Foreign Military Sales Reform to Strengthen International Cooperation 

Executive Orders, Organizational Realignment to Streamline Acquisition Process 

 When a foreign country seeks a military technology from a defense contractor in the United States, there are two ways for them to acquire that capability: Direct Commercial Sales (DCS) and Foreign Military Sales (FMS). Under DCS, the foreign country negotiates directly with the contractor. Under FMS, the U.S. government manages the sale with training and sustainment included. Which process is used depends on the technology, the partner nation and the policy considerations involved. But a recent surge in demand is challenging the current FMS process, resulting in two recent executive orders aiming to reform and modernize the program. 

“There’s been FMS reform initiatives before, but what’s unique now is the executive orders are coming directly from the President,” said Heidi Grant, Executive Partner at Elara Nova and the former Deputy Under Secretary of the Air Force for International Affairs (SAF/IA), and former Director of both the Defense Security Cooperation Agency (DSCA) and the Defense Technology Security Administration (DTSA).  

One key advantage of FMS over DCS is what Grant calls the “total package approach,” where the U.S. government ensures the sale includes training and sustainment across the lifecycle of the capability. 

While many critics, including senior U.S. leaders, have characterized the system as “broken,” the reality is more nuanced. The Foreign Military Sales process was deliberately designed to be thorough, ensuring that each transfer aligns with U.S. strategic, security and foreign policy interests. The challenge is not that the system fails to function, but that it was not built for the scale, speed and technological complexity of current demand. 

How the FMS Process Works 

The FMS process begins at U.S. embassies, where trained security cooperation officials, known as military groups or “milgroups,” help partner nations determine whether FMS is required and initiate the process. 

“DSCA — the Pentagon agency that administers the entire FMS enterprise — routes the request to the appropriate implementing agency,” Grant said. “For Air Force or Space Force, that agency is the Secretary of the Air Force for International Affairs (SAF/IA), who coordinates with the defense contractor to add the order to an existing production line, apply any required configurations and manage the delivery.” 

Brad Head, Managing Director of International Partnerships at Elara Nova, saw this process firsthand as Chief of the Office of Defense Cooperation in Brussels.  

“Belgium selected F-35s to replace its F-16s with a 5th-generation capability,” Head said. “DSCA sent that request to the F-35 Joint Program Office, which coordinated with Lockheed Martin to add Belgium’s order to the existing production run with Belgium’s unique configuration. Then the U.S. government took ownership of the jets and transferred them to Belgium with the appropriate training and sustainment package.” 

Belgium acquired a world-class capability with the support needed to sustain it. NATO’s collective defense posture was strengthened, and adding partner demand to the production program helped reduce costs for the United States. 

Why the System is Struggling to Keep Pace 

Allies and partners are seeking not only traditional weapons systems, but also emerging technologies in areas like unmanned systems, cyber and space. The Brussels-based think tank Bruegel found that European FMS cases reached a record $76 billion in 2024, roughly four times the European average since 2008. This surge is challenging the FMS program in several ways. 

First, the Defense, State and Commerce departments must agree the transfer serves U.S. strategic interests. Each brings a different lens, and when they cannot reach agreement, decisions can stall or escalate to the Cabinet level.  

Second, export control regimes add complexity. ITAR and EAR govern defense and dual-use technology transfers, while multilateral agreements like the MTCR impose additional restrictions. These controls protect sensitive technologies, but they can also restrict capabilities that did not exist when the regulations were written. Even a single restricted component embedded in an otherwise releasable system can prevent a sale. 

Third, contractors must balance U.S. production requirements against surging international demand.  

“Industry cannot invest in additional production capacity until a firm order justifies it,” Grant said. “A partner may place an order for a critical system, only to learn the delivery timeline is seven years because the production line is already committed. Munitions offer a clear example — demand has surged beyond what current production lines can support.”  

These challenges compound. Delays in interagency decisions slow export licensing, which creates uncertainty for industry and limits investment in production capacity. Friction at each stage reinforces the next, extending timelines even for cases aligned with U.S. strategic priorities. 

Executive Orders to Reform the Process 

The first executive order, signed in April 2025, targets several of these bottlenecks directly. 

The order directs Defense, State and Commerce to create a joint priority list for partners and end-items, establishing shared priorities up front and calls for a review of the MTCR to reclassify certain technologies. 

“The ‘exportability by design’ mandate is significant,” Grant said. “It directs the defense industrial base to build capabilities eligible for export from the outset, rather than requiring costly modifications after the fact.”  

