**Washington, D.C.:** President Trump has signed an executive order aimed at overhauling the US foreign defence sales system. The reforms promise improved transparency, accountability, and speed, alongside enhanced government-industry collaboration, with phased implementation deadlines through August 2025.
On April 9, 2025, President Trump signed an Executive Order entitled “Reforming Foreign Defense Sales to Improve Speed and Accountability,” which aims to overhaul the United States’ foreign defense sales (FDS) system. The FDS system governs the sale of U.S. defence products and services to foreign governments, encompassing both Foreign Military Sales (FMS) and Direct Commercial Sales (DCS).
The new Executive Order sets out several goals to enhance the FDS framework. These include improving transparency and accountability throughout the system, consolidating decision-making processes by enabling simultaneous certifications and approvals during FMS procedures, and reducing the regulatory burden involved in developing, executing, and monitoring sales and transfer cases. The Executive Order also seeks to foster closer government-industry collaboration to drive cost efficiencies and accelerate schedules within the FMS programme.
Furthermore, the reforms are intended to strengthen U.S. competitiveness internationally, revitalise the domestic defence industrial base, and reduce unit costs for both the United States and its allies. This will be achieved by incorporating “exportability” features into weapon design from the outset, improving financing options for partner countries, and increasing flexibility in contracting.
The Executive Order will be implemented in a phased manner, with immediate directives given to the Secretary of State and the Secretary of Defense. They are tasked with enforcing the United States Conventional Arms Transfer Policy (National Security Presidential Memorandum 10) or any updated successor directive, reassessing Missile Technology Control Regime restrictions on certain Category I items, and consulting with the Secretary of Commerce on potential supply of such items to specific partners. Additionally, the Secretary of State is directed to propose legislative updates to congressional certification thresholds under the Arms Export Control Act and to engage Congress in reviewing notification processes to ensure more efficient adjudication of FMS and DCS cases.
Two key deadlines established by the Executive Order specify further actions. By 8 June 2025, the Secretary of State, in coordination with the Secretary of Defense, must:
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Develop and annually update a list of priority partners for conventional arms transfers;
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Issue updated guidance to the United States’ diplomatic missions worldwide regarding these priority partners;
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Compile a list of priority end-items for potential transfer to these partners;
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Ensure that these transfers do not significantly impact U.S. military readiness;
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Confirm that such transfers promote the Trump Administration’s objective of bolstering allied burden-sharing.
By 8 July 2025, the Secretaries of State and Defense, in consultation with the Secretary of Commerce, must devise a plan to enhance transparency in U.S. defence sales by developing accountability metrics, embed exportability requirements early in the acquisition process, and consolidate technology security and foreign disclosure approvals.
Further, by 7 August 2025, the Secretary of Defense, working together with the Secretaries of State and Commerce, must prepare a plan to establish a unified electronic system to track all DCS export licence requests and ongoing FMS activities throughout their lifecycle.
The reforms outlined in this Executive Order are anticipated to simplify defence contracting by streamlining approval processes and reducing regulatory obstacles. While some U.S. allied nations are pursuing domestic defence manufacturing, the changes are expected to expand opportunities for contractors whose products are attractive to foreign militaries.
Although not explicitly addressed in the Executive Order, Foreign Military Financing (FMF) — a mechanism providing grants and loans to allied governments to facilitate purchases of U.S. defence goods and services — is likely to be affected, with expectations of its rules being streamlined in line with broader reforms.
The National Law Review is reporting that the precise impacts of the Executive Order will become clearer as the relevant agencies publish their detailed implementation plans. Meanwhile, defence contractors are advised to closely monitor developments in the FDS approval process.
Source: Noah Wire Services
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