Executive Order No. 14372. Prioritizing the Warfighter in Defense Contracting

• Executive Order No.: 14372
• Published date: 13 January 2026
• Citation: 91 FR 1377
• Date: 07 January 2026
• FR Document: 2026-00554
• Section: Presidential Documents
• Issuer: Executive Office Of The President

Presidential Documents

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Federal Register

Vol. 91, No. 8

Tuesday, January 13, 2026

Title 3—

The President

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 indus-

trial 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 impera-

tive 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 pro-

duction 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 ex-

cessive dividends to shareholders at the cost of production capacity, innova-

tion, 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 respon-

sibility 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.

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 deter-

mined 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.

(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 sub-

section (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 enforce-

ment 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 per-

mitted 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 con-

tractor.

(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 insuffi-

cient 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.

(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 underper-

forming contractors competing for an international Foreign Military or Direct

Commercial Sale.

(d) The Chairman of the Securities and Exchange Commission shall con-

sider 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.

(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.

THE WHITE HOUSE,

January 7, 2026.

[FR Doc. 2026–00554

Filed 1–12–26; 11:15 am]

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