Why It Matters

A new Congressional Research Service report published July 27 examines how the U.S. military equipment sales system is undergoing significant restructuring under the current administration. For Congress, this represents both an opportunity to shape policy and a challenge to maintain oversight. For allies and partners seeking American weapons, it signals a new calculus: access to U.S. defense technology increasingly depends on demonstrating commitment to their own defense spending and supporting American defense manufacturing.

The Big Picture

In fiscal year 2025, the combined value of U.S. defense articles, services, and security cooperation activities conducted under FMS totaled $104.4 billion. Of that sum, $75.9 billion in arms sales were funded by U.S. allies and partner nations themselves.

The FMS program is authorized primarily under the Arms Export Control Act of 1976, which authorizes sales from DOD stocks, procurement for cash sales, credit sales, and guaranties.

The Arms Export Control Act requires advance congressional notification for cases meeting certain criteria and sets conditions on the end-use and retransfer of items.

Political Stakes

The administration has signaled a dramatic shift in how it views arms transfers. In April 2025, Executive Order 14268 reinstated the first Trump Administration's 2018 Conventional Arms Transfer policy and directed reforms to improve the timeliness and predictability of U.S. arms transfers.

But the more consequential action came more recently. On February 6, Executive Order 14383 elevated industrial-capacity building from a supporting rationale to an organizing principle of U.S. arms transfer policy. The order directed agencies to develop a sales catalog of priority systems informed by U.S. defense industrial base needs and directed prioritization of transfers to partners that invest in their own defense.

The Bottom Line

Executive Order 14383 elevated industrial-capacity building from a supporting rationale to an organizing principle of U.S. arms transfer policy, directed agencies to develop a sales catalog of priority systems informed by U.S. defense industrial base needs, and directed prioritization of transfers to partners that invest in their own defense.

The 119th Congress has proposed and enacted legislation intended to improve the FMS process, increase oversight, and codify provisions of Executive Order 14268.

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