NSF X-Labs is the first large-scale deployment of Other Transactions (OT) authority at the National Science Foundation — a milestone-funded award mechanism that sits legally and administratively outside the framework that governs a standard NSF grant or cooperative agreement. Because this is a genuinely new vehicle for NSF (as opposed to the decades-established OT practice at agencies like DoD or DOE), documentation is still thin in places. This guide covers what is confirmed directly from NSF’s own materials and federal statute, and is explicit about where NSF-specific administrative detail (indirect-cost treatment, audit approach, reporting templates) is not yet clearly published.
What NSF X-Labs Is
NSF X-Labs is a National Science Foundation initiative to fund independent, full-time research and development teams — not individual investigator-led lab projects — that pursue “generational breakthrough science” the agency judges difficult to achieve inside conventional university or industry labs. NSF announced the program on May 14, 2026, committing $1.5 billion over the next decade, led by NSF’s Directorate for Technology, Innovation and Partnerships (TIP), the agency’s first new directorate in more than 30 years, established by the CHIPS and Science Act of 2022.
NSF describes X-Labs teams as moving beyond the traditional research outputs of publications and datasets toward “commercially viable platforms ready for private investment,” with “operational autonomy” and dedicated financial runway. An initial Request for Information was issued in December 2025, and the first two funding topics were announced alongside the May 2026 program launch:
- Scientific Instrumentation for Sensing and Imaging — quantum sensing, AI-driven computational imaging, adaptive AI-based sensing algorithms (solicitation NSF-Topic2-FY26-XLabsSensingandImaging; written-proposal deadline July 13, 2026)
- Quantum Systems: Interconnects and Integrated Photonics — components for transferring quantum information and integrating heterogeneous quantum systems
NSF has indicated additional topic areas will follow. Because X-Labs releases funding topic by topic rather than as one static solicitation, a research office should treat any given topic announcement’s specific figures (deadlines, award ceilings, eligibility) as provisional to that topic, not as fixed program-wide parameters.
What “Other Transactions” Authority Means at NSF
An Other Transaction is a federal award instrument that is deliberately not a grant, cooperative agreement, or procurement contract. That three-way distinction — contract vs. grant vs. cooperative agreement — comes from the Federal Grant and Cooperative Agreement Act of 1977, codified at 31 U.S.C. §§ 6303–6305: a contract is for the government’s own direct benefit and is governed by the Federal Acquisition Regulation (FAR); a grant or cooperative agreement provides assistance toward a public purpose and is governed by the OMB Uniform Guidance at 2 CFR Part 200. An Other Transaction is Congress’s deliberate fourth category, created precisely so that a small number of named federal agencies can enter into agreements that are not required to follow either the FAR or the Uniform Guidance in the way grants, cooperative agreements, and procurement contracts must.
NSF’s authority to use this fourth category rests on two separate statutory grants, not one:
- 42 U.S.C. § 1870(c) — a long-standing, general provision of the NSF Act authorizing the Foundation to “enter into contracts or other arrangements” with organizations and individuals, without regard to the standard bonding and legal-consideration requirements that apply to ordinary procurement.
- 42 U.S.C. § 19116 — added by the CHIPS and Science Act of 2022, specific to the TIP Directorate, explicitly stating the Director “may provide awards in the form of grants, contracts, cooperative agreements, cash prizes, and other transactions” in carrying out TIP’s statutory activities.
NSF’s own operating document for this authority is its Other Arrangements/Transactions (OA/T) Guide, published by the agency’s procurement office. It describes OA/Ts as contractual instruments — requiring mutuality of intent, offer and acceptance, consideration, and authority to bind the federal government — used where a program needs “substantial flexibility in terms, intellectual property rights, or cost sharing” that a standard grant or cooperative agreement doesn’t allow. NSF issued the X-Labs opportunities under what it calls an “Other Transactions Agreement Solutions Offering” (OTASO) — a master vehicle that lets NSF release multiple, more specific “topic announcements” under it over time, rather than running each science area as a separate standalone competition.
How X-Labs Milestone Funding Is Structured
NSF frames X-Labs funding as phase-gated and milestone-driven rather than continuously funded against a fixed budget period. Per the published Scientific Instrumentation for Sensing and Imaging topic announcement, the structure is:
- Phase 0 — up to $1.5 million for approximately 9 months, intended to let a team validate feasibility and refine its approach.
- Go/No-Go decision — NSF evaluates Phase 0 progress against defined milestones before authorizing continuation.
- Phase 1 — up to $50 million per year for 2–3 years for teams that clear the Go/No-Go gate, with the stated intent of renewing high-performing teams into a further Phase 2 following another Go/No-Go selection.
