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NIH's Use and Oversight of Its Other Transaction Authority

Announced on  | Last Modified on  | Project Number: OEI-04-24-00140
Status
Completed
Agency
National Institutes of Health

OBJECTIVE

The National Institutes of Health (NIH) is one of very few Federal entities with the authority to award Other Transactions (OTs). OTs are, by definition, awards other than procurement contracts, cooperative agreements, or grants. OTs are intentionally flexible and are generally not subject to the Federal Acquisition Regulation, the Uniform Guidance, or other regulations, unless otherwise noted in the terms and conditions of the OT award. As such, OTs are higher risk than traditional awards and should generally only be used when the objectives of a federally funded project cannot be accomplished under a traditional award, such as a contract or grant. This study will analyze NIH's use of OTs and determine the extent to which NIH is documenting required and encouraged parts of OTs. Additionally, we will determine what mechanisms NIH uses to oversee funds awarded through OTs to help ensure the effective stewardship of NIH funds.

TIMELINE

REPORT PUBLISHED

Gaps in NIH’s Oversight Put Millions in Funding for Other Transactions at Greater Risk of Fraud, Waste, or Abuse (OEI-04-24-00140)

By not consistently implementing required OT safeguards, NIH put millions of dollars in OT funding at greater risk of fraud, waste, and abuse. Each of the 15 OTs in our sample had issues in at least one area of our review:

NIH has fallen short in justifying its use of OTs. For 12 OTs in our sample, OT staff did not fully justify the use of OTs according to statutory and policy requirements, including why traditional, lower-risk funding mechanisms cannot meet the purpose of the initiative.

NIH Institute, Centers, and Offices (ICOs) did not effectively manage the unique risks of each OT. For 12 of the OTs in our sample, OT staff conducted minimal risk management. Risk management helps protect OTs from the unique risks posed by the recipient and the proposed project.

Additionally, three of seven ICOs in our sample had no required OT internal control policies to ensure efficient and effective management of government resources to protect against fraud, waste, and abuse. Effective internal controls are important given the inherent risks of OTs. Also, despite the increasing use of OTs, few ICOs reported measuring the benefit of OTs as encouraged by NIH policy.

26-E-04-006.01 to NIH - Open Unimplemented
Update expected on 05/19/2026
NIH should assess the benefits of Other Transactions to inform future Other Transaction policies and use.

26-E-04-006.02 to NIH - Open Unimplemented
Update expected on 05/19/2026
NIH should strengthen justifications for using Other Transactions.

26-E-04-006.03 to NIH - Open Unimplemented
Update expected on 05/19/2026
NIH should more effectively manage the unique risks of all Other Transactions.

26-E-04-006.04 to NIH - Open Unimplemented
Update expected on 05/19/2026
NIH should establish internal controls to protect Other Transactions from mismanagement and fraud by both Other Transaction staff and recipients.

View in Recommendation Tracker
Work Plan Type
Office of Evaluation and Inspections
HHS Agencies
National Institutes of Health
Issue Areas
Financial Stewardship
Target Groups
-
Financial Groups
Other Funding