Aug 25, 2026 · 6 min · 7 segments
In this week's episode of The Break Out, a new Defense Department memo reorients…
Lee FerrinHost
Mark PomerleauGuest
Valerie InsinnaGuest
And we're talking about a DoD memo that Val had a little scoop on last week, uh, that could give the DoD a lot more information about pricing and contracts.
So you nerds out in the audience probably already know this, but cost plus contracts, um, any contractor under that is supposed to give the DoD certified cost and pricing information.
The DoD says that it wants a lot more granularity, not just within the primes, but into supply chains, and to get it they are considering a software tool that is going to help them.
Right, and so this is a memo that went out to, uh, basically DoD-wide, uh, saying that most controversial part may be the, the software tool.
Like, we want software on private companies' financial systems so that we can gather that data automatically.
Yeah, I mean, AIA has already put out a statement saying that they've got some concerns about this.
There's not a lot of granularity in the memo itself about what this tool is gonna be or the path forward to resourcing it, where the budget's gonna come from, and then, you know, just figuring out exactly what we need and implementing it.
Yeah, and we were talking about how the, the kind of the top of the memo, uh, kind of laid out some problems, and I believe the tool was mentioned there, but the actual action items at the end of the memo were a bit, uh, lighter touch.
Yeah, it's, uh, s- a lot of questions I've heard from people in industry, in the investor community about what does this all mean? There was a line in there about ensuring that contractors' profit margins are fair.
Um, it's unclear what the DoD is gonna do to ensure that that's the case or what they might be looking at, what sort of standard they might apply and how.
Um, what the action items actually did kind of coalesce around was delinquent cost and pricing reports.
Essentially, um, Secretary def- Deputy Secretary Feinberg told, uh, contracting officers, "Make sure that contractors are submitting those po- reports, ones that are delinquent, and get those in, and then figure out if there are any trends, places where we can push to get better pricing."
Yeah, so we're gonna see, you know, continuing what the reaction is to this memo, not only from industry but also from Congress.
And we're talking about a DoD memo that Val had a little scoop on last week, uh, that could give the DoD a lot more information about pricing and contracts.
So you nerds out in the audience probably already know this, but cost plus contracts, um, any contractor under that is supposed to give the DoD certified cost and pricing information.
The DoD says that it wants a lot more granularity, not just within the primes, but into supply chains, and to get it they are considering a software tool that is going to help them.
Right, and so this is a memo that went out to, uh, basically DoD-wide, uh, saying that most controversial part may be the, the software tool.
Like, we want software on private companies' financial systems so that we can gather that data automatically.
Yeah, I mean, AIA has already put out a statement saying that they've got some concerns about this.
There's not a lot of granularity in the memo itself about what this tool is gonna be or the path forward to resourcing it, where the budget's gonna come from, and then, you know, just figuring out exactly what we need and implementing it.
Yeah, and we were talking about how the, the kind of the top of the memo, uh, kind of laid out some problems, and I believe the tool was mentioned there, but the actual action items at the end of the memo were a bit, uh, lighter touch.
Yeah, it's, uh, s- a lot of questions I've heard from people in industry, in the investor community about what does this all mean? There was a line in there about ensuring that contractors' profit margins are fair.
Um, it's unclear what the DoD is gonna do to ensure that that's the case or what they might be looking at, what sort of standard they might apply and how.
Um, what the action items actually did kind of coalesce around was delinquent cost and pricing reports.
Essentially, um, Secretary def- Deputy Secretary Feinberg told, uh, contracting officers, "Make sure that contractors are submitting those po- reports, ones that are delinquent, and get those in, and then figure out if there are any trends, places where we can push to get better pricing."
Yeah, so we're gonna see, you know, continuing what the reaction is to this memo, not only from industry but also from Congress.
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