Long Overdue Reform May Be Coming Soon to the Foreign Defense Sales Process

On July 10, 2024, the Defense Innovation Board (DIB) issued a report, “Optimizing Innovation Cooperation with Allies and Partners”. The DIB stated that the Department of Defense (DOD) is failing to modernize the concepts, systems, and processes that enable relationships with our allies and partner nations to flourish. They  found that, while numerous efforts to reform the systems have been attempted, significant structural and cultural issues stand in the way. The DIB noted there is a significant gap within the DOD between rhetoric and action; regulatory and compliance frameworks remain primary blockers to collaboration. Accordingly, they identified several overarching key priorities, including, among others, streamlining processes for United States (US) military sales and transfers involving procedural differences for foreign military sales (FMS), executed by DOD, but overseen by the Department of State (DOS) and, for which, they advised, DOD and DOS need to work together to claw back FMS rules that delay arms shipments to key allies and partners. The DIB also made key recommendations, which included regulatory and compliance reform. In making this recommendation, the DIB noted that DOD leaders and warfighters are committed to the mission of integrating allies and partners. However, to adequately address the issues needing resolved, significant senior leadership attention and collaboration across departments and agencies will be required.

Notwithstanding that the DIB report had been out since July 2024, no specific high-level action occurred until President Trump issued Executive Order 14628, “Reforming Foreign Defense Sales to Improve Speed and Accountability” on April 9, 2025, in which he directed a thorough review of the foreign defense sales processes. These include the FMS procedures to improve accountability and transparency, consolidate parallel decision making, reduce rules and regulations in the foreign defense sales process and transfer of arms cases to ensure alignment with US foreign policy objectives, increase government-industry collaboration to achieve cost and schedule efficiencies in the FMS program, and advance US competitiveness abroad, revitalizing the defense industrial base and lowering unit costs for the US and our allies and partners. 

"To serve the interests of the American people, the United States must maintain the world’s strongest and most technologically advanced military through a dynamic defense industrial base, coupled with a robust network of capable partners and allies. A rapid and transparent foreign defense sales system that enables effective defense cooperation between the United States and our chosen partners is foundational to these objectives. Reforming this system would simultaneously strengthen the security capabilities of our allies and invigorate our own defense industrial base. This mutually reinforcing approach would enhance United States warfighting capabilities by fostering healthy American supply chains, domestic production levels, and technological development." EO 14628

The President’s executive action ordered a phased approach which included the review and improvement of governing rules and regulations, establishment of priorities, and joint action by the Secretary of Defense (SecDef) and Secretary of State (SOS). Time will tell what specific changes result from this executive action but without such direction from the top, the matters raised in the DIB report over a year ago might continue to be mere rhetoric with no real action.  

Assuming timely and comprehensive executive action, the environment for international arms transfers may soon see significant change with an expanding opportunity for foreign arms sale transactions, with particular respect to reform of antiquated regulation and policy, as well as a renewed emphasis on partner nations bearing their fair share of the cost of defense. The President’s call for reform and modernization of the foreign defense sales process, including FMS, recognizes existing inefficiencies and bureaucratic hurdles within the FMS process and is aimed at streamlining approvals, reducing regulations, and improving accountability and transparency.  The call for reform recognizes the increased demand and pressure on the FMS system, with partner nations seeking to modernize their defense capabilities, leading to a surge in demand for US defense equipment and services through FMS. Increased focus on strategic partnerships, interoperability, and partner defense modernization, to which FMS provides significant contribution, will pressure FMS to become faster, more effective, more efficient, and more accountable. An FMS process which is faster, more responsive, and less burdened by unnecessary regulation is likely to create more opportunities for US defense contractors to sell products and services to our foreign allies and partners.

Taking advantage of these looming changes in the FMS process will require an understanding of the market for your products as well as knowledge of the FMS process and procedures. Both can be found in the talented subject matter experts at Dayton Aerospace, Inc. We can be reached at info@daytonaero.com or by calling (937) 426-4300.

About the Author

Anthony J. Perfilio, Esq. has over 40 years of experience as an attorney and legal services manager for the US Air Force (USAF). He is a proven acquisition professional with an engineering background and specialized expertise in government and private sector acquisition and sustainment strategy; proposal development and review; contract and subcontract support; rights in technical data; dispute resolution; foreign military sales (FMS); and International Traffic in Arms Regulation (ITAR) control. In addition to consulting, Mr. Perfilio currently serves as general counsel for Dayton Aerospace, as well as a private practitioner at Rendigs, Fry, Kiely & Dennis, L.L.P., of Cincinnati and Dayton, OH. He is also the author of “Foreign Military Sales Handbook”, West Legal Works, Thomson Reuters.

To learn more about Tony, view his expert profile here.