[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 4212 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
2d Session
S. 4212
To require contractors of the Department of Defense to prioritize
meeting warfighter needs over the purchase of their own securities and
executive compensation, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 25, 2026
Ms. Warren (for herself and Mr. Hawley) introduced the following bill;
which was read twice and referred to the Committee on Armed Services
_______________________________________________________________________
A BILL
To require contractors of the Department of Defense to prioritize
meeting warfighter needs over the purchase of their own securities and
executive compensation, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as ``Prioritizing the Warfighter in Defense
Contracting Act of 2026''.
SEC. 2. DEFINITIONS.
In this Act:
(1) Appropriate congressional committees.--The term
``appropriate congressional committees'' means--
(A) the Committee on Armed Services and the
Committee on Homeland Security and Governmental Affairs
of the Senate; and
(B) the Committee on Armed Services and the
Committee on Oversight and Government Reform of the
House of Representatives.
(2) Covered employee.--The term ``covered employee'' means
an employee, executive, or officer.
(3) Equity security.--The term ``equity security'' has the
meaning given such term in section 3(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)).
(4) Covered compensation.--The term ``covered
compensation''--
(A) means--
(i) salary;
(ii) bonuses;
(iii) any compensation that is granted,
earned, or vested based wholly or in part upon
the attainment of any financial reporting
measure or other performance metric;
(iv) equity-based compensation;
(v) time- or service-based awards;
(vi) awards based on nonfinancial metrics;
and
(vii) any profits realized from the buying
or selling of securities; and
(B) does not include--
(i) routine employee 401(k) plans; or
(ii) employee stock ownership plans.
(5) Large contractor.--The term ``large contractor'' means
a contractor that received more than $250,000,000 in annual
revenue from contracts or licenses from the Department of
Defense in any of the previous 3 years.
(6) National securities exchange.--The term ``national
securities exchange'' means an exchange registered as a
national securities exchange in accordance with section 6 of
the Securities Exchange Act of 1934 (15 U.S.C. 78f).
(7) Short-term financial metrics.--The term ``short-term
financial metrics'' means--
(A) free cash flow;
(B) operating cash flow; and
(C) earnings per share driven by stock buy-backs.
SEC. 3. LIMITATIONS ON CONTRACTORS OF DEPARTMENT OF DEFENSE.
(a) In General.--The Secretary of Defense may not enter into a
contract with a large contractor for the procurement of goods or
services unless such contractor agrees in writing that--
(1) the entity shall not--
(A) purchase an equity security of such entity, or
any parent entity of such entity, that is listed on a
national securities exchange; or
(B) pay dividends or make any other capital
distribution with respect to the equity securities of
the entity; and
(2) the covered compensation of a covered employee of such
entity shall--
(A) comply with the requirements of section 3744 of
title 10, United States Code;
(B) not be linked to short-term financial metrics;
and
(C) not exceed $5,000,000 per calendar year.
(b) Compliance Plan and Procedures.--
(1) In general.--Any contractor subject to the requirements
of subsection (a) shall develop and implement a plan to prevent
the activities prohibited under that subsection.
(2) Certification.--Prior to entering into a contract with
the Department of Defense, and annually thereafter for the
duration of the contract, a contractor shall submit to the
contracting officer of the Department a certification that to
the best of the knowledge of the contractor, neither the
contractor nor any covered employee of the contractor is
engaged in any of the activities prohibited under subsection
(a).
(c) Waiver Authority.--
(1) Identification of contractors eligible for waiver.--
Beginning on the date of the enactment of this Act, and on a
rolling basis thereafter, the Secretary of Defense--
(A) shall review and determine whether a large
contractor meets the contractor metrics described in
paragraph (4); and
(B) for any large contractor assessed by the
Secretary to meet such metrics, may grant the
contractor a waiver of the requirements of subsection
(a).
(2) Notice.--For any waiver granted under paragraph (1),
the Secretary shall submit to the appropriate congressional
committees notification of the waiver that includes
justification for the waiver.
(3) Annual review.--
(A) In general.--For any contractor granted a
waiver under paragraph (1), the Secretary shall
conduct, not later than 1 year after the date on which
the contractor was granted a waiver under such
paragraph and not less frequently than once a year
thereafter, a review to determine whether the
contractor continues to meet the metrics described in
paragraph (4).
(B) Authority to revoke waiver.--The Secretary may
revoke a waiver issued to any contractor that the
Secretary determines, during a review conducted
pursuant to subparagraph (A), no longer meets the
metrics described in paragraph (4).
(4) Contractor metrics.--The contractor metrics described
in this paragraph are as follows:
(A) Not less than 80 percent of the time during the
preceding fiscal year, the contractor met contract
requirements regarding delivery dates with
demonstrated, fieldable capability or associated
technical achievement.
(B) Not less than 80 percent of the time during the
preceding fiscal year, the contractor met contract
readiness requirements.
(C) Not less than 80 percent of the time during the
preceding fiscal year, the contractor demonstrated
technical performance metrics and regular value
assessments with the user community.
(D) Not less than 80 percent of the time during the
preceding fiscal year, the contractor responded to
requests for certified or uncertified cost or pricing
data by the due date stated in the request for
submissions.
