Prioritizing the Warfighter in Defense Contracting

Key Points

• The President signed an order that stops defense companies from giving money to shareholders through dividends or stock buybacks if they are behind schedule or over budget on military projects.
• The government wants these companies to spend their extra cash on building more factories and hiring more workers to speed up the production of military equipment.
• New defense contracts will now include rules that tie executive bonuses to on-time delivery and production speed rather than financial goals like stock prices.
• If a company is failing to meet its goals, the Secretary of War can freeze executive salaries and use federal laws to force the company to prioritize military orders.
• The Secretary of War has 30 days to start identifying companies that are not investing enough in their own production capacity or are delivering equipment too slowly.
• Companies that underperform may also lose government help when trying to sell their products to other countries.