Prioritizing the Warfighter in Defense Contracting

[Federal Register Volume 91, Number 8 (Tuesday, January 13, 2026)]

[Presidential Documents]

[Pages 1377-1379]

From the Federal Register Online via the Government Publishing Office [www.gpo.gov]

[FR Doc No: 2026-00554]

[[Page 1375]]

Vol. 91

Tuesday,

No. 8

January 13, 2026

Part II

The President

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Executive Order 14372--Prioritizing the Warfighter in Defense

Contracting

Presidential Documents

Federal Register / Vol. 91 , No. 8 / Tuesday, January 13, 2026 /

Presidential Documents

___________________________________________________________________

Title 3--

The President

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Executive Order 14372 of January 7, 2026

Prioritizing the Warfighter in Defense

Contracting

By the authority vested in me as President by the

Constitution and the laws of the United States of

America, it is hereby ordered:

Section 1. Purpose. As Chief Executive and Commander in

Chief, I am committed to ensuring that the United

States military possesses the most lethal warfighting

capabilities in the world. Our Nation can only be at

peace if we maintain strength. The performance of

America's defense industrial base is critical to this

capacity. After years of misplaced priorities,

traditional defense contractors have been incentivized

to prioritize investor returns over the Nation's

warfighters.

rld. Our Nation can only be at

peace if we maintain strength. The performance of

America's defense industrial base is critical to this

capacity. After years of misplaced priorities,

traditional defense contractors have been incentivized

to prioritize investor returns over the Nation's

warfighters.

While the United States produces the best military

equipment in the world, we do not make enough of it

quickly enough to meet the needs of our military and

our partners. As a result, in these dangerous times, it

is imperative that our defense contractors be held to

the highest standards intended to ensure the

advancement of core national interests, including with

respect to the timeliness and quality of the defense

items that they deliver.

Although some contractors have made critical

investments in increased production capacity and been

responsive to our Nation's vital interests, far more

have not. Many large contractors--while underperforming

on existing contracts--pursue newer, more lucrative

contracts, stock buy-backs, and excessive dividends to

shareholders at the cost of production capacity,

innovation, and on-time delivery.

Effective immediately, they are not permitted in any

way, shape, or form to pay dividends or buy back stock,

until such time as they are able to produce a superior

product, on time and on budget.

essive dividends to

shareholders at the cost of production capacity,

innovation, and on-time delivery.

Effective immediately, they are not permitted in any

way, shape, or form to pay dividends or buy back stock,

until such time as they are able to produce a superior

product, on time and on budget.

Every firm across our economy has a right to profit

from prudent investment and hard work, but the American

defense industrial base also has the responsibility to

ensure that America's warfighters have the best

possible equipment and weapons. These two objectives

are not mutually exclusive.

Sec. 2. Policy. It is the policy of the United States

Government to accelerate defense procurement and

revitalize the defense industrial base to maintain

peace through strength. To achieve this, the United

States will no longer allow defense contractors to

single-mindedly pursue investor profits at the expense

of warfighter capability and readiness. Major defense

contractors will no longer conduct stock buy-backs or

issue dividends at the expense of accelerated

procurement and increased production capacity.

States will no longer allow defense contractors to

single-mindedly pursue investor profits at the expense

of warfighter capability and readiness. Major defense

contractors will no longer conduct stock buy-backs or

issue dividends at the expense of accelerated

procurement and increased production capacity.

Sec. 3. Review. (a) Within 30 days of the date of this

order, and on a continuing basis thereafter, the

Secretary of War (Secretary) shall identify any defense

contractors for critical weapons, supplies, and

equipment that are underperforming on their contracts,

not investing their own capital into necessary

production capacity, not sufficiently prioritizing

United States Government contracts, or whose production

speed is insufficient as determined by the Secretary,

and that have, during the period of underperformance or

insufficient prioritization, investment, or production

speed, engaged in any stock buy-back or corporate

distribution. If a contractor is identified as such,

the Secretary shall provide that contractor with notice

describing the nature of the underperformance or

insufficient prioritization, investment, or production

speed. The Secretary shall then engage as needed with

the relevant contractor to resolve the issues

identified in such notice, including,

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where permissible under applicable law, providing the

contractor with the opportunity to submit a remediation

plan approved by its board of directors for review by

the Secretary, during the 15-day period following

notification.

esolve the issues

identified in such notice, including,

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where permissible under applicable law, providing the

contractor with the opportunity to submit a remediation

plan approved by its board of directors for review by

the Secretary, during the 15-day period following

notification.

(b) For those contractors that have already been

identified and studied by the Secretary as of the date

of this order, in the manner described in subsection

(a) of this section, an additional review as described

in subsection (a) of this section may not be required,

as determined by the Secretary.

