Secretary of Defense Pete Hegseth speaks at a Lockheed Martin facility in Fort Worth, Texas, Monday, January 12, 2026, as part of the “Arsenal of Freedom” industry tour.
Amanda McCoy Fort Worth Star-Telegram | Tribune News Service | Getty Images
Lobbying efforts to block a proposed ban on stock buybacks by some defense contractors in the annual defense bill are intensifying as the House moves toward passing the bill this week.
The ban is included in the Senate version of the National Defense Authorization Act for Fiscal Year 2027, and is being proposed as an amendment for the House Rules Committee to consider when it considers the bill Monday night.
If it makes it into the final bill, it could transform the way the Department of Defense does business with tens of thousands of contractors, including: boeing, lockheed martin and Northrop Grumman.
Reps. Chris Delzio, D-Pennsylvania, and John Garamendi, D-Calif., have proposed amendments in the House, which could lead to a vote on the NDAA later this week.
Prior to the rules committee meeting, industry groups, led by the Chamber of Commerce, sent a letter to the committee asking it to reject the proposed amendments. Signatories include the Chamber of Commerce, the Aerospace Industry Association, and the Business Roundtable.
The ban on stock buybacks and dividend payments “raises serious concerns about the unprecedented expansion of the federal government’s role in restricting companies’ legitimate corporate governance and capital allocation decisions,” the groups said in a letter shared with CNBC.
“Prohibiting covered defense contractors from engaging in lawful dividends, stock repurchases, or other capital distributions unless they obtain a waiver from the DoW would establish a troubling precedent in which the U.S. government effectively dictates how companies control capital allocation decisions that have traditionally remained the responsibility of corporate leadership and shareholders,” the letter said.
An amendment being considered by the House of Representatives would prohibit the Department of Defense from awarding contracts to companies unless the contractors agree not to buy the company’s stock. This ban may be lifted at the discretion of the Department of Defense.
This is similar to a provision in the Senate’s version of the NDAA that was added to the bill on a bipartisan basis and would also prohibit dividend payments to contractors. Both aim to codify President Donald Trump’s executive orders that required the ban to be implemented, and their inclusion in the bill approved by the Senate Armed Services Committee greatly increases the chances of passage.
Supporters say the provision is intended to force contractors to deliver before paying themselves. Critics of defense contracts have long argued that companies defraud the federal government with cost overruns and product delays.
Sen. Elizabeth Warren (D-Mass.), who leads the Senate, argued to CNBC earlier this month that the goal is to “bring some discipline to defense contractors that have been out of control for years.”
Industry groups are currently strongly opposed to the measure, warning that it would be counterproductive if approved.
“Creating a framework that prohibits companies from being involved in regular capital allocation decisions unless they obtain a government exemption risks sending the opposite signal and discouraging the very types of innovative and non-traditional market participants that policymakers are actively seeking to attract,” the letter said.
Delzio and Garamendi’s amendment is one of more than 1,300 proposed to the House Rules Committee.
