Department of War Memorandum – Supplier Cost and Pricing Transparency
15th October 2026
Consistent with Executive Order 14372, Prioritizing the Warfighter in Defense Contracting, the DoW released a memorandum dated August 10, 2026 that expands the review of contractor facilitization costs on sole source acquisitions. A prior DoW memo dated May 4, 2026 stated that facilitization costs include both direct and indirect expenses for long-term, non-recurring investments in physical assets to improve, expand, or maintain operational capacity or increase production quantity. According to the May 4 DoW memo, the foOn August 18, 2026, the Department of War published a memorandum that focuses on gaining maximum insight into contractor cost and pricing data. The memorandum requires full transparency throughout all tiers of the supply chain for contractors and subcontractors. This requirement applies to products and services valued at $10 million or more, regardless of whether cost and pricing data requires certification. Other notable elements of the memo include:
- Directive to the Under Secretary of War for Acquisition and Sustainment “to establish fair and reasonable contract profit margins by applying commercial best practices tailored to each product or service line”
- Establish Application Programming Interfaces to extract financial data directly from contractors’ ERP and financial systems
- Require delinquent Cost and Software Data Reporting reports to be submitted within 30 days of the memo release
The memo states that the objective is not to limit profitability when contractors realize after-the-fact efficiencies, provided that the negotiated price is based on a realistic baseline.
Read the memorandum
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