An Offeror's Legal Guide to Commercial Solutions Openings

The U.S. Army recently launched a commercial solutions opening (CSO) focused on counter-drone technology in support of Joint Interagency Task Force (JIATF) 401, an initiative that began in August 2025 by U.S. Department of War (DOW) Secretary Pete Hegseth "to rapidly deliver Joint C-sUAS capabilities to America's warfighters."

The JIATF 401 CSO, released on February 26, 2026, seeks solutions to "synchronize Counter-small Unmanned Aircraft Systems (C-sUAS) efforts across the Department of War (DoW) and the broader interagency community."

Although CSOs have been utilized by the Pentagon for years, their use has been inconsistent. As such, many defense companies will find themselves competing for a CSO for the first time when responding to JIATF 401 or a future CSO. This Holland & Knight alert breaks down the CSO process and provides best practices for companies competing for CSO awards.

Introduction to CSOs

Originally authorized by Section of the 2017 National Defense Authorization Act (NDAA) (Pub. L. 114-328) in 2016 for the Defense Innovation Unit (DIU), CSOs have been utilized sparingly over the past several years. DOW Secretary Hegseth has sought to increase the use of CSOs, ordering a "commercial-first" approach to acquisition. In a memorandum published on November 7, 2025, DOW Secretary Hegseth directed that the use of streamlined solicitation approaches, including CSOs, be the preferred approach for acquiring commercial products and services. Previously, a March 2025 memorandum designated CSOs and Other Transaction Authority Agreements (OTAs) as "the default solicitation and award approaches" for acquiring capabilities under the Software Acquisition Pathway (SWP). Thus, it is important that defense contractors familiarize themselves with CSOs.

A CSO is essentially another name for a competitive solicitation. However, unlike a traditional Federal Acquisition Regulation (FAR)-based solicitation, a CSO seeks a solution to a government-specified problem or need – called an "area of interest" – instead of explicitly defining the product or service that the government wishes to procure.

There are three primary types of CSOs:

1. The competitive procedure developed and utilized to solicit OTAs pursuant to 10 U.S.C. 4022.
2. The Defense Federal Acquisition Regulation Supplement (DFARS) 212.70, which is used to solicit and award FAR-based procurement contracts and agreements through the authority of 10 U.S.C. 3458.
3. The hybrid approach – which blends the authority of 10 U.S.C. 4022 and 10 U.S.C. 3458 – to award prototype OTAs and/or FAR-based procurement contracts (JIATF 401 follows the hybrid approach).

2026 NDAA Massively Expands CSO Authority

Previously, when the government identified its preferred solution from the CSO process, it could make award to that offeror either through a traditional FAR-based procurement contract or through an OTA if the project qualified as a prototype project under 10 U.S.C. § 4022.

Now, thanks to recent revisions to 10 U.S.C. § 3458 in the 2026 NDAA, the government has the ability to award a production OTA directly from a CSO. Previously, the government could only issue a CSO award as a FAR-based contract or a prototype OTA. Now, the government can skip the prototype award and move straight to a production OTA. OTAs are not subject to FAR and can be negotiated as a commercial agreement, allowing companies greater freedom to negotiate intellectual property (IP) and data rights. This opportunity should prompt more commercial companies – including Fortune 100 titans and small technology startups – to begin competing for opportunities in the defense space.

Furthermore, CSOs are no longer limited to only "innovative" solutions. Under the 2026 NDAA, Congress revised 10 U.S.C. § 3458 by removing the term "innovative," allowing CSOs to now be used as a general commercial acquisition tool. Though a CSO has not been used in this manner, it is only a matter of time before DOW takes advantage of this broader authority in order to speed up acquisition and attract commercial firms into the defense marketplace.

JIATF 401 CSO Overview

The JIATF 401 CSO is a competitive solicitation designed to create a "coordinated and adaptable approach to detecting, tracking, identifying, and defeating threats posed by malicious or unauthorized sUAS operations" and establish "a central hub for integrating C-sUAS activities, promoting information sharing, and driving innovation." The government seeks "advanced capabilities that can seamlessly integrate data from diverse sensors, provide real-time threat assessments, and enable coordinated responses."

The CSO identifies four Areas of Interest (AoIs) across three capability management offices:

• AoI 26-001 (CMO-Mobile) focuses on mobile and on-the-move C-sUAS capability, including defense of the U.S. southern border and National Security Special Events (NSSE).
• AoI 26-004 (Task Force East) seeks a comprehensive, integrated layered defense solution to equip four fixed-site zones and six mobile infantry squad vehicle (ISV) platforms, with a suspense date of March 6, 2026.
• AoI 26-002 (CMO-Fixed Site) covers fixed-site C-sUAS capability, Replicator 2 and the JIATF 401 C-sUAS Marketplace.
• AoI 26-003 (CMO-Command and Control) targets interoperability and commonality in C-UAS command and control, with interest in platform-agnostic integration, universal data models, decision support and automation, operator interface design and sensor fusion.

As with nearly all CSOs, the JIATF 401 CSO process is broken down into three phases.

Phase 1 requires a written solution brief (no more than five pages, 12-point font) addressing company information, an executive summary, a technology concept and a rough order of magnitude price. If the government believes that a solution brief has merit, the offeror will be invited to Phase 2, which involves an oral presentation (and potentially a demonstration) detailing technical and business viability, rough order of magnitude (ROM) pricing, IP considerations and a notional schedule. Phase 3 invites selected offerors to submit a full Commercial Solution Proposal (CSP) comprising a Technical Volume and a Price Volume.

