By the authority granted to me as President under the Constitution and the laws of the United States of America, I hereby declare:
Section 1. Purpose.
As the Chief Executive and Commander in Chief, I hold a firm commitment to ensuring that the United States military maintains the most formidable warfighting capabilities globally. A nation can only enjoy peace when it possesses strength. The effectiveness of America’s defense industrial base is crucial to this strength. Unfortunately, after years of misaligned priorities, traditional defense contractors have been encouraged to focus more on investor returns than on the needs of our warfighters.
While the United States is indeed home to the finest military equipment, our capacity to produce it swiftly remains inadequate to meet the demands of our military and allies. Therefore, in these precarious times, it is essential that our defense contractors adhere to the highest standards to promote core national interests, particularly regarding the timeliness and quality of the defense items they provide.
Although some contractors have made significant investments to enhance production capabilities and have been responsive to our national needs, many others have not. Numerous large contractors — while failing to meet existing contract obligations — chase after newer, more lucrative contracts, engage in stock buy-backs, and distribute excessive dividends to shareholders, all at the expense of production capacity, innovation, and timely delivery.
Effective immediately, these contractors are prohibited from distributing dividends or repurchasing stock until they can demonstrate the ability to deliver superior products punctually and within budget.
Every company within our economy deserves to profit from sound investments and hard work, yet the American defense industrial base also bears the responsibility of ensuring that our warfighters receive the best equipment and weaponry possible. These objectives are not mutually exclusive.
Sec. 2. Policy.
The policy of the United States Government is to expedite defense procurement and revitalize the defense industrial base to uphold peace through strength. To achieve this, defense contractors will no longer be allowed to prioritize investor profits over warfighter capability and readiness. Major defense contractors must cease stock buy-backs or dividend distributions that undermine accelerated procurement and increased production capacity.
Sec. 3. Review.
(a) Within 30 days of this order and on an ongoing basis thereafter, the Secretary of War shall identify any defense contractors involved in critical weapons, supplies, and equipment that are failing to meet their contract obligations, not investing necessary capital into production capacity, neglecting U.S. Government contracts, or failing to produce swiftly as determined by the Secretary. If a contractor is found lacking during this review and has engaged in stock buy-backs or corporate distributions during the period of underperformance, the Secretary will notify the contractor of the identified deficiencies. Subsequently, the Secretary will engage with the contractor to address these issues, potentially allowing the contractor to submit a remediation plan approved by its board of directors for the Secretary’s review within the following 15 days.
(b) For contractors already identified and reviewed by the Secretary before this order, an additional evaluation may not be required as determined by the Secretary.
Sec. 4. Enforcement.
(a) If a contractor’s remediation plan is deemed insufficient by the Secretary, or if an agreement cannot be reached during the designated 15-day negotiation period, the Secretary may initiate prompt actions to secure remedies that will expedite production, prioritize the needs of the U.S. military, and restore contractor performance to acceptable levels, as permitted by law. This may include using voluntary agreements, enforcement actions under the Defense Production Act, and available mechanisms within the Federal Acquisition Regulations and the Defense Federal Acquisition Regulations Supplement. In deciding whether to pursue enforcement actions, the Secretary will consider the financial health of the defense contractor, the economic feasibility of relevant programs, and the potential mutual benefits offered by sustained growth opportunities from the U.S. Government alongside capital investments from the contractor.
(b) Within 60 days of this order, the Secretary will ensure that any future contracts with new or existing defense contractors, including renewals, incorporate provisions that prohibit stock buy-backs and corporate distributions during periods of underperformance, non-compliance, insufficient prioritization, or inadequate investment or production speed as determined by the Secretary. Additionally, the Secretary will ensure future contracts stipulate that executive incentive compensation will not be linked to short-term financial metrics, such as free cash flow or earnings per share driven by stock buy-backs, but instead will be tied to on-time delivery, increased production, and necessary investments to rapidly enhance U.S. stockpiles and capabilities. The Secretary will also ensure that contracts allow for the capping of executive base salaries at current levels, with increases only for inflation, during a period sufficient for the Secretary to scrutinize the incentive portion of executive compensation and ensure it aligns tightly with the above metrics.
(c) When a contractor is identified by the Secretary under section 3 of this order, the Secretary will consult with the Secretary of State and the Secretary of Commerce to evaluate the appropriateness of ceasing advocacy efforts or denying new advocacy cases for underperforming contractors competing for international Foreign Military or Direct Commercial Sales.
(d) The Chairman of the Securities and Exchange Commission will consider whether to adopt amended regulations governing stock buy-backs under Rule 10b-18, prohibiting the use of the relevant safe harbor for the identified defense contractors.
Sec. 5. General Provisions.
(a) Nothing in this order shall be interpreted to impair or otherwise affect:
(i) the authority granted by law to an executive department or agency, or the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget regarding budgetary, administrative, or legislative proposals.
(b) This order shall be implemented in accordance with applicable law and subject to available appropriations.
(c) This order is not intended to, nor does it create any rights or benefits, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
(d) The costs associated with the publication of this order will be borne by the Department of War.
DONALD J. TRUMP
THE WHITE HOUSE,
January 7, 2026.
