The Pentagon launches a comprehensive performance review of defense contractors, targeting stock buybacks and dividends.

It has been reported that the US Department of Defense has warned defense contractors to be prepared for the upcoming comprehensive performance review. This review aims to identify contractors who have been deemed not fulfilling their contracts adequately. The report cited a message sent to the industry over the weekend. It is understood that this review stems from an executive order signed by President Trump in January, which threatens to cancel contracts of defense companies that engage in stock buybacks or dividend payments but underperform. Pentagon Chief Spokesperson Sean Parnell stated in a statement to The Hill on Monday that the Department of Defense has completed a preliminary review of defense contractors to determine if companies are investing in their production capabilities or engaging in dividend payments and stock buybacks. Parnell said that defense contractors have been notified, and the Pentagon has initiated an "extended review period" during which the Department of Defense will make "non-compliant determinations." Under the executive order, contractors named by the Pentagon will have 15 days to submit a correction plan detailing how they will address production delays. Earlier reports indicated that US defense contractors are facing a tug-of-war in two directions: the Pentagon demanding faster weapon production while investors continue to expect stable dividends and returns. Executives from companies like Raytheon Technologies, Lockheed Martin, Northrop Grumman, and L3Harris Technologies all stated that they are increasing the production of missiles, rockets, and other systems under pressure from the Pentagon to replenish depleted stocks.