U.S. Directorate of Defense Trade Controls releases list of FY 2025 Q1 proposed commercial defense export licenses

Background on FMS/DCS congressional notification requirements

The 1976 Arms Export Control Act (AECA) established a process for the President and Congress to oversee foreign defense sales agreements, ensuring that such transactions align with U.S. policy objectives, including those of national security, global alliances, international stability, and the discouragement of arms races.

The AECA requires the President to notify Congress at least 30 calendar days prior to authorizing direct commercial sales (DCS) or government-to-government foreign military sales (FMS) of major defense equipment valued at US$14 million or more, defense articles or services valued at US$50 million or more, or design and construction services valued at US$200 million or more. This statutory review period can be waived if the President declares a national security emergency. Additionally, the President must inform Congress prior to issuing a license for the exportation of US$1 million or more in firearms listed on category I of the United States Munitions List. In the case of DCS or FMS to a NATO member state, Japan, Australia, South Korea, Israel, or New Zealand (known as “NATO +5”), the congressional notification timeline is reduced to 15 days and the notice threshold values for defense equipment, articles and services are higher.

Once notice is submitted by the President, Congress has 30 calendar days (or 15 in the case of NATO +5 countries) during which it can elect to enact a joint resolution prohibiting the transfer of arms. If no action is taken, the certification is deemed approved by default. The AECA also requires that the President publish information about proposed transactions that meet the criteria above in the Federal Register “in a timely manner.” Certifications are expected to be unclassified, though limited information may remain confidential if public disclosure would be “detrimental to the security of the United States.”

Developments and trends in FMS/DCS transactions

According to the U.S. Department of State, U.S. military equipment sales to foreign governments reached a record high US$318.7 billion in fiscal year 2024 (FY 2024), marking a 29% increase from the previous year. This figure included US$200.8 billion in DCS and US$117.9 billion in FMS.

The ongoing conflicts in Ukraine and Gaza have contributed to increased global demand for U.S. weapons and defense services. [1]The List reflects this trend; the notice listed a proposed transaction for the export of US$50 million or more of 40mm grenades to Ukraine (See Table 1). Ukraine was also one of the proposed recipients of a contract for foreign pilot training support. Israel, along with Romania, was offered a contract for laser tracker receivers and target sensor program components.

Table

1. List of License Certifications Submitted by the DDTC for Congressional Review; October 7 to December 26, 2024

 Source: Bureau of Political-Military

Affairs, Directorate of Defense Trade Controls: Notifications to the Congress

of Proposed Commercial Export Licenses, 90 FR 23097 (05/30/2025)

Although the May 30 List includes only transactions proposed during the former Biden administration, the current Trump administration has also demonstrated its commitment to sharing defense capabilities with Ukraine and Israel. On May 1, following a temporary suspension of weapons transfers to Ukraine, the Trump administration announced that it would approve a license to sell the country at least US$50 million in defense hardware services.

Defense-related sales to Israel have also increased significantly over the past six months. On February 28, 2025, the State Department notified Congress of three potential FMS to Israel, amounting to nearly US$12 billion. [2] U.S. Secretary of State Marco Rubio invoked the AECA’s national security emergency provision to bypass congressional review and expedite the delivery of $4 billion of that military assistance to Israel. Within the last three months, the State Department has notified Congress of an additional $690 million in potential FMS to Israel, $510 million of which is intended to help the country restore its bomb guidance kits and munitions stockpiles which were depleting during its recent conflict with Iran. [3]

Trump Administration policy and outlook on FMS/DCS

On April 9, President Trump issued Executive Order (EO) “Reforming Foreign Defense Sales to Improve Speed and Accountability,” which sought to streamline the process of transferring U.S. defense articles and services to allied and partner nations, enhance, national security, and increase the competitiveness of the U.S. defense industry. In the EO, the President called for “improve[d] accountability and transparency throughout the foreign defense sales system,” as well as consolidation of parallel decision-making processes and a reduction in rules and regulations involved in the development, execution, and monitoring of foreign defense sales. Notably, the EO called on the Secretary of State and the Secretary of Defense to submit a joint letter to Congress proposing an update to statutory congressional certification thresholds of proposed sales under the DCS and FMS programs in the AECA.

During his May 31 remarks at the 2025 Shangri-La Dialogue in Singapore, Secretary of Defense Pete Hegseth reiterated President Trump’s commitment to strengthening military cooperation with U.S. allies abroad. He urged the countries in attendance to “do their part on defense,” and stated that “NATO members are pledging to spend 5% of their GDP on defense.”

Hegseth emphasized the shared interest of the U.S. and Indo Pacific nations in deterring Chinese military and economic aggression. He also referenced plans to employ more unmanned aircrafts and vessels through the Maritime Security Consortium (MARSEC), an enterprise comprised of defense industry stakeholders committed to identifying low-priced, commercially available solutions to maritime security challenges faced by the U.S.’s Southeast Asian partners.

Additionally, Hegseth described several ongoing initiatives to strengthen the U.S. defense industrial base, including a number of projects launched via the Partnership for Indo-Pacific Industrial Resilience (PIPIR), a U.S.-initiated multilateral forum of Indo-Pacific and Euro-Atlantic government partners, industry experts, capital providers, and non-governmental stakeholders devoted to promoting military technical cooperation and defense supply chain resilience. He also mentioned plans to enhance U.S. support of Australia's Guided Weapons and Explosive Ordnance enterprise and to expand existing contracts for U.S Army Watercraft repair across the Indo-Pacific.

In light of these remarks and the April 9 EO, we may see an increase in high-value FMS and DCS license applications listed in the next quarterly Federal Register DDTC notice (expected at the end of August).

Authored by Beth Peters, Deborah Wei,

and Andrea Fraser-Reid.

Special thanks to summer associate Arianna Unger who contributed to this report.