DoW Finalizes Arms Transfer Realignment: What Contractors Should Know
Last week, the Department of War finalized a major restructuring of its arms transfer and security cooperation enterprise. The move implements a November 7, 2025 memorandum that directed the realignment of the Defense Security Cooperation Agency (DSCA) and the Defense Technology Security Administration (DTSA) from the Under Secretary for Policy to the Under Secretary for Acquisition and Sustainment (USW(A&S)).
The November directive required development of an implementation plan within 60 days. The February 2026 announcement confirms that process is complete and the new structure is now operational.
The DoW is currently managing more than 16,000 open Foreign Military Sales (“FMS”) cases valued at approximately $903 billion, alongside roughly $200 billion in annual Direct Commercial Sales (“DCS”) approvals. With foreign military sales expected to continue rising in the near term, the DoW is repositioning its internal structure to handle increased volume and strategic importance.
At a high level, the change consolidates arms transfers, security cooperation, technology security, acquisition planning, and industrial base considerations under a single enterprise. Policy oversight remains with the Under Secretary for Policy, but execution authority now sits within the acquisition organization. Because A&S oversees program execution, industrial base strategy, and resource alignment, this shift places foreign military sales within one of the most influential and action-oriented offices in the DoW.
Several aspects of the finalized realignment are particularly relevant to defense contractors.
- Exportability Is Moving Upstream
The November memorandum announced the initiation of policy revisions requiring exportability to be built into system design at the beginning of the acquisition lifecycle, supported by increased investment in exportability features. Contractors developing new platforms or major upgrades should expect earlier scrutiny of releasability, configuration management, and technology protection decisions. Export considerations are no longer a late-stage compliance issue. They are becoming embedded in core acquisition planning, reinforcing the expectation that systems be designed with foreign sales in mind from the outset.
- Industrial Base Planning Is Being Integrated with Foreign Demand
The DoW intends to integrate acquisition data, industrial base capacity information, technology security data, and FMS and DCS case information to improve forecasting of global demand against available production capacity. With foreign demand projected to grow, foreign sales are increasingly being treated as a structural component of production planning rather than opportunistic transactions. For contractors, this may influence capital investment strategies, supply chain resilience planning, and long-term production scaling.
- Authority Over the Sales Lifecycle Has Been Consolidated
By moving DSCA and DTSA under A&S, the DoW has aligned arms transfers with the office responsible for acquisition outcomes and industrial performance. While Policy retains strategic oversight, A&S now controls execution. That structural shift signals an intent to increase speed, reduce friction, and elevate the institutional priority of foreign military sales.
- Burden-Sharing and Sales Growth Are Explicit Objectives
The memorandum ties arms transfers directly to strengthening allied defense capacity and revitalizing the U.S. defense industrial base. It also references narrowing the scope of items limited to government-to-government transfer in order to expand DCS opportunities. Together, these steps suggest continued regulatory streamlining and a strategic push to expand foreign military sales as a pillar of industrial base growth.
This realignment embeds foreign defense sales within the DoW’s core acquisition and industrial base architecture at a time of rising demand. As updated guidance, delegations, and implementing issuances follow, we will continue monitoring developments closely. For companies active in FMS or DCS, the message is clear: foreign military sales are not simply growing in volume; they are gaining institutional priority within the DoW.