A Senate NDAA provision would require defense contractors to obtain Defense Secretary waivers before paying dividends, repurchasing shares or making other equity distributions, extending a broader push to tie capital returns to production performance.
A Senate Armed Services Committee provision in the FY2027 National Defense Authorization Act would require defense contractors to obtain explicit approval from the Defense Secretary before paying dividends, conducting stock buybacks or making other equity distributions. The measure, approved by the committee on June 15 in an 18-9 vote, builds on President Trump’s January 2026 executive order tying contractor capital returns to production performance metrics and on the “Prioritizing the Warfighter in Defense Contracting Act of 2026” introduced by Senators Elizabeth Warren and Josh Hawley on March 26. Business groups are pressing the Senate to remove the language, arguing it would shift routine capital allocation decisions to Washington and apply broadly across Pentagon suppliers, while supporters say large defense contractors have funneled billions to shareholders instead of reinvesting in production capacity and national security readiness. Lobbying intensified in late June ahead of full Senate consideration, but the bipartisan committee vote suggests the provision may be difficult to strip entirely. The measure could still be weakened during the legislative process, and the NDAA must still pass the full Senate and be reconciled with the House version.