Feinberg directs API supply-chain transparency for $10M+ contracts
The third industry-facing directive in three months, it deepens concerns that DoD's compliance demands are undercutting its own industrial-base expansion goals.
TL;DR
Deputy Defense Secretary Steve Feinberg's Aug. 18 memo directs contracting officers to obtain supply-chain cost transparency through APIs on commercial contracts over $10 million, and to establish fair profit margins by product line. Major system providers face stricter Cost and Software Data Reporting requirements. The memo is the latest in a sequence that industry says contradicts Defense Secretary Hegseth's pledge to cut bureaucracy and expand the defense industrial base. "These send a signal that DoD doesn't trust industry," said former acquisition executive David Berteau.
Feinberg's memo focuses on two areas. First, for commercial item contracts worth at least $10 million, contracting officers should obtain "full transparency throughout all tiers of the supply chain." The method: APIs pulling cost information from contractors' ERP or other financial systems. Feinberg also directed the Under Secretary of War for Acquisition and Sustainment to establish fair and reasonable contract profit margins by product line, applying commercial best practices. "The department does not intend to limit profitability when contractors realize efficiencies after negotiating a fair and reasonable price," the memo states.
Second, providers of major systems (including IT and weapons platforms) must submit Cost and Software Data Reporting more regularly. Feinberg noted that "thousands of these cost reports are currently delinquent across our acquisition portfolio."
The memo is the latest in a sequence that has industry questioning whether Hegseth's reform rhetoric matches the policy coming out of the Pentagon. "These memos go in opposite direction of what Secretary Hegseth said in November 2025," said David Berteau, a former DoD acquisition executive. "These send a signal that DoD doesn't trust industry and that this is an adversarial relationship."
The timing sharpens the contradiction. Just weeks earlier, Duffey and then-acting Pentagon comptroller Michael Powers issued an open letter asking industry for "common sense contract accounting changes" that would align DoD requirements with GAAP and Sarbanes-Oxley, an effort explicitly aimed at lowering compliance barriers. That letter and a May 4 Duffey memo on peer review for contractor facilitization costs make the Feinberg memo the third industry-facing directive since early May.
Feinberg framed the memo as advancing Hegseth's "Arsenal of Freedom" initiative. For contractors weighing whether to enter or stay in the defense market, the calculus didn't get any simpler.
Published ·Deep Fathom