Acquisition Agility in Foreign Military Sales: A Comparative Analysis of Lead Time, Competition, and Vendor Diversity in FMS vs U.S. Funded Contracts

Abstract

This study presents a comparative analysis of Foreign Military Sales (FMS) and U.S.-funded Department of Defense contracts to assess how acquisition structure influences procurement lead time, competition, and vendor diversity. Using contract-level data from Fiscal Years 2019 through 2025, a matched dataset of 128 contract actions was constructed across four cohorts: FMS products, non-FMS products, FMS services, and non-FMS services. Each FMS contract was paired with a structurally equivalent non-FMS contract based on Product Service Code, standardized dollar value band, and contract action type to ensure comparability. Findings indicate that FMS contracts consistently exhibit longer procurement administrative lead times (PALTs), lower rates of competition, and reduced small business participation relative to non-FMS contracts, despite operating within identical markets and contract scales. These differences persist across both product and service acquisitions, suggesting that they are driven by structural characteristics of the FMS acquisition pathway rather than market conditions. Interpreted through Transaction Cost Economics, Institutional Theory, the Resource-Based View, and Principal Agent Theory, the results highlight the impact of statutory requirements, governance complexity, and coordination demands on acquisition performance. The study provides empirical evidence to inform policy and process improvements aimed at enhancing FMS acquisition agility.