(5) Rule of construction.--Nothing in this subsection may
be construed to supersede existing limitations that restrict
Federal funds from being used for contractor employee
compensation.
(d) Review and Enforcement.--
(1) Establishment of formal review process.--Not later than
30 days after the date of the enactment of this Act, the
Secretary of Defense shall establish a formal review mechanism
for identifying, on a continuing basis, Defense contractors
that are in violation of the requirements of subsection (a).
(2) Renegotiation of existing contracts.--
(A) Review and identification.--The Secretary shall
review all contracts in existence on the day before the
date of the enactment of this Act and identify any
contract to be modified in the interest of the
Department.
(B) Renegotiation.--For each contract identified by
the Secretary pursuant to subparagraph (A), the
Secretary shall renegotiate such contract in accordance
with the requirements of this section.
(3) Evidence and notification of violation.--
(A) In general.--If a contracting officer of the
Department finds, or receives and substantiates, an
allegation described in subparagraph (B), the Secretary
shall--
(i) immediately notify the contractor of
the violation in writing; and
(ii) track and continually update the
allegation in the Contractor Performance
Assessment Reporting System and the System for
Award Management of the General Services
Administration, for shared use across
contracting officers.
(B) Allegation described.--An allegation described
in this subparagraph is any allegation relating to--
(i) a contractor of the Department or any
covered employee of such contractor engaging in
an activity prohibited under subsection (a), if
the requirements of such subsection have not
been waived under subsection (c)(1); or
(ii) a contractor who received a waiver
under subsection (c)(1) that is underperforming
with respect to prioritization, investment, or
production such that the contractor no longer
meets the contractor metrics described in
subsection (c)(4).
(C) Contents of notice.--The notice issued under
subparagraph (A)(i) shall include, depending on the
basis of the violation, a description of--
(i) the conduct of the contractor or the
covered employee of the contractor that is
prohibited under subsection (a); or
(ii) the nature of the underperformance or
insufficient prioritization, investment, or
production speed of the contractor that fails
to meet the contractor metrics described in
subsection (c)(4).
(4) Remediation.--
(A) In general.--Not later than 15 days after the
date on which the contractor receives the notice of a
violation under paragraph (3)(A)(i), the contractor may
submit to the Secretary a remediation plan, approved by
the board of directors of the contractor, for review by
the Secretary.
(B) Content of plan.--The remediation plan
submitted under subparagraph (A) shall include a
description of the manner by which the contractor shall
remedy the violation, including, if applicable, a
strategy for meeting the contractor metrics described
in subsection (c)(4).
(C) Identification of deficiencies.--If the
Secretary identifies deficiencies in the remediation
plan submitted under subparagraph (A), the Secretary
shall engage with the contractor as needed to resolve
such deficiencies.
(5) Penalties.--If a contractor engages in an activity
prohibited under subsection (a) and was not granted a waiver
under subsection (c)(1) or if the contractor was granted a
waiver under subsection (c)(1) but no longer meets the
contractor metrics described in subsection (c)(4), the
contracting officer of the Department may take one or more of
the following actions against the contractor:
(A) Suspend payment under one or more contracts, at
the discretion of the Department.
(B) Revoke the waiver issued under subsection
(c)(1).
(C) Terminate the eligibility of the contractor to
receive progress payments under section 3804 of title
10, United States Code.
(D) Terminate the contract for default or cause in
accordance with the termination clause for the
contract.
(E) Refer the matter to the Secretary to claw back
all or part of the covered compensation given to a
covered employee.
(F) Refer the matter to the relevant suspension and
debarment official.
(G) Refer the matter to the Secretary for other
administrative actions.
(H) Refer the matter to the Attorney General for
prosecution under any applicable law.
(I) Cease advocacy for the contractor for foreign
military sales and direct commercial sales.
(J) Prohibit the Department from entering into a
new contract with the contractor.
(e) Reports to Congress.--
(1) Annual report.--
(A) In general.--Not later than one year after the
date of the enactment of this Act, and annually
thereafter, the Secretary of Defense shall submit to
the appropriate congressional committees a report that
includes, for the one-year period preceding submission
of the report--
(i) a list of all contractors subject to
the requirements of subsection (a);
(ii) for each contractor, a copy of the
certification submitted under subsection
(b)(2);
(iii) a list of all contractors granted a
waiver under subsection (c)(1) and the
justification for each waiver; and
(iv) a list of all entities that have
violated the certification submitted under
subsection (b)(2) or diverged from the
practices that justified the granting of a
waiver under subsection (c)(1).
(B) Publication.--Not later than 30 days after the
date of submission of the report under subparagraph
(A), the Secretary shall make the report publicly
available.
(2) Quarterly report.--Not later than 90 days after the
date of the enactment of this Act, and not less frequently than
once every 90 days thereafter, the Secretary shall submit to
the appropriate congressional committees a report that
includes, for the period covered by the report--
(A) a list of all of the contractors that submitted
a request for a waiver under subsection (c)(1); and
(B) the unclassified summaries of the materials
submitted by such contractors to the Department in
support of the requests for a waiver.
<all>