Sneak Preview: OIG Identifies ‘Gaps’ in NIH Oversight of OTs

(The following was excerpted from a recent Thompson Grants Compliance Expert article.) The National Institutes of Health (NIH) plans to update numerous policies to address deficiencies the Department of Health and Human Services Office of Inspector General (OIG) identified in a recent report regarding the agency’s oversight of other transactions (OT) as grant funding instruments.

Use of OTs almost doubled between 2020 and 2024, while at the same time, NIH “has fallen short in justifying its use of these mechanisms,” and “did not effectively manage the unique risks of each OT,” according to OIG. OTs generally fund “high-impact, cutting-edge” research, or research in response to “urgent” public health needs, OIG noted. OTs are, by definition, not grants, contracts or cooperative agreements, and therefore, they are not subject to the Office of Management and Budget uniform guidance or the Federal Acquisition Regulations. OTs are considered to be higher risk as they come with fewer requirements and “should generally be used only when the objectives of a federally funded project cannot be accomplished under a traditional funding mechanism,” OIG said.

OTs provide unique flexibilities to NIH that make them a more collaborative award mechanism, according to NIH. For example, OTs can allow for more flexible negotiation of terms and conditions for funded work, including who retains rights to the intellectual property resulting from the effort, and often attract “nontraditional recipients” (i.e., those that have not previously received grants, contracts or cooperative agreements from the federal government).

(The full version of this story has now been made available to all for a limited time here.)

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