Under the general OA/T framework, milestone procedures are negotiated per agreement rather than standardized — NSF’s OA/T Guide describes milestones as able to be structured as non-consecutive, conditional, contingency-based, incrementally funded, or priced as options, “or in any other manner…appropriate under the circumstances.” That flexibility is the mechanism’s defining feature and also the reason a research office cannot assume one X-Labs award’s milestone/payment structure will look like another’s — each is a negotiated term of that specific agreement, not a fixed regulatory schedule the way, for example, NIH’s modular budget increments are.
How This Differs Structurally From a Traditional NSF Grant or Cooperative Agreement
| Dimension | Standard NSF grant / cooperative agreement | NSF X-Labs Other Transaction |
|---|---|---|
| Statutory basis | 31 U.S.C. §§ 6304–6305 (Federal Grant and Cooperative Agreement Act) | 42 U.S.C. § 1870(c) and 42 U.S.C. § 19116 (NSF Act / CHIPS and Science Act) |
| Governing compliance framework | 2 CFR Part 200 (Uniform Guidance) applies in full — cost principles, audit requirements, administrative rules | By design, sits outside the standard grant/cooperative-agreement/contract frameworks; terms are individually negotiated in the agreement rather than uniformly imposed by regulation |
| Funding release | Cost-reimbursement or advance drawdown against an approved budget period, typically tracked in a federal payment system | Structured around phase gates and negotiated milestones (e.g., Phase 0 → Go/No-Go → Phase 1), which can be incremental, contingency-based, or option-priced |
| Proposal/application process | Standard NSF PAPPG rules, submitted via Research.gov/Grants.gov against an open program solicitation | Topic-by-topic announcements issued under a master OTASO; each topic sets its own deadline, format, and eligibility |
| Intellectual property terms | Standard NSF IP terms (generally following Bayh-Dole-derived conventions for university awardees) | Negotiated case by case; NSF’s OA/T Guide describes this as one of the specific reasons to use the mechanism |
| Eligible/expected participants | Traditional NSF awardee base — universities, nonprofits, some industry — via standard proposal channels | Explicitly framed to include “non-traditional performers,” including firms with no prior NSF relationship |
| Programmatic involvement | Grant: minimal NSF involvement in day-to-day conduct. Cooperative agreement: NSF anticipates “substantial involvement,” per NSF’s PAPPG guidance on when a cooperative agreement (rather than a grant) is used. | Phase-gate Go/No-Go review built directly into the award structure, functioning as an active, recurring NSF checkpoint rather than periodic progress reporting |
What This Means Administratively for a Research Institution
A sponsored-programs or research-administration office managing (or considering pursuing) an NSF X-Labs award should expect several real differences from managing an R01-style grant or a standard NSF cooperative agreement:
- The proposal isn’t a standard NSF submission. Because each X-Labs topic is released as its own announcement under the OTASO, submission mechanics, formatting rules, and deadlines are set per topic rather than by the standard PAPPG — don’t assume Research.gov/Grants.gov conventions carry over automatically without checking the specific topic announcement.
- Internal proposal routing still applies, and may be tighter than usual. Early X-Labs topic announcements have included per-institution submission caps and rules limiting a given senior/key person to one proposal per topic — the kind of constraint that normally triggers an internal limited-submission review process at a research institution, even though the award itself isn’t going through the standard federal grants pipeline.
- Negotiation, not standard terms acceptance. Because OA/T terms — including IP treatment — are individually negotiated rather than set by regulation, institutional counsel/OGC involvement in reviewing and negotiating the actual agreement language is likely to be more substantial than for a standard NSF award, where the terms are largely fixed by the PAPPG and the institution’s existing negotiated agreements.
- Compliance and reporting cadence is set by the agreement, not by the standard federal grant reporting calendar. Standard NSF grants follow a predictable cycle: annual/final project reports through Research.gov, standard financial reporting, and (where applicable) Single Audit inclusion under 2 CFR Part 200 Subpart F. Because Other Transactions are not, by design, subject to the Uniform Guidance the same way, an institution should not assume its existing federal-grant compliance calendar, effort-reporting workflow, or F&A/indirect-cost rate agreement applies automatically to an X-Labs award — these need to be confirmed against the specific negotiated agreement rather than assumed from institutional policy built around 2 CFR 200-governed awards.
- Oversight expectations aren’t lighter just because the paperwork is different. A 2023 NSF Office of Inspector General review of Other Transaction Agreements across the federal government — drawing on prior findings from HHS, USAID, and DHS OIG reports — catalogued 19 findings and 39 recommendations about OTA oversight gaps, with agencies obligating funds without complete supporting documentation flagged as a recurring issue. NSF OIG conducted the review specifically to inform NSF’s own OTA policies and procedures before the agency’s OTA use scaled up. The practical implication for a recipient institution: the absence of standard Uniform Guidance paperwork does not mean the institution can document less carefully — if anything, because the terms are individually negotiated rather than templated by regulation, getting the negotiated obligations in writing and tracked is more important, not less.
