What Productivity EO May Mean for Defense Industrial Base

Government Contracts attorneys Amy Fuentes and Christian Nagel and Public Policy & Regulation attorney Mike Wakefield wrote an article for Law360 sharing key takeaways from Executive Order No. 1437, which aims to accelerate defense procurement and enhance the defense industrial base by shifting contractor priorities from investor returns to production and performance. The order responds to reports of contractors that underperform or preclude innovation by establishing a new policy to prevent defense contractors from conducting stock buybacks or issuing dividends if doing so slows procurement or decreases production capacity; it also creates a formal review process to identify and address contractor performance issues. In their article, the attorneys describe the criteria for identifying and notifying these contractors as well as detail potential enforcement techniques, including new clauses to incorporate in future defense contracts. The authors also highlight several considerations for affected organizations, from effects on supply chains to capital allocation assessments.

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Holland & Knight recently hosted a webinar with 47G on the order and its implications for contractors. The authors led this informative discussion. Click here to view a recording of the program.