Last month, United States Secretary of Defense Pete Hegseth announced plans to consolidate all programs relating to the development, procurement and sustainment of unmanned systems within the Pentagon under one new office, headed up by a Direct Reporting Portfolio Manager (DRPM) or ‘drone czar’. This is the latest in a series of actions taken by the Donald Trump administration to increase the speed at which the United States military develops and acquires innovative military capabilities, particularly unmanned systems.
Informed by Ukraine’s use of drones against Russia and the high production rate of unmanned systems by the United States’ adversaries, Secretary Hegseth first released a memo directing Pentagon leadership to unleash “US military drone dominance” in July 2025. This involved rescinding ‘risk-avoidant’ policies that regulate the acquisition of emerging technologies and launching the Drone Dominance Program – a $1 billion initiative to purchase 200,000 “small, lethal drones” by 2027 from defence start-ups and other non-prime contractors. The cost asymmetryfaced by the United States throughout the war with Iran served as further justification for the Pentagon’s increased pursuit of drones, as the US Armed Forces have expended high-end, expensive weapons systems when countering mass amounts of cheap drones deployed by Iran. The Department’s push to acquire more drones can be seen in its FY2027 budget request, which included over $70 billion towards drone and counter-drone technologies, a significant increase from the $1.5 billion authorized for UAS and counter-UAS systems in the FY2026 National Defense Authorization Act.
This interest in drones fits with the Trump administration’s wider efforts to revitalise the US defence industrial base. A key element of that agenda has been reforming the Pentagon’s business practices to attract more innovative companies working on the newest defence technologies, and to get their products into military service much faster.
One way this administration has sought to do this is by using Other Transaction Authorities, or OTAs.
What are Other Transaction Authorities?
OTAs are a legal mechanism that enables the Department of Defense to enter into more flexible contracting agreements with non-traditional defence companies. It’s typically used to acquire prototypes and to support the follow-on production of successful prototypes. OTAs are distinct from traditional defence procurement contracts, in that they are not subject to the Federal Acquisition Regulations (FAR) or the Defense FAR Supplement – a comprehensive set of rules that dictate how the Pentagon must typically purchase goods and services. In bypassing these regulations, OTAs allow the Pentagon to speed up the procurement process by simplifying government contracting and replicating commercial industry negotiation standards. The idea is that the sort of nontraditional contractors typically leading innovation would be more inclined to work with government with this arrangement, thus enabling the Pentagon to acquire emerging technologies faster.
Proponents describe this is as a mutually beneficial approach to defence acquisition – the Pentagon gains access to innovative technologies much faster, while non-traditional actors obtain a viable pathway to win government contracts. On the other hand, critics argue that in bypassing federal regulations, OTAs limit oversight around how government money is spent, are not appropriately competitive, and reduce protections around intellectual property for contractors.
How has this mechanism been used?
While Secretary Hegseth has pushed for the use of OTAs, interest in this mechanism predates the second Trump administration.
Using data from the US Federal Procurement Data System, the above graph tracks the Pentagon’s use of OTAs between October 2016 and January 2026. It shows that number of OTA actions has increased by more than 13-fold in less than decade, growing from 586 in 2017 to 8,159 in 2025. This growth started under the first Trump administration and intensified during the Biden years – a key reason for this being that the Pentagon used this mechanism to support vaccine development and manufacturing during COVID-19. Given the current Trump administration has explicitly encouraged the use of OTAs in defence procurement, this pattern is expected to continue.
Are OTAs achieving their purpose?
As previously stated, the recent push to use OTAs is motivated by the desire to increase the speed of the acquisition process to provide American forces with “the best equipment, FAST”. If a product developed through a Prototype OTA is successful, the Pentagon may choose to acquire more by either issuing a traditional defence contract, where FAR and DFARS apply, or by entering into a Production OTA Agreement.
The above graph shows that the use of Production OTAs has increased overtime, from 0 actions in FY 2017 to 899 in FY2025. This would indicate that the number of successful prototypes being acquired at speed is increasing. That said, this only tells part of the picture, since the Pentagon does not systematically track the number of prototype OTAs that enter production under traditional defence contracts.
The US Government Accountability Office has investigated this gap in data and found that, in a sample size of 18 weapons systems created through prototype OTAs, 10 went on to use traditional contracts for production, where the barriers to speed remain. There are numerous reasons for this, ranging from the type of product being acquired to the culture preference within the contracting workforce for traditional procurement processes, given the greater risk protections guaranteed under these contracts.
Without consistent reporting on the number of prototype OTAs transitioning into traditional procurement contracts, the Department is unable to accurately assess the extent to which OTAs are achieving their stated purpose: to deliver capabilities “FAST”.
