C# – MSDTC – Communication with the underlying transaction manager has failed

Use this for windows Server 2008 r2 and Windows Server 2012 R2

1. Click Start, click Run, type dcomcnfg and then click OK to open Component Services.

2. In the console tree, click to expand Component Services, click to expand Computers, click to expand My Computer, click to expand Distributed Transaction Coordinator and then click Local DTC.

3. Right click Local DTC and click Properties to display the Local DTC Properties dialog box.

4. Click the Security tab.

5. Check mark "Network DTC Access" checkbox.

6. Finally check mark "Allow Inbound" and "Allow Outbound" checkboxes.

7. Click Apply, OK.

8. A message will pop up about restarting the service.

9. Click OK and That's all.

Reference : https://msdn.microsoft.com/en-us/library/dd327979.aspx

Note: Sometimes the network firewall on the Local Computer or the Server could interrupt your connection so make sure you create rules to "Allow Inbound" and "Allow Outbound" connection for C:\Windows\System32\msdtc.exe

SQL Server 2008 can use multiple SQLConnections in one TransactionScope without escalating, provided the connections are not open at the same time, which would result in multiple "physical" TCP connections and thus require escalation.

I see some of your developers have SQL Server 2005 and others have SQL Server 2008. Are you sure you have correctly identified which ones are escalating and which not?

The most obvious explanation would be that developers with SQL Server 2008 are the ones that aren't escalating.