The order also streamlines congressional notifications and creates an electronic tracking system giving foreign buyers and U.S. industry visibility into where a case stands. 

Separately, the Air Force is also accelerating approvals through the “STAR Baseline,” a classified document that pre-determines which technologies the U.S. is willing to export. 

“The STAR Baseline short-circuits the process,” Head said. “It decides ahead of time what we are willing to export to a country, so that the U.S. doesn’t have to start a review from scratch every time an FMS request comes in. Technologies not covered by the baseline still require a broader interagency review that can take weeks or months.” 

A second executive order, signed in February 2026, aims to shape the demand signal that drives sales in the first place.  

“This executive order directs the Defense, State and Commerce secretaries to develop a prioritized sales catalog, or a proactive menu of capabilities reflecting both the industrial and strategic priorities of the U.S.,” Grant said. “This catalog signals to allies what the U.S. would like them to buy, while a new Promoting American Military Sales Task Force and mandatory quarterly performance data will increase accountability.” 

This reflects a broader shift: rather than responding to partner demand as it emerges, the U.S. is signaling preferred capabilities and partners in advance, shaping demand to align with its strategic and industrial priorities. 

Organizational Realignment to Empower Acquisition Officials 

The U.S. government’s reform efforts extend beyond executive orders. DSCA and DTSA — previously under the Pentagon’s policy directorate — will now move under the acquisition and sustainment directorate. This reflects a shift from FMS as primarily a foreign policy tool to a core function of the defense industrial enterprise. 

“The head of acquisition will now be responsible for managing FMS timelines and resolving trade-offs between U.S. and international deliveries against current demands,” Grant said. “This also gives senior leaders from partner nations a single point of entry, rather than having to navigate between the policy and acquisition sides of the Pentagon.” 

The move will carry strategic implications for future military programs that require allied support.  

“The U.S. is acknowledging that it can’t do everything, everywhere,” Head said. “As the U.S. builds global architectures like Golden Dome, allies and partners will be required to contribute systems based in their own countries. Allied acquisition will be central going forward and placing those agencies under the same leadership that manages U.S. acquisition ensures those two tracks can be coordinated.” 

The Unique Challenge of Space Security Cooperation 

These challenges are most acute in space, where demand is accelerating and the supporting processes are least mature.  

“Until recently, space was the exclusive domain of a handful of nations,” Head said. “But with launch costs coming down and the conflicts in Ukraine and the Middle East underscoring space as a critical component of multi-domain operations, allied demand is surging.” 

Unlike mature FMS programs for fighter jets or air defense systems, the U.S. does not have a well-established catalog of space capabilities it is actively offering to allies. Outside of a few existing programs like Wideband Global SATCOM (WGS), most space cooperation is what Head described as “a handmade wooden shoe” — or a custom-made capability. 

U.S. embassies also lack space-smart personnel to guide partner nations.  

“You either need a list of things you’re selling or you need experts on the front line, and we currently don’t have either one,” Head said. 

Likewise, the space domain also faces a funding challenge. A surcharge on every FMS sale funds the personnel, training programs and institutional support that underpins the security cooperation process. But there is currently not enough space cases to generate the revenue needed to sustain a space-focused workforce, leading SAF/IA and DSCA to identify seed funding to address this problem. 

Grant noted this tension is not without precedent.  

“When we were selling F-15s to partner nations, uniformed pilots were needed in U.S. cockpits and couldn’t be spared for international training missions,” she said. “The solution was contracted training support. It’s the same tension right now with guardians. We need them working U.S. priorities, and at the same time we need to build enough of them to support the international business.” 

In this sense, space is not an exception to the FMS system, but rather an early indicator of where the entire enterprise is heading. As demand for advanced, rapidly evolving technologies grows across domains, the challenges seen in space today are likely to emerge more broadly across the security cooperation landscape. 

How Elara Nova Supports the Process 

As the FMS system evolves, the challenge will be translating reform into execution across government, industry and international partners. Elara Nova brings experience from within the security cooperation enterprise, including leadership roles at DSCA, SAF/IA and on the front lines of defense cooperation. 

For the U.S. government, the firm helps fill capacity gaps where the security cooperation workforce is stretched thin. For allies and partners, it translates requirements into cases the system can act on. For industry, it maps the export control landscape before companies invest in markets they may not be accessible. Elara Nova provides the insight to navigate the system and the experience to deliver results. 

Elara Nova is a trusted guiding partner that builds tailored teams to illuminate unseen opportunities and deliver impact across every domain. Learn more at https://elaranova.com/