Pentagon Directs Broader Contractor Cost and Pricing Transparency

On August 18, 2026, Deputy Secretary Stephen Feinberg issued a memorandum on Supplier Cost and Pricing Transparency directing the Department's acquisition workforce to obtain greater insight into contractor and supplier costs and pricing information. The memorandum is available through Federal News Network's published copy of the memorandum. 

Although the memorandum does not amend procurement statutes, regulations, or existing contracts, it signals a potentially significant shift in how the Department intends to approach pricing negotiations, supply-chain transparency, profit analysis, and contractor reporting obligations. 

Key Takeaways

• DoD has directed acquisition officials to pursue "full transparency" into cost and pricing information throughout the supply chain for negotiations involving products and services valued at $10 million or more. 
• The memorandum states that these transparency expectations apply regardless of whether certified cost or pricing data is required. 
• DoD will explore automated methods, including Application Programming Interfaces-based solutions, to obtain contractor cost information directly from Enterprise Resource Planning (ERP) and financial systems. The memorandum does not specify how any such system would operate or whether it ultimately will be implemented. 
• The Department intends to develop approaches for determining "fair and reasonable" profit margins by product and service category. 
• Department leadership has also directed increased enforcement of existing Cost and Software Data Reporting (CSDR) requirements and intends to use cost data more aggressively in evaluating sole-source acquisitions. 

What the Memorandum Does—And Does Not—Do

The memorandum directs contracting officers to seek access to actual cost information at both the prime contractor and supplier levels for covered acquisitions, except for Commercial Off-the-Shelf (COTS) items. It also directs DoD acquisition leadership to explore mechanisms for obtaining cost information more efficiently and to develop approaches for evaluating contract profit. 

Importantly, the memorandum does not:

• Amend 10 U.S.C. § 3702 or alter statutory thresholds governing certified cost or pricing data; 
• Eliminate existing statutory or regulatory exceptions applicable to commercial products, commercial services, or acquisitions supported by adequate price competition; 
• Establish profit caps; 
• Require immediate or unrestricted government access to contractor ERP or financial systems; or 
• Automatically modify existing contracts or insert new contractor reporting obligations. 

Acquisition Reform Considerations 

The memorandum has generated discussion within the government contracts community because it appears to move toward greater government access to contractor cost information while other acquisition reform initiatives seek to reduce compliance burdens and rely more heavily on commercial market practices. 

Critics argue that expanded cost visibility requirements could increase administrative burden, discourage commercial participation, and erode some of the policies underlying statutory exemptions from certified cost or pricing data requirements. How these competing objectives are reconciled may become an important issue as DoD develops implementing guidance and as the Revolutionary FAR Overhaul continues to advance.

Compliance and Business Risks for Contractors

While implementation details remain unknown, contractors should anticipate several areas of increased scrutiny:

Pricing and Cost Documentation. Greater visibility and access into actual costs is a primary goal. Greater documentation requests may be a result.

Data Requests Beyond Certified Cost or Pricing Data. Existing law permits contracting officers to request data other than certified cost or pricing data when necessary to determine price reasonableness. Contractors should ensure that responses to such requests are complete, accurate, and appropriately documented.

Supplier and Subcontractor Information. Prime contractors may face increased pressure to obtain cost information from suppliers and subcontractors. Existing subcontract terms, confidentiality provisions, and proprietary-data restrictions should be reviewed carefully.

CSDR Compliance. Contractors performing contracts that include applicable CSDR requirements should confirm that reporting processes, plans, and submissions are current. The memorandum specifically highlights delinquent reporting as a Department concern. 

Protection of Proprietary Information. Any future automated reporting solution may raise significant questions concerning data access, cybersecurity, confidentiality, trade secrets, and use restrictions. The memorandum does not address these issues in detail. 

Recommended Actions

Government contractors should consider:

1. Reviewing current and upcoming negotiations at or above the $10 million level regardless of whether cost or pricing data requires certification;
2. Confirming compliance with applicable CSDR requirements;
3. Evaluating subcontract and supplier agreements addressing access to pricing and cost information;
4. Assessing safeguards for proprietary pricing, accounting, and ERP-system data; and
5. Monitoring future DoD guidance, regulatory changes, solicitation provisions, and contract clauses implementing the memorandum. 

Bottom Line

The Supplier Cost and Pricing Transparency memorandum is a policy signal rather than a self-executing legal mandate. Nevertheless, it reflects senior Department leadership's clear intent to obtain greater visibility into contractor and supplier costs, measure pricing outcomes more aggressively, and strengthen oversight of sole-source acquisitions. Contractors should monitor implementation and prepare for increased scrutiny of pricing, cost reporting, and supply chain transparency.