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By Joey Roulette and Mike Stone
WASHINGTON, Dec 16 (Reuters) – The Trump administration is planning an executive order that would limit dividends, buybacks and executive pay for defense contractors that are over-budget and delayed, according to three sources briefed on the order.
President Donald Trump and the Pentagon have been complaining about the expensive, slow-moving and entrenched nature of the defense industry, promising dramatic changes that would make the production of war equipment more nimble.
Industry groups have been on high alert about the closely held proposal, which is tied to a Treasury Department initiative, two of the sources said.
Reuters could not determine exactly how the order would compel defense firms to enact any restrictions. The sources said the language of the order could still change.
Online political news service Punchbowl was the first to report the potential for financial restrictions on defense firms.
The White House did not immediately return a request for comment.
U.S. Secretary of Defense Pete Hegseth unveiled sweeping changes in November to how the Pentagon purchases weapons, allowing the military to more rapidly acquire technology amid growing global threats, in accordance with an executive order signed by Trump in April.
The Pentagon restructuring will have direct authority over major weapons programs to eliminate bureaucracy. The acquisition chain will run directly from program managers to these portfolio executives to military service branch acquisition leaders, with no intermediate approval layers.
The November reforms target what Pentagon officials call “unacceptably slow” procurement, which they blame on fragmented accountability and misaligned incentives that have hampered the military’s ability to field new technology quickly.
(Reporting by Joey Roulette and Mike Stone; Editing by Chris Reese)