Is the Pentagon buying more through commercial procedures?

The orders are real, and aimed at two-thirds of the money

Executive orders, a statute and OMB guidance now favor commercial buying. Executive Order 14271, Ensuring Commercial, Cost-Effective Solutions in Federal Contracts · Executive Order 14222, Implementing the President's 'Department of Government Efficiency' Cost Efficiency Initiative

1. Apr 9, 2025EO 14265
   a first preference for commercial solutions and a general preference for Other Transactions Authority

   The order told the Secretary of Defense to deliver a reform plan within 60 days. Executive Order 14265, Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base · Executive Order 14222, Implementing the President's 'Department of Government Efficiency' Cost Efficiency Initiative

2. Apr 15, 2025EO 14271
   Ensuring Commercial, Cost-Effective Solutions in Federal Contracts

   Buy commercially available products and services wherever practicable. A senior procurement executive must approve any non-commercial buy in writing. OMB Memorandum M-26-12, Increasing the Acquisition of Commercial Products and Services · Executive Order 14240, Eliminating Waste and Saving Taxpayer Dollars by Consolidating Procurement

3. Dec 18, 2025FY26 NDAA
   Sec. 1822

   Written non-availability determinations before any non-commercial solicitation. Sec. 1823 widens Commercial Solutions Openings. Executive Order 14271, Ensuring Commercial, Cost-Effective Solutions in Federal Contracts · OMB Memorandum M-26-12, Increasing the Acquisition of Commercial Products and Services

4. Pending

   The FY2027 NDAA passed the House 216 to 212 on July 22, 2026. Not enacted as of September 1. Hatched means announced, not enacted. GovInfo public laws (P.L. 119-60 FY2026 NDAA; P.L. 119-21 reconciliation) · CRS IN12704, FY2027 NDAA: Status of Legislative Activity (Sept 1, 2026)

Sources: Federal Register (Executive Order 14222, Implementing the President's 'Department of Government Efficiency' Cost Efficiency Initiative · Executive Order 14240, Eliminating Waste and Saving Taxpayer Dollars by Consolidating Procurement · Executive Order 14265, Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base · Sources), GovInfo P.L. 119-60 (GovInfo public laws (P.L. 119-60 FY2026 NDAA; P.L. 119-21 reconciliation)), CRS IN12704 (CRS IN12704, FY2027 NDAA: Status of Legislative Activity (Sept 1, 2026)).

What they were aimed at

Most federal contract money does not go through commercial procedures, and OMB said so. M-26-12 says "more than two-thirds". FPDS agrees: 67.7% of FY2024 federal contract dollars, $501.5B of $740.7B. At the Pentagon the gap is wider. In FY2025, 19.4% of Pentagon contract dollars went through commercial procedures. Executive Order 14271, Ensuring Commercial, Cost-Effective Solutions in Federal Contracts · Pentagon Federal Register notice requesting comments on EO 14265 (Jul 9, 2025)

The commercial share has sat between 16% and 22% for a decade

"Labor-based" usually means time-and-materials and labor-hour contracts, where the government pays for hours. The rules never touched them: Executive Order 14222, Implementing the President's 'Department of Government Efficiency' Cost Efficiency Initiative · Executive Order 14271, Ensuring Commercial, Cost-Effective Solutions in Federal Contracts

• Title XVIII of the FY2026 NDAA, the acquisition title, has no section limiting time-and-materials or labor-hour contracting. OMB Memorandum M-25-26, Overhauling the Federal Acquisition Regulation · GovInfo public laws (P.L. 119-60 FY2026 NDAA; P.L. 119-21 reconciliation)
• EO 14271 and M-26-12 sort buying into commercial and non-commercial. Pricing type is a different question. Executive Order 14271, Ensuring Commercial, Cost-Effective Solutions in Federal Contracts · OMB Memorandum M-26-12, Increasing the Acquisition of Commercial Products and Services
• And at the Pentagon, labor mostly is not bought by the hour. It is bought cost-plus. Executive Order 14222, Implementing the President's 'Department of Government Efficiency' Cost Efficiency Initiative · Executive Order 14271, Ensuring Commercial, Cost-Effective Solutions in Federal Contracts

Source: GovInfo, P.L. 119-60 Title XVIII (GovInfo public laws (P.L. 119-60 FY2026 NDAA; P.L. 119-21 reconciliation)); OMB memoranda (OMB Memorandum M-25-26, Overhauling the Federal Acquisition Regulation · Federal funding lapse (shutdown) begins; agencies reopen per OMB M-26-01 (Nov 2025) · OMB Memorandum M-26-12, Increasing the Acquisition of Commercial Products and Services).

