Congressional Watchdog: Microsoft & AstraZeneca Were Counted as “Startups”

When you’ve been in the government contracting space as long as I have, you start to notice the patterns. Some things never change — like the mountain of regulations in the FAR (Federal Acquisition Regulation) that make new contractors’ eyes glaze over. But then, every once in a while, something comes along that’s supposed to change the game.

That’s where Other Transaction Authority Agreements (OTAAs) come in.

Recently, I listened to a fantastic discussion with Mona Sehgal, a director at the U.S. Government Accountability Office (GAO), who’s been digging into government contracting for over 20 years. If there’s anyone who understands how Congress looks at acquisition reform, it’s Mona. Her perspective gave me a front-row seat to how OTAAs are reshaping the landscape, the promise they hold, and the challenges that still keep them from living up to the hype.

I want to walk you through the highlights, my takeaways, and what it all means if you’re a business owner, consultant, or veteran trying to navigate the world of federal contracting.

GAO’s Role: The Watchdog of Congress

First, let’s talk about GAO itself. Most people don’t fully understand its role. Unlike Inspectors General (IGs), who are agency-specific watchdogs, GAO takes a government-wide perspective. They’re the ones Congress turns to when they want to know if acquisition systems are working, if taxpayer dollars are being spent wisely, and where systemic problems are hiding.

That big-picture view matters because contracting isn’t just about the DoD. NASA, DHS, VA, and every other major agency are in this mix. Mona’s team isn’t just chasing one fire — they’re mapping the entire forest.

Why OTAAs Exist (And Why They Matter)

If you’ve ever cracked open the FAR, you know it’s thousands of pages long. Layers upon layers of clauses, rules, thresholds, and procedures. That complexity scares off non-traditional companies — especially tech firms or startups that don’t want their innovations buried under red tape.

OTAAs were designed as a flexible alternative. Picture it as starting with a blank sheet of paper instead of a 2,000-page rulebook. They were first created back in the late 1980s for DARPA research projects, where speed and innovation mattered more than compliance checklists.

Fast forward to today, and their use has exploded. From $1.8 billion in 2016 to $18 billion in 2024, OTAAs have become a core piece of DoD’s acquisition strategy, especially for prototyping new tech.

The idea is simple: cut the bureaucracy, move faster, and bring in non-traditional contractors who’d otherwise steer clear of government work.

The Reality: Who’s Really Winning the Deals?

Here’s where things get tricky.

While OTAAs were meant to pull in small businesses, startups, and non-traditional innovators, the top recipients are still the big players — traditional defense contractors and giants like Microsoft.

Smaller firms usually get pulled in as subcontractors through consortia — groups managed by nonprofits that distribute funding across multiple members. But the problem is, tracking where the money actually goes is a nightmare.

Systems like FPDS and USAspending.gov now include OTAA data, but they don’t paint a clear picture of how much funding truly reaches non-traditional businesses. Congress wants answers, but the visibility just isn’t there.

So while OTAAs are growing, the question remains: are they really changing the industrial base, or are we just giving big players another path to the same money?

The Human Factor: Agreements Officers

Here’s something Mona stressed that I’ve seen firsthand: OTAAs live or die by the skill of the agreements officers.

Unlike FAR contracts, which give you a rigid structure, OTAAs rely heavily on judgment. That flexibility is a double-edged sword. On one hand, you can cut through red tape. On the other, you’re asking contracting personnel to operate without the safety net of FAR protections.

Problem is, there’s a shortage of trained agreements officers. Training is limited, class sizes are small, and culturally, most contracting folks are more comfortable sticking to FAR because it feels safer. This bottleneck could stall the expansion of OTAAs no matter how much policy support they get.

From Prototype to Production: The Valley of Death

If you’ve ever tried to bring new tech into DoD, you’ve probably heard the term “valley of death.” That’s the gap between a cool prototype and actually getting it into production at scale.

GAO’s research shows this is still a huge hurdle. Prototypes are popping up left and right under OTAAs — but many never make it past that stage. The reasons vary: sometimes the tech isn’t ready, sometimes the systems are too complex, and sometimes risk aversion kills momentum.

For small businesses, this is especially brutal. You can spend years developing something innovative, get that prototype award, and then watch the opportunity evaporate when it doesn’t transition to production.

Transparency: Still a Work in Progress

One of GAO’s biggest recommendations is around data transparency. If Congress can’t clearly see where money is flowing, oversight breaks down.

Mona explained how OTAA data is messy:

• Project-based awards show where money goes, but

• Modification-based awards make it hard to trace funds.

GAO wants DoD to supplement automated systems with manual reporting so Congress can actually see what’s happening. Until that happens, there will always be a question mark around OTAA’s effectiveness.

What This Means for Small Businesses

If you’re a small or non-traditional business, here’s the reality check:

• OTAAs can be a path in, but expect to work through consortia.

• Don’t assume a prototype award equals long-term production work.

• Learn the contracting culture — FAR is still king, and most people default to it.

The opportunity is real, but it’s not simple. You need strategy, patience, and often a willingness to partner with larger players.

Looking Ahead: The Future of OTAAs

Policy momentum is pushing OTAAs forward. Executive orders and DoD memos are encouraging their use, especially for software and tech. The spending growth shows they’re not going away anytime soon.

But scaling them up will require more trained agreements officers, better data transparency, and a cultural shift in how contracting is done. Otherwise, they risk becoming just another tool that benefits the same old players.

Final Thoughts

Listening to Mona reminded me of why I love and hate this space. On one hand, OTAAs are a brilliant idea — a way to finally break free from the bureaucracy and let real innovation into the system. On the other hand, the execution is messy, the data is flawed, and the human capacity isn’t keeping up.

For anyone in this game — whether you’re a veteran starting a consulting business, a small tech firm eyeing DoD contracts, or a policymaker trying to reform acquisitions — the lesson is clear: know the system, understand its limits, and position yourself smartly.

If you want to dig deeper, GAO’s reports are public on gao.gov. Trust me, they’re worth the read. And if you’re serious about government contracting, OTAAs are a space you can’t afford to ignore.

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