Government Contracts Intelligence Briefing

A memo signed this week by Deputy Secretary of War/Defense Stephen Feinberg signals one of the more potentially consequential shifts in defense pricing policy in years. The directive, addressed to senior Pentagon leadership and the directors of the military services and defense agencies, calls for a “reset” of the Department’s expectations around contractor cost and pricing data and floats a tool that would let the Pentagon reach directly into contractors’ financial systems to get it. This, coupled with the broader push to fixed-price contracts, would push contractors to take all of the financial risk in contracts without a potential upside.