Defense contractors want to keep buying back their own stock. A group of lawmakers wants them to deliver before they pay themselves.
Two Democratic representatives, Chris Deluzio of Pennsylvania and John Garamendi of California, introduced an amendment to the National Defense Authorization Act. Under the proposal, the Pentagon would be prohibited from contracting with any company that buys back its shares. The Defense Department could grant exceptions at its own discretion. A comparable provision appears in the Senate's fiscal 2027 defense authorization bill.
In an interview with CNBC, Senator Elizabeth Warren, a Massachusetts Democrat spearheading the effort, stated that the measure aims to "bring a small amount of discipline to these defense contractors who have been running wild for years." Supporters argue that the rule is meant to ensure that contractors fulfill their obligations before rewarding themselves. Longtime detractors of defense procurement contend that firms are overcharging the government through budget overruns and late deliveries.
The ban would affect major contractors including Boeing, Lockheed Martin, and Northrop Grumman.
The letter says the ban "raises serious concerns about an unprecedented expansion of the federal government's role in restricting lawful corporate governance and capital allocation decisions made by businesses." It also warns that "prohibiting covered defense contractors from engaging in otherwise lawful dividends, share repurchases, and other capital distributions unless they obtain a waiver from the DoD establishes a troubling precedent in which Washington effectively dictates how businesses manage capital allocation decisions that have traditionally remained the responsibility of corporate leadership and shareholders."
The letter adds that "creating a framework that prohibits companies from engaging in ordinary capital allocation decisions unless they obtain a government waiver sends the opposite signal and risks discouraging precisely the type of innovative and non‑traditional market participants policymakers are actively trying to attract."
The House is expected to vote on the National Defense Authorization Act later this week. The Rules Committee will decide whether to include the buyback ban amendment in the final bill.
The outcome will show whether lawmakers side with defense contractors or the push for more discipline.
Stock buybacks have become a flashpoint in debates over corporate spending, with critics arguing that companies prioritize shareholder returns over investment in innovation, workers, and contract performance. The defense industry, which relies heavily on government contracts, has faced particular scrutiny as delays and cost overruns on major programs like the F-35 fighter jet and the KC-46 tanker have drawn congressional ire. The proposed amendment is part of a broader effort to tie contractor profitability to meeting deadlines and budget targets, echoing previous attempts to limit buybacks at firms that miss milestones or exceed cost estimates.
