Prioritizing the Warfighter in Defense Contracting Act of 2026

This bill requires large Department of Defense contractors to prioritize meeting warfighter needs by limiting stock buybacks, dividends, and executive compensation, and establishes compliance, waiver, review, and penalty procedures. Sec. 2, Definitions: Defines key terms including "large contractor" as one with over $250 million in annual DoD revenue in any of the previous 3 years, "covered compensation" as salary, bonuses, equity-based pay, and profits from securities trading (excluding routine 401(k) and ESOP plans), and "short-term financial metrics" as free cash flow, operating cash flow, and earnings per share driven by stock buy-backs. Sec. 3, Limitations on Contractors of Department of Defense: The Secretary of Defense cannot contract with a large contractor unless it agrees in writing not to buy its own listed equity securities or pay dividends, and to limit covered employee compensation to no more than $5 million per year, not linked to short-term financial metrics, and compliant with 10 U.S.C. 3744. Contractors must implement a compliance plan and annually certify compliance. The Secretary may waive these requirements for contractors meeting metrics such as 80% on-time delivery, readiness, technical performance, and cost data response. The Secretary must establish a review process, renegotiate existing contracts, and upon finding a violation, notify the contractor, who may submit a remediation plan. Penalties for violations include payment suspension, waiver revocation, termination of progress payments or contracts, clawback of compensation, referral for suspension/debarment or prosecution, ceasing advocacy for foreign sales, and prohibiting new contracts. The Secretary must submit annual public reports listing contractors, certifications, waivers, and violations, and quarterly reports listing waiver requests and supporting materials.