On April 9, 2025, President Donald J. Trump signed an Executive Order, titled “Modernizing Defense Acquisition and Spurring Innovation in the Defense Industrial Base.” This order outlines a broad and ambitious reform effort aimed at overhauling the Department of Defense’s (DoD) acquisition processes. Contractors engaged in or seeking business with the DoD should review the order closely, as it may significantly alter acquisition timelines, regulatory obligations, and program-level risks. A detailed timeline and cast of characters can be found here.
Key Provisions and Implications
The Executive Order directs the Department of Defense to accelerate its procurement processes by placing a heightened emphasis on speed, flexibility, and execution. This direction signals a move away from traditionally long acquisition cycles and will likely require shorter development and delivery cycles on major technology acquisitions.
A central feature of the order is its preference for commercial solutions and Other Transactions Authority (OTA) agreements. Section 3(a) of the EO mandates a “first preference” for commercial offerings, while Section 7(e) reinforces a general preference for OTA. Though FAR part 12 and DFARS subpart 21.2 already emphasize commercial solutions, the new focus on OTAs increase the use of non-traditional acquisition pathways. Contractors who have not yet engaged with commercial solution frameworks or OTA mechanisms should promptly evaluate their relevance and advantages.
The order also directs the Secretary of Defense to begin a comprehensive review and revision of all internal acquisition-related regulations and policies. Under Section 4(a), the DoD must eliminate unnecessary administrative procedures to facilitate expedited acquisition. The “ten-for-one” rule in Section 4(b), which requires the repeal of ten regulations for every new supplemental rule adopted, reflects a significant deregulatory push. These changes could materially reduce compliance costs and administrative burdens for contractors.
Workforce reform is another major component of the order. Section 5(a) requires the development of new performance evaluation metrics for acquisition personnel, with a focus on commercial solutions and adaptive acquisition pathways. Section 5(d) directs the DoD to adopt incentive policies that encourage acquisition officials to exercise innovative acquisition authorities and to take calculated risks. These reforms suggest a forthcoming shift in the culture of government procurement, one that may be more supportive of novel or flexible contracting approaches proposed by contractors.
The Executive Order also mandates a comprehensive review of all Major Defense Acquisition Programs (MDAPs). Under Section 6(a), the Deputy Secretary of Defense must identify programs that are more than 15% over budget or behind schedule, failing to meet key performance parameters, or inconsistent with current DoD priorities. These programs will be subject to potential cancellation. In addition, the Deputy must submit a detailed report on the performance of all MDAP contracts against original cost estimates to the Office of Management and Budget. Contractors participating in these programs should recognize that this review introduces another layer of risk and scrutiny.
The order also requires a review of the Joint Capabilities Integration and Development System (JCIDS) under Section 6(b). This review aims to streamline how the government defines and refines its acquisition requirements. Contractors may find that this results in more dynamic or less static definitions of government needs, requiring greater agility in adapting to revised or evolving procurement objectives.
Finally, the order emphasizes the use of “innovative acquisition authorities,” which it defines to include OTA, commercial solutions, and rapid acquisition mechanisms such as those employed by the Rapid Capabilities Offices. Sections 7(e) and 7(h) elaborate on these authorities. Field training teams led by senior acquisition officials will be established to provide hands-on guidance in their use, under Section 5(c). Contractors are encouraged to develop internal expertise in these non-traditional acquisition pathways to better position themselves for future solicitations.
Strategic Considerations for Contractors
Contractors engaged in or pursuing MDAPs should assess their exposure to program risk considering the Secretary’s review mandate. Those contractors should evaluate performance metrics, delivery timelines, and cost compliance to anticipate areas of scrutiny. Simultaneously, firms should explore whether they can offer their products and services as commercial solutions, and whether they are eligible to participate in OTA-based procurement. The new focus on OTAs has potential for major disruption of the research-prototype-production relationships some large contractors enjoy now. Internal compliance teams may also benefit from reviewing existing policies and procedures to prepare for possible reductions in regulatory oversight and reporting obligations.
Contractors working MDAPs that are 15% over budget or behind schedule, failing to meet key performance metrics, or no longer consistent with DoD priorities should ensure preservation of their rights under the Contract Disputes Act by (1) documenting changes in scope of work and requesting change orders as necessary, including changes due to government delays and force majeure events; (2) documenting disputes with formal dispute letters to the contracting officer; and (3) keeping track of relevant timelines in any disputes for resolution at the Armed Forces Board of Contract Appeals or Court of Federal Claims.
As the DoD shifts its workforce training and evaluation framework, contractors should expect that acquisition officials may be more receptive to flexible and innovative solutions than under prior regimes. Engaging early with contracting officers and understanding their evolving priorities may present opportunities for competitive advantage.
Summary
This Executive Order represents a significant shift in the federal acquisition landscape. By prioritizing commercial practices, streamlined processes, and flexible contracting tools, the DoD appears poised to create a more dynamic and innovation-driven procurement environment. At the same time, the order introduces heightened risk for programs that fail to perform or align with strategic priorities. Contractors should take proactive steps to adapt to these changes by evaluating their portfolios, exploring non-traditional procurement pathways, and reassessing their approach to compliance and performance.
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