"Full transparency throughout all tiers of the supply chain applies to all contractors and subcontractors," Deputy Defense Secretary Steve Feinberg wrote in a memo reviewed by Breaking Defense.
Feinberg's directive: reset expectations on cost and pricing data
The memo, signed off by Deputy Defense Secretary Steve Feinberg "on Tuesday," directs senior Pentagon leaders and the directors of defense agencies and department field activities to "reset" the department’s expectations for supplier cost and pricing information. The stated purpose is to use that data to prevent contractors' profit margins from "getting out of control" and to ensure contracts are negotiated fairly. Feinberg also directed the Under Secretary of War for Acquisition and Sustainment (USW(A&S)) to "establish fair and reasonable contract profit margins by applying commercial best practices tailored to each product or service line."
Automated access: Application Programming Interfaces to company ERPs
At the core of the memo is a proposed technical change: the exploration of an "automated solution" that would establish Application Programming Interfaces (APIs) to pull cost information directly from contractors' enterprise resource planning (ERP) or other financial systems. Feinberg framed the move as intended "to reduce industry’s regulatory burden and compliance costs" by standardizing how cost information is transferred to the department.
The memo does not provide an implementation or funding plan for the API approach, and it is not clear whether adopting such a tool would impose new costs on industry. The Pentagon did not immediately respond to a request for comment about the memo or how the directive would be implemented.
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End the scrambleCSDR delinquency and a 30‑day enforcement deadline
Feinberg’s directive singles out the Pentagon’s Cost and Software Data Reporting (CSDR) system, noting that "thousands of these cost reports are currently delinquent across our acquisition portfolio." The memo calls the resulting "data deficit" an impairment to the department’s ability to identify which programs "are providing the most value" and which require adjustments to stay on budget and on track.
To address that shortfall, the department’s acquisition wing is tasked with ensuring delinquent CSDR reports are submitted within 30 days and with using CSDR data to assess the quality of sole‑source contracts over time.
Legislative context and industry objections
The memo arrives after Congress adjusted statutory thresholds in the 2026 defense authorization act: the certification requirement for cost and pricing data was raised to $10 million for contracts awarded after June 2026, up from a previous $2.5 million threshold. Feinberg’s memo nonetheless seeks "full transparency" for products and services valued at $10 million or more "regardless of whether cost and pricing data requires certification."
Defense contractors and industry groups have long criticized current cost‑and‑pricing demands as burdensome, saying they force companies to maintain administrative systems and personnel solely to satisfy Pentagon reporting. The Aerospace Industries Association has argued those requirements also impede commercial businesses and nontraditional firms from doing business with the department.
John Ferrari's practicality test: standardization, AI, and human expertise
John Ferrari, a retired Army major general and a senior nonresident fellow at the American Enterprise Institute, offered a practical reading of the memo's proposed automation. Ferrari said the software "would likely be used to standardize and streamline how the Pentagon gets cost information from companies, with artificial intelligence potentially being used to help comb through data." He cautioned that the memo "does not necessarily say the Pentagon’s going to reach in through the machine and pull it out," suggesting an automated filing process akin to electronically submitting tax information.
Ferrari also warned that the influx of cost data will require new analytical capacity inside the department. He noted the need for financial experts who can "untangle what all that cost information means" and added a caveat about AI: "if you don’t know what you’re looking at and you don’t know how to make inferences from it, AI can give you the exactly wrong answers."
Implications for acquisition policy and next steps
The memo tasks USW(A&S) to both set profit margins using "commercial best practices" and to explore an API‑based path for automated cost reporting. It raises immediate operational questions the memo itself does not answer: how would the automated connections be secured and scoped, who would pay for integration or compliance, and what role will human expertise play in interpreting a much larger volume of cost data? The department has signaled urgency—ordering delinquent CSDR submissions within 30 days—while leaving the technical and financial architecture of the proposed automation undefined.
Original reporting: https://breakingdefense.com/2026/08/dod-memo-pushes-for-more-contractor-pricing-info-potential-direct-software-link/
