agency may compete the original umbrella agreement but then award individual projects through a more limited internal process.

“Competition occurred at some point” is not the same as demonstrating that the company receiving the project competed for that project.

Step Twelve: Examine the Pricing and Cost Protections

Traditional contracts may contain established requirements for certified pricing data, cost accounting, allowable costs, audits, and government access to contractor records. Those protections do not automatically appear in every OT agreement.

Identify the pricing method used. It may involve fixed milestone payments, estimated costs, negotiated prices, shared costs, expenditure reimbursement, or another structure.

Request the independent government cost estimate, price analysis, negotiation memorandum, commercial pricing comparisons, participant contribution records, and approval of the final amount.

Determine whether officials evaluated the complete project cost rather than only the government contribution.

Ask what rights the agency reserved to inspect financial records and recover unsupported charges. Record how long those rights remain available.

Flexibility in pricing can encourage innovation. It can also turn “trust us” into a line item.

Step Thirteen: Verify the Cost Share

When an agency relies on private contributions to satisfy a statutory condition, verify the contribution rather than repeating the proposal’s promise.

Identify what counts as the participant’s share. Separate cash from labor, equipment, facilities, prior research, intellectual property, and other contributions.

Confirm when the contribution was incurred and whether it was properly valued. Review invoices, accounting records, certifications, valuation methods, and government acceptance documents.

Determine whether the participant delivered its promised share over the life of the project. Compare the original commitment with the final amount.

A company cannot contribute the same laboratory, employee time, or preexisting technology to several government projects and call each appearance fresh generosity without raising some accounting questions.

Step Fourteen: Examine Intellectual Property and Data Rights

Other Transaction Agreements allow agencies and participants to negotiate intellectual property and data rights with more flexibility than standard contracts.

Locate every clause addressing patents, technical data, software, inventions, licensing, commercial use, government purpose rights, proprietary information, cybersecurity, publication, and access after the project ends.

Determine what the government paid to develop and what it may actually use, reproduce, modify, disclose, compete, or maintain.

Ask whether future contractors will receive enough information to repair, integrate, test, or compete with the resulting product.

An agency can successfully finance a prototype and still leave the public dependent on one company because the government failed to secure usable technical rights.

That is not innovation. That is purchasing a very expensive leash and allowing the vendor to hold the other end.

Step Fifteen: Match Payments to Milestones

Create a schedule showing every milestone, due date, payment amount, evidence required, completion date, acceptance decision, and approving official.

Request technical reports, demonstrations, test results, acceptance memoranda, invoices, and payment records.

Determine whether payments were based on effort, expenditure, completed deliverables, or technical achievement. Check whether the agreement permitted partial payments and whether officials documented partial completion.

Compare planned and actual dates. Record extensions, failed tests, waived requirements, revised milestones, and payments made despite incomplete performance.

A milestone titled “prototype demonstrated” should involve more than a slideshow in which the prototype appears optimistic.

Step Sixteen: Follow the Prototype Into Production

Identify whether the prototype was successfully completed and who made that determination.

Obtain the success criteria, test results, acceptance record, completion memorandum, and decision approving follow on production.

Then search for every later production OT agreement and traditional production contract connected to the prototype.

Record the production recipient, amount, quantity, competition status, legal authority, award date, and relationship to the original prototype.

Section 4022 permits qualifying follow on production awards without another competitive process when statutory conditions are met. That makes the original competition and successful completion finding especially important.

A modest prototype can become the legal runway for a production award worth far more than the experimental project. Follow the runway.

Step Seventeen: Inspect the Protest and Challenge History

Search GAO bid protest decisions, federal court dockets, agency protest records, congressional correspondence, and inspector general reports.

GAO generally does not review challenges to how an agency evaluated proposals or selected a recipient under Other Transaction Authority because the agreements are not procurement contracts within its ordinary bid protest jurisdiction.

However, GAO may consider a timely challenge alleging that an agency improperly used Other Transaction Authority when a procurement contract was required. The protest generally must be filed before the proposal deadline when the solicitation clearly announces the planned instrument.

A 2018 GAO decision involving an Army cloud agreement sustained a challenge concerning the agency’s use of follow on production authority.

A 2021 GAO decision involving coronavirus testing supplies dismissed challenges to the evaluation and award because they fell outside GAO’s ordinary jurisdiction over procurement protests.

The oversight door is not completely closed. It is simply narrow, time sensitive, and labeled in six point legal font.

Step Eighteen: Compare the Agreement With a Traditional Contract

Create a comparison showing which protections appeared in the OT agreement and which would ordinarily appear in a comparable federal contract.

Examine competition, cost visibility, audit rights, intellectual property, cybersecurity, conflicts, records retention, small business participation, domestic sourcing, termination, disputes, performance monitoring, and public reporting.

Do not assume every omitted standard clause should have been included. The point is to understand the risk officials accepted and the alternative protection they negotiated.

If the agreement removed a familiar safeguard, ask what replaced it.

Flexibility should produce a better fit, not an empty garment bag.

Step Nineteen: Test Whether the Project Achieved Its Purpose

Determine what the project was supposed to prove, build, demonstrate, or deliver.

Locate measurable success criteria established before work began. Compare them with test data, milestone reports, operational evaluations, user feedback, technical reviews, and production decisions.

Separate successful project administration from successful technology. An agreement may remain on schedule and within its negotiated value while producing a prototype that never becomes useful.

The 2025 GAO review of Defense OT agreements found that the department lacked a systematic process for tracking conventional production contracts that resulted from prototype agreements. That gap limited its ability to assess whether prototypes ultimately delivered capabilities.