NSF’s Use of OT Authority vs. the More Established DoD/DOE Practice
Other Transaction authority itself isn’t new to the federal government — NASA has held it since 1958, and the Department of Defense and Department of Energy have run large, mature OTA programs for years, with their own detailed guides (the DoD Other Transactions Guide and DOE’s OT Guide, governed separately for DOE/NNSA under 2 CFR Part 930). NSF’s use of the mechanism is comparatively new: its TIP-specific authority dates to the 2022 CHIPS and Science Act, and X-Labs, launched in 2026, is the most visible large-scale deployment of it to date at NSF. A research administrator with prior exposure to DoD OTA practice (consortium management organizations, specific DoD-style milestone payment conventions) should not assume those conventions transfer to an NSF award — 2 CFR Part 930 governs DOE/NNSA specifically, not NSF, and NSF’s own OA/T Guide is the only document that reliably describes NSF’s actual practice.
What Isn’t Yet Clearly Documented
In the interest of not overstating certainty on a genuinely new mechanism: NSF’s public-facing X-Labs materials describe the program’s purpose, phase structure, and topic areas clearly, but do not, in the pages and documents checked for this guide, spell out in plain language how routine post-award administrative questions are handled — for example, whether and how a recipient institution’s federally negotiated F&A/indirect-cost rate applies to an X-Labs award, what specific financial and technical reporting forms are used, or how subrecipient monitoring is expected to work on a multi-organization team. NSF’s full OA/T Guide document exists and is publicly posted, but its detailed text was not fully extractable for this guide; institutions with an active or prospective X-Labs proposal should treat the specific negotiated agreement and direct consultation with NSF program/grants staff as the authoritative source for those administrative specifics, not general OTA practice borrowed from other agencies.
Frequently Asked Questions
Is NSF X-Labs a grant?
No. NSF X-Labs awards are issued as Other Transactions under NSF’s OA/T authority (42 U.S.C. § 1870(c) and, for TIP specifically, 42 U.S.C. § 19116), a category Congress created separately from grants and cooperative agreements under 31 U.S.C. §§ 6303–6305. It is a distinct instrument, not a variant of a standard NSF grant.
Does 2 CFR 200 (Uniform Guidance) apply to an NSF X-Labs award?
Other Transactions are, by statutory design, not bound to the Uniform Guidance the way grants and cooperative agreements are — that is part of why the mechanism exists. This does not mean no compliance terms apply; it means the applicable terms are set in the negotiated agreement rather than uniformly imposed by 2 CFR 200. Confirm the specifics against your institution’s actual award terms rather than assuming standard Uniform Guidance requirements apply by default.
How much funding can an X-Labs team receive?
Per NSF’s Scientific Instrumentation for Sensing and Imaging topic announcement, Phase 0 awards are up to $1.5 million for about 9 months, and Phase 1 awards (for teams that clear a Go/No-Go review) are up to $50 million per year for 2–3 years. These figures are specific to that topic announcement — check the relevant topic announcement for any other X-Labs area before relying on these numbers.
Is NSF X-Labs the same kind of Other Transaction Agreement DoD uses?
They share the same general legal category (an instrument outside the FAR and outside the Uniform Guidance), but the specific statutory authority, negotiated terms, and administering agency guidance are separate. DoD’s OTA practice is far more established; NSF’s is new, dating to 2022 CHIPS and Science Act authority and first deployed at this scale through X-Labs in 2026. Don’t assume DoD-specific conventions apply to an NSF award.
What should a research office do differently when pursuing an X-Labs proposal?
Expect topic-specific (not PAPPG-standard) submission mechanics, likely internal limited-submission review given per-institution proposal caps in early topic announcements, heavier institutional counsel involvement in negotiating agreement terms (including IP), and a compliance/reporting cadence defined by the negotiated agreement rather than the standard federal grant reporting calendar — confirm each of these against the specific topic announcement and negotiated agreement rather than institutional grant-management default policy.
Related CASRAI Resources
- Uniform Guidance (2 CFR 200): The Governing Framework for Federal Research Grants — the compliance framework NSF Other Transactions are specifically designed to sit outside of.
- Grant vs. Contract vs. Cooperative Agreement — the three-way legal distinction that Other Transactions were created as a fourth alternative to.
- NSF I-Corps Program — another non-traditional NSF mechanism outside the standard research-grant model, useful context for how NSF structures programs beyond the standard PAPPG process.
- Federal Grant Compliance Checklist — the standard Uniform Guidance-based compliance baseline an X-Labs award administratively departs from.
- Milestone payment and Project milestone — the underlying funding-release concept X-Labs is built around.
- Grants Management & Research Funding — the cluster hub for federal award mechanisms and post-award administration.