Notably, the government reserves the right to forgo earlier phases or accelerate the process when urgent requirements arise. Furthermore, offerors themselves may elect to skip directly to a written proposal.

In Phase 3, technical proposals receive an "Acceptable" or "Unacceptable" rating, with acceptable proposals proceeding to negotiations or directly to award. Price proposals are evaluated for affordability, with the government assessing whether the price is "fair and reasonable." Awards may take the form of FAR Part 12 contracts, prototype OTAs, production OTAs or Cooperative Agreements under 31 U.S.C. § 6305. All resulting contracts must be structured as fixed-price, including fixed-price incentive fee contracts.

The JIATF 401 CSO remains open through December 31, 2028, meaning that the government will issue awards on a rolling basis. However, offerors would be wise to respond as soon as possible in order to ensure there is funding and interest in their solutions. Furthermore, although the suspense date for AoI 26-004 has passed as of the date of this writing, companies that have a meritorious solution that fits this AoI should still consider submitting a solution brief.

One notable provision in the JIATF 401 CSO is the government's desire for foreign participation. Page 4 of the CSO provides as follows:

Foreign-Owned businesses may independently submit a solution or do so as part of a teaming arrangement with one or more United States-owned businesses. The ability to obtain an agreement based upon a submission may depend upon the ability of the Foreign-Owned business to obtain necessary clearances and approvals to obtain proscribed information.

Foreign firms competing for the JIATF 401 CSO would be wise to either identify a U.S. partner or have a detailed plan in place to ensure compliance with regulations and rules relating to handling controlled unclassified information (CUI) and classified information, International Traffic in Arms Regulations (ITAR), cybersecurity and a host of other performance obligations that will come into play if an offeror is selected for an award.

Best Practices for Offerors

Whether a company is competing for an award through JIATF 401 or another CSO, there are numerous legal considerations to analyze from a compliance standpoint, as well as at the strategic/tactical level. It is highly recommended that offerors consult with experienced counsel as early in the process as possible. In addition, below are additional recommendations for offerors to assess:

• Enter into a teaming agreement with your partners early to clearly outline roles and responsibilities and rights and obligations for each team member. The Teaming Agreement should also include a nondisclosure agreement.
• Be sure to mark your solutions brief, written proposal and any documents submitted to the government as proprietary and exempt from disclosure under the Freedom of Information Act. 5 U.S.C. §552(b)(4) exempts trade secrets and commercial or financial information from disclosure, but this information must be marked accordingly. The JIATF 401 CSO also includes specific instructions on marking the cover page to ensure confidentiality.
• Assess what IP and data rights are involved in the effort and whether to assert restrictions on the government's use of that IP, along with at what stage to do so.
• Review the government's standard agreement/contract terms and conditions, and consider submitting suggested revisions or additional terms and conditions to the government where appropriate.
• Consider the ability to meet CUI requirements, whether it will be necessary to access classified information and if other technical data compliance requirements such as ITAR will be implicated in performance. Handling CUI requires a Cybersecurity Maturity Model Certification (CMMC) Level 2, which typically takes six to 12 months for most organizations to achieve, although it can take more than 18 months for those starting with limited cybersecurity measures. Preparations to meet these requirements should begin immediately.
• Offerors should consider proposing a Service License Agreement (SLA) and/or End User License Agreements (EULA), especially if the C-sUAS solution involves 1) software as a service (SaaS) or technology licensing models, 2) significant proprietary technology or 3) if the technology being proposed is currently commercially available.
• Register at SAM.gov immediately. Companies cannot receive an award without having a Unique Entity ID (UEI) and being registered on SAM, a process that is often nuanced and time-consuming.

In addition, offerors seeking a prototype OTA pursuant to 10 U.S.C. § 4022 should assess the best way to avoid the one-third cost share requirement. The DOW is not permitted to award a prototype OTA without imposing this cost share unless 1) there is at least one "nontraditional defense contractor" or nonprofit research institution participating to a significant extent in the prototype project, 2) all significant participants in the transaction are small businesses, or 3) the senior procurement executive for the agency determines in writing that exceptional circumstances justify not assessing the cost share requirement. Under 10 U.S.C. § 3014, a "nontraditional defense contractor" is "an entity that is not currently performing and has not performed, for a least the one-year period preceding the [CSO] … any contract or subcontract for the Department of Defense that is subject to full coverage under the cost accounting standards prescribed pursuant to 41 U.S.C. § 1502."

It is also critical that offerors consider not just the immediate contract/agreement to be awarded, but the potential follow-on as well. 10 U.S.C. 4022(f) provides that a sole-source follow-on production contract "may be awarded to the participants in the transaction" if competitive procedures were used in the initial selection and "the participants in the transaction successfully completed the prototype project" (emphasis added).

Neither 10 U.S.C. § 4022 nor its implementing regulations (32 C.F.R. Part 3) nor DOW Other Transactions Guide (2023) provide a definition of "participant." However, there is nothing that suggests "participants" are limited to the prime contractor. Accordingly, any entity significantly involved in the prototype award, including subcontractors, could be an eligible recipient for the sole-source follow-on production contract. Therefore, companies entering into teaming arrangements to compete for CSOs should be mindful of this possibility and negotiate their teaming agreements and subcontracts appropriately to advance their desired position.

Conclusion

The JIATF 401 CSO (and future CSOs) represents a tremendous opportunity for companies. However, the unique process and flexible agreement terms inherent in a CSO also demand that entities exercise prudence in putting together their proposal, negotiating teaming agreements and resulting prime contracts and/or subcontracts, and preparing to meet compliance obligations during performance.

For tailored advice on these requirements and strategies to help maximize the potential for a successful award, please reach out to the authors.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.