diff --git a/TESTING.rst b/TESTING.rst
index 363d25d00d1..04fd217539d 100644
--- a/TESTING.rst
+++ b/TESTING.rst
@@ -150,10 +150,7 @@ Functional tests (neutron/tests/functional/) are intended to
 validate actual system interaction. Mocks should be used sparingly,
 if at all. Care should be taken to ensure that existing system
 resources are not modified and that resources created in tests are
-properly cleaned up both on test success and failure. Note that when run
-at the gate, the functional tests compile OVS from source. Check out
-neutron/tests/contrib/gate_hook.sh. Other jobs presently use OVS from
-packages.
+properly cleaned up both on test success and failure.
 
 Let's examine the benefits of the functional testing framework.
 Neutron offers a library called 'ip_lib' that wraps around the 'ip' binary.
@@ -210,6 +207,15 @@ attributes and configures dnsmasq for that network, the test:
   namespace.
 * Assert that the device successfully obtained the expected IP address.
 
+Gate exceptions
++++++++++++++++
+
+Test neutron.tests.functional.agent.test_ovs_flows.OVSFlowTestCase.\
+test_install_flood_to_tun is currently skipped on upstream gate because Ubuntu
+Xenial 16.04 contains openvswitch 2.5.0. This version contains bug where appctl
+command prints wrong output for Final flow. It's been fixed in openvswitch
+2.5.1 in `this commit <https://github.com/openvswitch/ovs/commit/8c0b419a0b9ac0141d6973dcc80306dfc6a83d31>`_.
+
 Fullstack Tests
 ~~~~~~~~~~~~~~~
 
@@ -303,6 +309,19 @@ bridge connected to that port. The test is a true integration test, in the
 sense that it invokes the API and then asserts that Neutron interacted with
 the hypervisor appropriately.
 
+Gate exceptions
++++++++++++++++
+
+Currently we compile openvswitch kernel module from source for fullstack job on
+the gate. The reason is to fix bug related to local VXLAN tunneling which is
+present in current Ubuntu Xenial 16.04 kernel. Kernel was fixed with this
+`commit <https://github.com/torvalds/linux/commit/bbec7802c6948c8626b71a4fe31283cb4691c358>`_
+and backported with this
+`openvswitch commit <https://github.com/openvswitch/ovs/commit/b1c74f35273122db4ce2728a70fd34b98f525434>`_.
+Due to kernel compatibility, Ubuntu Trusty (Mitaka release) uses openvswitch
+version 2.5.1. Ubuntu Xenial jobs use 2.6.1. Both versions contain fixes for
+local VXLAN tunneling.
+
 API Tests
 ~~~~~~~~~