New Executive Orders Seek to Improve Acquisition in the Defense Industrial Base

President Donald Trump on April 9, 2025, signed three executive orders (EOs) focused on accelerating defense procurement, improving foreign defense sales between the U.S. and its allies and revitalizing American maritime industries. This Holland & Knight alert summarizes these new EOs and provides insight on what defense contractors should expect moving forward.

Modernizing Defense Acquisitions

The first order, "Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base," aims to ensure that the U.S. can "deliver state-of-the-art capabilities at speed and scale" through a reform of the defense acquisition system. The order directs the secretary of defense, within 60 days, to provide a plan for accomplishing this goal by giving a "first preference" for acquisition of commercial solutions and a "general preference" for use of Other Transaction Authority (OTA), as well as Rapid Capabilities Office policies and the Adaptive Acquisition Framework pathways. The order further directs the secretary of defense to undertake additional efforts towards streamlining defense acquisitions, including eliminating or revising "unnecessary supplemental regulations" and guidance; retraining the acquisition workforce to prioritize commercial solutions, adaptive acquisition pathways and iterative requirements; and reviewing major defense acquisition programs (MDAPs) for potential cancellation based on delays, cost overruns, inability to meet key performance parameters or unalignment with mission priorities.

The new preferences for "commercial solutions" and other transactions (OTs) are intended to have immediate application to current U.S. Department of Defense (DOD) acquisitions. The EO states that, starting upon the issuance of the order, DOD "shall prioritize use of these authorities in all pending Department of Defense contracting actions and require their application, where appropriate and consistent with applicable law, for all Department of Defense contracting actions pursued while the plan directed by this section is under consideration." Thus, contractors who have successfully completed an OTA prototype project that is ready for production or who offer innovative technology that meets DOD's requirements may have near term opportunities to receive contracts under applicable the OTA or Commercial Solutions Opening (CSO) procedures, even though DOD is conducting a pending procurement for the requirement using a Federal Acquisition Regulation (FAR)-based procedure.

The order also mandates a review of all MDAPs within 90 days to ensure consistency with the new policy based on speed, flexibility and execution. Programs that are 1) more than 15 percent behind schedule or 15 percent over cost, 2) unable to meet any key performance parameters or 3) "unaligned" with the secretary of defense's mission priorities will be scrutinized for cancellation. MDAPs are those programs with an initial research, testing and development budget of more than $525 million (in FY 2020 dollars) or a total budget of $3.065 billion or more. The secretary of defense is required to submit the list of MDAPs for potential cancellation to the Office of Management and Budget (OMB) for future budget determinations and then additionally submit a plan to OMB for reviewing all remaining major systems that are not MDAPs. This focus on efficiency and accountability is intended to address long-standing issues of delays and cost overruns in defense procurement, which have hindered the timely delivery of critical capabilities to the U.S. Armed Forces.

One of the key aspects of this order is the emphasis on utilizing OTs to expedite acquisitions. The increased emphasis on the use of OTs follows the secretary of defense's recent directive to make the use of CSOs and OTs "the default solicitation and award approaches for acquiring capabilities under the Software Acquisition Pathway." OTs are intended to provide a flexible and streamlined contracting mechanism that allows the DOD to engage with non-traditional defense contractors and rapidly prototype and field new technologies. The goal is to create more opportunities to participate in defense contracts without the traditional bureaucratic hurdles, making it easier to bring innovative solutions to the market.

Practically, the use of OTs can significantly reduce the time and complexity associated with traditional defense contracts. Unlike the FAR-based contracts, OTs are not subject to the same stringent requirements, allowing for more agile and adaptive contracting processes. This can be particularly beneficial for small businesses and startups that may not have the resources to navigate the complex FAR system.

