President Trump’s April 9, 2025, Executive Order Modernizing Defense Acquisitions and Spurring Innovation In the Defense Industrial Base (EO) is likely to have major implications for federal defense contractors. This blog, the first in a three-part series about Other Transactions Authority (OTA), discusses the EO and the Department of Defense’s (DOD) use of OTA in reforming defense acquisition. For government contractors eager to work with DOD under OTA—particularly small businesses and non-traditional defense contractors with an interest in research, development, and prototyping—the EO’s preference for OTs may present a significant opportunity.
DOD’s Goals
The EO requires DOD to take several actions, including:
- submitting a plan to reform DOD’s acquisition process;
- revising internal regulations and implementation guidance (including the DFARS);
- reviewing all Major Defense Acquisition Programs (MDAPs) with an eye toward potential cancellation should the MDAPs not meet enumerated metrics in the EO;
- proposing a plan to overhaul the defense acquisition workforce; and
- completing a comprehensive review of the Joint Capabilities Integration and Development System (JCIDS).
This blog will focus on one piece of the first goal of the EO: reforming DOD’s acquisition process by prioritizing the use of OTA.[1]
The Plan
Within sixty days of the April 9, 2025, Order (i.e., June 8), the Secretary of Defense is required to submit to the President a plan to reform the DOD acquisition process to eliminate inefficiencies. Importantly, DOD’s plan is required to utilize existing authorities to expedite acquisitions, including “a first preference for commercial solutions and a general preference for Other Transactions Authority, application of Rapid Capabilities Office policies, or any other authorities or pathways to promote streamlined acquisitions under the Adaptative Acquisition Framework.” In fact, even during the formation of the Secretary’s plan, DOD is immediately required to prioritize (and require where appropriate and consistent with applicable law) using these authorities in existing contracting actions.
While there is certainly reason to expect DOD to utilize OTA more in future procurements, it is important to underscore that using OTA for existing DOD contracting actions is perhaps more limited than the EO indicates. The EO itself notes that it can only be implemented “where appropriate and consistent with applicable law” and DOD’s current authority to utilize OTs and is restricted by statute. Currently, DOD can award OTs for research and development projects under 10 U.S.C. § 4021 and prototype projects (with the possibility of follow-on production awards for successful prototypes) under 10 U.S.C. § 4022. In short, DOD risks a protest before the Government Accountability Office (GAO) and the Court of Federal Claims (COFC) if it attempts to use OTs beyond the bounds of 10 U.S.C. § 4021 and 10 U.S.C. § 4022 in attempting to comply with the EO.
Broader Plan to Overhaul Federal Procurement
On April 15, 2025, the President issued another EO titled Restoring Common Sense to Federal Procurement. The EO gives the Office of Federal Procurement Policy (OFPP) and the Federal Acquisition Regulatory Council (the organization responsible for administering the FAR, members of which include DOD, GSA, and NASA) 180 days to work with designated senior acquisition officials from each federal agency to edit the FAR. Specifically, the EO instructs that the “FAR should contain only provisions required by statute or essential to sound procurement, and any FAR provisions that do not advance these objectives should be removed.” The EO did not explicitly address OTA, but the focus of this EO is in lockstep with the April 9 EO, and it’s important for contractors to stay informed of all the changes on the horizon for federal procurements.
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[1] Although this blog is focused on the first part of the EO as it relates to DOD’s requirement to prioritize OTA moving forward, it is worth noting that as part of DOD’s plan for acquisition workforce reform (due within 120 days, i.e., August 7), the Under Secretary of Defense for Acquisition and Sustainment must establish field training teams with expertise in “innovative acquisition authorities”—which the EO defines as including OTA—to provide hands-on guidance and deliver templates and case studies of successful approaches for implementing OTA and the other “innovative” authorities under the EO.
