The Pentagon Stopped Pretending: OTAs & CSOs Are Now the Default

If you're still treating Other Transaction Agreements and Commercial Solutions Openings as niche tools for innovation shops, you're already behind.

In March 2025, Defense Secretary Pete Hegseth signed a memo directing every DoD component (now formally called the Department of War) to use CSOs and OTAs as the default solicitation and award approach for software acquisition. Not a suggestion. Not a pilot. A mandate. The memo explicitly prohibited components from issuing internal guidance that would water it down.

Then in November, Hegseth went further. The "Warfighting Acquisition System" memo renamed the entire defense acquisition enterprise and put it on what he called a wartime footing. Commercial-first wasn't just preferred. It was the posture.

Congress followed in December with the FY2026 NDAA, and Section 1823 may be the most consequential change to commercial acquisition in a decade. The "innovative" requirement that had defined CSO eligibility since 2017 is gone. CSOs can now be used to acquire any commercial product or service. The $100 million approval threshold that had slowed large awards is gone. The government can now award a production OTA directly from a CSO, skipping the prototype phase entirely for solutions that are already commercially proven. Sole-source follow-on production contracts from CSO awards are expressly authorized.

Read that again. Win a competitive CSO, deliver, and hold a sole-source production relationship going forward. That's not a loophole. That's the statute.

The numbers are consistent with what the memos signal. The Defense Innovation Unit has run over 500 OTA awards through its CSO process since 2016, with 88 percent going to nontraditional vendors. The Army launched a major C-sUAS CSO in February 2026. The Air Force saw its CSO training tool go from 200 users to 3,000 in the weeks after Hegseth's March memo dropped.

None of this kills FAR-based contracting. Large platform programs, complex weapons systems, anything requiring detailed cost accounting stays on traditional rails. But for software, commercial technology, and anything a company is already selling in the private market, the acquisition system is being rebuilt around OTAs and CSOs faster than most primes have adjusted.

The question for BD teams right now is whether they're tracking SAM.gov amendments and not just new postings, and whether they know which of their products qualify for a CSO today that couldn't six months ago. The companies that figure that out first will have a real advantage.