Sec. 4. Enforcement. (a) In any case where the

contractor's remediation plan is insufficient as

determined by the Secretary, or the contractor and the

Secretary are unable to resolve the dispute as to

underperformance within the relevant 15-day negotiation

period, the Secretary may initiate immediate actions to

secure remedies for the Secretary that will expedite

production, prioritize the United States military, and

return the contractor to sufficient performance,

investment, prioritization, and production, to the

maximum extent permitted by law, including through use

of any voluntary agreement of the contractor, available

enforcement actions under the Defense Production Act

(50 U.S.C. 4501 et seq.), and any available contract

enforcement mechanisms within the Federal Acquisition

Regulations and Defense Federal Acquisition Regulations

Supplement

ing through use

of any voluntary agreement of the contractor, available

enforcement actions under the Defense Production Act

(50 U.S.C. 4501 et seq.), and any available contract

enforcement mechanisms within the Federal Acquisition

Regulations and Defense Federal Acquisition Regulations

Supplement. When considering whether to initiate any

available enforcement action, the Secretary, to the

extent permitted by law, shall take into account the

financial condition of the defense contractor, the

economic viability of relevant programs, and the

potential mutual benefits offered by robust and

sustained growth opportunities from the United States

Government coupled with capital investments by the

contractor.

(b) Within 60 days of the date of this order, the

Secretary shall take steps to ensure that any future

contract with any new or existing defense contractor,

including any renewal, contains a provision prohibiting

both any stock buy-back and corporate distributions by

the contractor during a period of underperformance,

non-compliance with the contractor's contract,

insufficient prioritization of the contract,

insufficient investment, or insufficient production

speed as determined by the Secretary

rohibiting

both any stock buy-back and corporate distributions by

the contractor during a period of underperformance,

non-compliance with the contractor's contract,

insufficient prioritization of the contract,

insufficient investment, or insufficient production

speed as determined by the Secretary. Additionally, the

Secretary shall ensure such future contracts stipulate

that executive incentive compensation for contractors

will not be tied to short-term financial metrics, such

as free cash flow or earnings per share driven by stock

buy-backs, and instead will be linked to on-time

delivery, increased production, and all necessary

facilitation of investments and operating improvements

required to rapidly expand our United States stockpiles

and capabilities. Further, the Secretary shall ensure

such future contracts allow the Secretary, upon a

finding by the Secretary that a contractor has engaged

in underperformance, non-compliance with the

contractor's contract, insufficient prioritization of

the contract, insufficient investment, or insufficient

production speed, to require that executive base

salaries of the contractor be capped at current levels,

with increases allowed for inflation, consistent with

applicable law, for a time period sufficient to allow

the Secretary to scrutinize the incentive portion of

executive compensation to ensure it is directly,

fairly, and tightly tied to the above metrics.

salaries of the contractor be capped at current levels,

with increases allowed for inflation, consistent with

applicable law, for a time period sufficient to allow

the Secretary to scrutinize the incentive portion of

executive compensation to ensure it is directly,

fairly, and tightly tied to the above metrics.

(c) When a contractor is identified by the

Secretary pursuant to section 3 of this order, the

Secretary shall, in consultation with the Secretary of

State and the Secretary of Commerce, consider whether

it is appropriate to cease ongoing advocacy efforts or

deny new advocacy cases for underperforming contractors

competing for an international Foreign Military or

Direct Commercial Sale.

(d) The Chairman of the Securities and Exchange

Commission shall consider whether to adopt amended

regulations governing stock buy-backs under Rule 10b-18

that would prohibit use of the relevant safe harbor for

defense contractors of the type identified by the

Secretary pursuant to section 3 of this order.

Sec. 5. General Provisions. (a) Nothing in this order

shall be construed to impair or otherwise affect:

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(i) the authority granted by law to an executive department or agency, or

the head thereof; or

(ii) the functions of the Director of the Office of Management and Budget

relating to budgetary, administrative, or legislative proposals.

(b) This order shall be implemented consistent with

applicable law and subject to the availability of

appropriations.

uthority granted by law to an executive department or agency, or

the head thereof; or

(ii) the functions of the Director of the Office of Management and Budget

relating to budgetary, administrative, or legislative proposals.

(b) This order shall be implemented consistent with

applicable law and subject to the availability of

appropriations.

(c) This order is not intended to, and does not,

create any right or benefit, substantive or procedural,

enforceable at law or in equity by any party against

the United States, its departments, agencies, or

entities, its officers, employees, or agents, or any

other person.

(d) The costs for publication of this order shall

be borne by the Department of War.

(Presidential Sig.)

THE WHITE HOUSE,

January 7, 2026.

[FR Doc. 2026-00554

Filed 1-12-26; 11:15 am]

Billing code 6001-FR-P