Overview
- The Secretary has 30 days to identify contractors deemed underperforming based on delivery, investment, prioritization, or production speed coupled with recent buybacks or distributions.
- Identified companies receive notice and have 15 days to submit board‑approved remediation plans before the department may move to secure remedies.
- Enforcement options include Defense Production Act authorities with civil or criminal penalties, use of FAR/DFARS mechanisms, and potential limits on foreign military sales advocacy for lagging firms.
- Future contracts must bar buybacks and dividends during periods of underperformance, tie executive incentives to on‑time delivery and production gains, and permit caps on executive base salaries upon such findings.
- The SEC chairman was asked to consider narrowing Rule 10b‑18’s buyback safe harbor for identified contractors through formal rulemaking, while undefined thresholds and terms leave legal and commercial uncertainty.