The limitation of OTs and CSOs "where appropriate and consistent with applicable law" limits the reach and impact of these new preferences. DOD's current authority to utilize OTs and CSOs is restricted by statute. Currently, DOD's authority to enter into OTs is limited to research projects under 10 U.S.C. § 4021 and prototype projects and follow-on production contracts for such prototypes under 10 U.S.C. § 4022. Similarly, the authority to use CSOs is restricted to "innovative" commercial products or services under 10 U.S.C. § 3458, which is limited to technology that is "new as of the date of submission of a proposal" or an application of existing technology that is "new as of the date of submission of a proposal of the technology." To the extent DOD attempts to use OTA or CSO procedures for requirements beyond the statutory scope of these authorities, the improper use of OTA or CSO authority remains with the protest jurisdiction of the U.S. Government Accountability Office (GAO) and U.S. Court of Federal Claims. To the extent DOD or the White House wishes to use OTA or CSO procedures for procurements of other requirements beyond research, prototypes or innovative technology, new legislation by Congress should be considered.

The EO's reforms share similarities with recent legislative proposals from congressional leaders to streamline defense acquisitions. Last year, the now-Chair of the Senate Armed Services Committee Roger Wicker introduced the Fostering Reform and Government Efficiency in Defense (FoRGED) Act, which would emphasize commercial solutions and rapid acquisition authorities, among numerous other significant reforms. Some provisions of the FoRGED Act are expected to be included in the fiscal year 2026 National Defense Authorization Act (NDAA).

Reforming Foreign Defense Sales

The second order, "Reforming Foreign Defense Sales to Improve Speed and Accountability," is geared towards establishing a "rapid and transparent" foreign defense sales system in order to enable "effective defense cooperation" with U.S. allies. This goal entails a suite of policy changes, including ensuring "predictable and reliable delivery" of American products; consolidating parallel decision-making on providing military capabilities; reducing rules and regulations for the development, execution and monitoring of foreign defense sales; collaborating with industry for cost and schedule efficiencies in Foreign Military Sales (FMS); and achieving greater U.S. competitiveness, a revitalized defense industrial base and lower unit costs. The order requires a phased implementation, beginning with a review of Missile Technology Control restrictions and proposals to reform congressional notification, followed by prioritizing partners and end-items for conventional arms transfers, along with developing methods to increase transparency of defense sales and track export license requests.

Currently, FMS contracts are managed through a government-to-government agreement, where the DOD procures defense articles and services on behalf of foreign partners. The process begins with the foreign partner defining their requirements, which are then translated into a Letter of Offer and Acceptance (LOA) by the Defense Security Cooperation Agency (DSCA). The LOA outlines the terms, conditions and costs associated with the sale. Once the LOA is signed, the DOD uses its acquisition system to procure the necessary items and services.

FMS contracts are subject to a lengthy approval process involving multiple layers of review by DSCA, DOD and the U.S. Department of State. Translating foreign partners' requirements into precise specifications can be time-consuming and burdensome, and ensuring compliance with U.S. export laws and regulations adds to the duration of the process. The new EO aims to improve the overall efficiency of the FMS process, making it more responsive to the needs of foreign partners and enhancing the competitiveness of U.S. defense products in the global market.

Restoring Maritime Dominance

The third order, "Restoring America's Maritime Dominance," announces a comprehensive set of policy initiatives designed to increase U.S. vessel commercial competitiveness, rebuild maritime manufacturing, as well as strengthen and grow the associated workforce. Among these initiatives, the secretaries of commerce, transportation and homeland security must prepare an assessment of options, ranging from the Defense Production Act to private capital investment, to invest in and expand the Maritime Industrial Base, including commercial and defense shipbuilding. The order also contemplates encouraging capital investment in the U.S. by shipbuilders in allied nations; incentivizing private investment in shipbuilding, including capital improvements and loans; improving acquisition strategies to provide shipbuilders with market forecasting, eliminating "excessive requirements" contributing to ship design and acquisition delay, and considering use of industry standards and American-made readily available parts; and providing incentives and enhancing existing subsidies for construction and modification of militarily useful vessels to operate as U.S.-flagged.

Conclusion

By modernizing the defense acquisition system, the EOs aim to strengthen the U.S. military's competitive edge in the face of rapidly advancing military technologies from adversaries like China and Russia.

Trump's 2025 Executive Orders: Updates and Summaries

Holland & Knight's Public Policy & Regulation Group is actively monitoring and reviewing President Trump's EOs and other actions. View a comprehensive tracking chart of EO summaries on our website.

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