OTAs at Scale, Accountability in Flux: Why GAO’s 2025 Findings Matter to Federal Contractors
GAO’s September 2025 report, Other Transaction Agreements: Improved Contracting Data Would Help DOD Assess Effectiveness (GAO-25-107546), is a consequential read for any firm operating—or aspiring to operate—inside the defense acquisition ecosystem. The report documents continued growth in the Department of Defense’s (DOD) use of Other Transaction Agreements (OTAs) while underscoring a core governance gap: DOD cannot reliably trace how prototype OTAs translate into production, particularly when the follow-on instrument is a Federal Acquisition Regulation (FAR) contract rather than a production OTA. In fiscal year (FY) 2024 alone, DOD obligated over $16 billion to prototype OTAs and reported about $2 billion in production OTA use; yet it lacks a systematic way to identify FAR production contracts that flow from those prototypes, impeding any rigorous assessment of whether OTA prototyping is actually delivering fielded capability.
For contractors, two dynamics stand out. First, despite strong policy signals encouraging OTA use—including recent administration initiatives and steady obligation growth to more than $18 billion in FY 2024—production decisions still gravitate toward FAR contracts. In GAO’s sample of 18 weapon-system development efforts that employed prototype OTAs, a majority planned to transition to standard (FAR-based) contracts for production, citing greater cost insight and risk protections at scale. That is, OTA flexibility is prized for speed, collaboration, and access to nontraditional defense contractors (NDCs) during prototyping, but FAR’s auditability and default safeguards tend to dominate once programs enter production.
Second, GAO demonstrates that DOD’s current data posture obscures visibility into outcomes. While the Federal Procurement Data System (FPDS) flags production OTAs, it does not reliably identify FAR production contracts awarded under follow-on production authority after successful prototypes. DOD’s manual reporting to Congress has proven inaccurate; for FY 2023, only 7 of 48 entries labeled as FAR production contracts truly met the criterion. This matters because portfolio-level rebaselining, industrial base analysis, and congressional oversight hinge on accurate transition data; the current gaps complicate evaluation of performance, value for money, and warfighter delivery.
GAO’s recommendations follow naturally from these findings. It urges DOD to develop and implement a department-wide process to track FAR production contracts that result from prototype OTAs and to ensure fuller, more accurate reporting of awardee data for consortia-based OTAs. DOD concurred with both recommendations. For industry, this foreshadows stricter and more standardized data capture around OTA-to-production transitions and greater transparency into which consortium members actually perform the work—changes that will affect how primes, subs, and NDCs represent their roles and results.
The report also clarifies the evolving place of NDCs in consortia. GAO’s review of four consortia shows NDCs constitute roughly 80–85% of membership and often appear as prime performers, yet DOD still lacks aggregate, reliable data on the value flowing to NDCs and their precise contributions. Congress has directed the Department to institute a process by December 2025 to track NDC and small-business awards, including under consortia. Contractors—traditional and nontraditional alike—should anticipate expanding data fields, sharper reporting obligations in solicitations and agreements, and closer scrutiny of role delineation within consortium awards.
In practical terms, the significance for federal contractors is threefold. First, “prototype with production in mind” remains the dominant success pattern: even when OTAs catalyze speed and collaboration, production is likely to demand FAR-grade cost visibility, business systems, and audit readiness. Positioning your prototype team, accounting practices, and intellectual-property posture to survive that pivot is no longer optional. Second, expect expanded data requirements—whether in FPDS fields, reporting templates, or contract clauses—that make transitions, awardee identity, and NDC participation more traceable. Third, consortia will remain important vectors for market entry, but member firms should prepare for improved attribution and potentially more performance-tied oversight as DOD operationalizes GAO’s recommendations.
This summary draws on GAO’s Other Transaction Agreements report (September 2025), prepared for congressional committees; contact: Mona Sehgal.
Disclaimer: This article provides a good-faith summary and commentary on a GAO report for informational purposes only and does not constitute legal advice. Readers should review the source document and consult qualified counsel regarding specific matters.