The Prioritizing the Warfighter in Defense Contracting Act of 2026 restricts how large Defense Department contractors—those receiving over $250 million annually in DoD contracts—can spend their money and compensate executives. The bill prohibits these contractors from buying back their own stock, paying dividends, or linking executive compensation to short-term financial metrics like earnings per share, while capping total executive compensation at $5 million per year. The Secretary of Defense can grant waivers to contractors that meet strict performance standards, including meeting at least 80 percent of their delivery dates, readiness requirements, and technical performance metrics over the preceding fiscal year. The bill establishes enforcement mechanisms including compliance certifications, violation tracking, remediation procedures, and penalties ranging from payment suspension to contract termination and employee compensation clawbacks for violating contractors. The Defense Secretary must establish a review process within 30 days, renegotiate existing contracts to comply with the new requirements, and submit annual reports to Congress listing affected contractors and any violations.
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