An agency cannot prove its innovation program works by counting agreements. That proves only that it has mastered the advanced technology of signing documents.

Step Twenty: Request the Missing Records

Send focused Freedom of Information Act requests to the issuing office, program office, agreement office, financial office, testing organization, and relevant inspector general.

Ask for records by agreement number, project name, consortium, performer, recipient, agreement officer, fiscal year, and date range.

Be aware that certain proposal information submitted to the Defense Department for research transactions may receive temporary protection from disclosure under 10 U.S.C. section 4021. That protection does not automatically convert every agreement record, payment, modification, milestone, or performance finding into a national treasure concealed forever.

If an agency withholds records, examine the exemption cited, segregability analysis, search description, referral history, and appeal rights.

Request the file index, final agreement, public award data, aggregate figures, and nonexempt portions even when proprietary material requires redaction.

The correct response to a protected paragraph is not necessarily a protected filing cabinet.

How To Build an Audit Register

Create one row for every base agreement, project award, modification, payment, and follow on production action.

Record the agreement number, project title, authority, agreement type, issuing office, recipient, consortium, management organization, actual performer, parent company, award date, announced value, obligated amount, paid amount, private contribution, period of performance, milestones, modifications, intellectual property terms, completion status, and production outcome.

Add columns for the competition method, number of responses, nontraditional participant, small business participation, cost share condition, agreement officer, decision maker, and source document.

Include a column marking whether the public database identifies the actual performer correctly.

The register should allow you to move from the government’s announcement to the company, money, work, outcome, and later production award without losing the thread.

Red Flags That Deserve Closer Examination

An agreement deserves closer scrutiny when the statutory authority is unclear, the work resembles routine procurement, officials cannot identify which section 4022 condition applied, or the claimed nontraditional participant received little money and performed little work.

Other warning signs include opportunities available only through obscure consortium pages, expensive membership requirements, short response periods, recurring winners, incomplete competition records, consortium managers involved in evaluating members, unexplained management fees, and database records naming the manager instead of the performer.

Examine large modifications, repeated schedule extensions, private contributions that never materialized, milestone payments unsupported by test results, intellectual property terms that prevent competition, and production awards disconnected from successful prototype completion.

Watch for agencies celebrating the speed of the award while declining to measure the quality of the result. Moving quickly toward an unknown destination is not innovation. It is jogging in fog.

A Current Civil Works Example

A March 2026 GAO report on Army Corps agreements examined the Corps’ use of OT agreements for civil works research and prototypes.

The Corps awarded its first civil works OT agreement in 2024 for the design of a prototype flume used to research waterway structures. It awarded three additional agreements in September 2025 to study technologies for detecting and managing harmful freshwater algal blooms.

The example shows that Other Transaction Authority is not limited to military weapons. Congress may authorize particular agencies or programs to use the instrument for specific research and development purposes.

It also demonstrates why every audit must begin with the precise statute. “The government uses OT agreements” is not a legal conclusion. It is the opening sentence of a much longer investigation.

Working With Independent Media

Once the audit is documented, take the findings to independent organizations that understand procurement, national security spending, technology policy, and public records.

The nonprofit Project On Government Oversight investigates federal contracting, national security, conflicts of interest, and government accountability.

The nonprofit newsroom ProPublica accepts investigative tips supported by documents and data.

The public records platform and nonprofit newsroom MuckRock can help researchers file, track, and publish records requests.

Provide the agreement register, legal authority, participant map, consortium structure, payment trail, major modifications, performance evidence, and specific unanswered questions.

A reporter needs a documented finding. She does not need 4,000 unsorted PDFs and a message reading, “This feels weird, good luck.”

What a Strong Audit Should Prove

A responsible audit should answer several central questions.
Was the agency legally authorized to use an Other Transaction Agreement for this purpose?
Which statutory condition justified the transaction?
Was the opportunity meaningfully competitive?
Who actually performed the work and received the money?
What protections did the government negotiate for costs, records, intellectual property, and performance?
Were payments tied to verified milestones?
Did the prototype succeed?
Did it lead to a production award, and was that transition lawful?
Did the public data accurately identify the companies involved?

If the evidence cannot answer one of these questions, document the gap. A missing record is especially important when flexibility has already replaced the standard safeguards that would normally produce it.

Turning the Findings Into Accountability

Send credible findings to the issuing agency, relevant inspector general, congressional authorizing and appropriations committees, Government Accountability Office, and independent reporters.

Ask the agency to publish complete agreement data, project performers, consortium members, management fees, statutory conditions, competition methods, modifications, milestone status, private contributions, and follow on production awards.

Recommend that every agreement identify the actual companies performing the work and the amount each receives.

Ask inspectors general to compare negotiated protections with the risks officials accepted. Request an examination of whether consortium managers performed activities requiring stronger government supervision.

The solution is not to ban flexible agreements. It is to make the flexibility traceable, justified, and measurable.

In Closing

Other Transaction Agreements can help the government work with innovative companies and develop important technology more quickly. They can also make it harder to identify the performer, reconstruct the competition, evaluate pricing, challenge an award, or determine whether a prototype ever became useful.

That is why the investigation must follow the complete life of the transaction.

Begin with the statute. Find the opportunity. Identify every participant. Map the consortium. Obtain the agreement. Trace the payments. Test the milestones. Examine the intellectual property. Then follow the prototype into production.

Resistance Kitty does not object to government trying something new. She simply believes “other” should describe the transaction, not the location of the accountability.