The dollar meter has barely moved. The department's commercial share was 20.0% October to May FY2026, against 19.4% a year earlier, and it has stayed inside the same band since FY2015. Executive Order 14222, Implementing the President's 'Department of Government Efficiency' Cost Efficiency Initiative · Executive Order 14271, Ensuring Commercial, Cost-Effective Solutions in Federal Contracts

Hourly contracts are under 1% of Pentagon dollars

In FY2025, 0.86% of Pentagon contract dollars ($4.21B) were time-and-materials or labor-hour. They rose 26% October to May. In professional services, the department's labor-heavy category, cost-type contracts carry most of the money. USAspending custom award data download

The commercial share held still across the policy period

Executive orders, OMB memos, a FAR deviation and the FY2026 NDAA arrived between February 2025 and April 2026. Over that period, the department's rolling 12-month commercial share stayed between 19.4% and 20.0%. The lower panel shows monthly Other Transaction obligations. FPDS ezSearch public ATOM feed: Department of War Other Transactions · Executive Order 14222, Implementing the President's 'Department of Government Efficiency' Cost Efficiency Initiative

Civilian and defense services diverged

• Feb 26, 2025, EO 14222. Agency heads, with DOGE team leads, review contracts and grants and end or cut them. Executive Order 14271, Ensuring Commercial, Cost-Effective Solutions in Federal Contracts · Booz Allen Hamilton 8-K Ex. 99.1, Q4/FY2026 results (May 22, 2026)

Sources: Federal Register (Executive Order 14222, Implementing the President's 'Department of Government Efficiency' Cost Efficiency Initiative · Executive Order 14240, Eliminating Waste and Saving Taxpayer Dollars by Consolidating Procurement · Executive Order 14265, Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base · Sources).

Civilian services fell while defense services held, and defense products and software grew. OMB Memorandum M-26-12, Increasing the Acquisition of Commercial Products and Services · Executive Order 14265, Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base

Which claims check out

The policies cover services as well as products

The distinction matters for suppliers: commercial preference covers services too, and an order for a reform plan does not itself rewrite procurement rules. Executive Order 14240, Eliminating Waste and Saving Taxpayer Dollars by Consolidating Procurement · Executive Order 14271, Ensuring Commercial, Cost-Effective Solutions in Federal Contracts

OMB Memorandum M-26-12, dated April 17, 2026, is titled "Increasing the Acquisition of Commercial Products and Services". It implements EO 14271: a report to OMB by May 4, 2026 on non-commercial awards, senior review of non-commercial buys, FPDS fixes and optional OMB review. It covers services as well as products; it does not force COTS or ban custom builds. OMB Memorandum M-26-12, Increasing the Acquisition of Commercial Products and Services · OMB Memorandum M-25-26, Overhauling the Federal Acquisition Regulation

EO 14265, signed April 9, 2025 and published April 15, ordered a reform plan within 60 days. It also required a first preference for commercial solutions and a general preference for Other Transactions on pending actions in the meantime. The plan directive did not itself rewrite procurement rules. The department's July 9, 2025 request for comments concerned that order. Executive Order 14271, Ensuring Commercial, Cost-Effective Solutions in Federal Contracts · Executive Order 14222, Implementing the President's 'Department of Government Efficiency' Cost Efficiency Initiative

Sources: OMB memoranda (OMB Memorandum M-25-26, Overhauling the Federal Acquisition Regulation · Federal funding lapse (shutdown) begins; agencies reopen per OMB M-26-01 (Nov 2025) · OMB Memorandum M-26-12, Increasing the Acquisition of Commercial Products and Services); Federal Register (Executive Order 14222, Implementing the President's 'Department of Government Efficiency' Cost Efficiency Initiative · Executive Order 14240, Eliminating Waste and Saving Taxpayer Dollars by Consolidating Procurement · Executive Order 14265, Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base · Sources).

Two comparisons with the contract data

Sources: USAspending (USAspending custom award data download); GAO-25-107546 (GAO-25-107546, Other Transaction Agreements: Improved Contracting Data Would Help DOD Assess Effectiveness); DoD OT report to Congress FY2024 (DoD Report to Congress on the Use of Other Transaction Authority, FY2024 (archived copy)); FPDS ATOM (FPDS ezSearch public ATOM feed: Department of War Other Transactions).

Pentagon Other Transaction obligations doubled

EO 14265 asked for a first preference for commercial solutions and a general preference for Other Transactions. The commercial share of ordinary FAR contract dollars barely changed. Separately, Pentagon Other Transaction obligations doubled, from $10.1B October to May FY2025 to $20.3B in the same months of FY2026. FPDS ezSearch public ATOM feed: Department of War Other Transactions · Executive Order 14271, Ensuring Commercial, Cost-Effective Solutions in Federal Contracts

A few large awards dominate FY2026: a $2.6B SpaceX prototype (May 29, 2026) and $1.4B of equity agreements. Without them, October to May OTs still rose 61%, to $16.2B. FPDS ezSearch public ATOM feed: Department of War Other Transactions · Executive Order 14222, Implementing the President's 'Department of Government Efficiency' Cost Efficiency Initiative

Other Transactions doubled while the commercial share of ordinary contracts barely changed. OTs are not in USAspending; we pulled every Pentagon OT action from FPDS. FY2026 is partial and includes the October to November 2025 shutdown.