Defense contractors bidding on deals as small as $10 million now have to be ready to open their books — and potentially their financial software — to Pentagon reviewers at every tier of their supply chain. The trigger is an Aug. 18, 2026 memo from Deputy Defense Secretary Steve Feinberg, one of three recent Pentagon directives — alongside an Aug. 10, 2026 peer-review memo from the Office of the Under Secretary of War for Acquisition and Sustainment and an earlier May 4, 2026 facilitization-costs memo — that industry groups say are converging into a coordinated tightening of cost oversight, and that at least one longtime observer says is working against the Pentagon's own acquisition-reform agenda.

The Aug. 10 memo, signed by Defense Pricing, Contracting, and Acquisition Policy Principal Director John M. Tenaglia, lowers the DFARS sole-source peer-review threshold from $1 billion to $50 million. It creates a new streamlined peer-review tier for sole-source deals between $50 million and $500 million that zeroes in on facilitization costs, historical supplier costs and prior realized profits, while deals between $500 million and $1 billion move to the fuller peer-review process previously reserved for the largest awards. The memo implements an earlier May 4, 2026 directive from Under Secretary of War for Acquisition and Sustainment Michael P. Duffey that singles out "contractor facilitization costs" — capital equipment, tooling and plant investment — for added scrutiny before a sole-source award can proceed.

"This memo aligns the Department with the policy and objectives of Executive Order 14372, which requires defense contractors to make critical investments with their own capital to increase production capacity when required and overall to deliver timely, quality warfighting capabilities to our military," Duffey wrote in the May 4 memo attached to Tenaglia's directive.

That Feinberg memo, titled "Supplier Cost and Pricing Transparency," demands full cost and pricing visibility across every tier of the supply chain on contracts of $10 million or more — regardless of whether certified cost or pricing data is legally required on that deal. It also directs the Under Secretary of Acquisition and Sustainment to explore building an API-based tool that would give the Pentagon machine-to-machine access into contractors' own ERP and financial systems. Both the Tenaglia and Feinberg memos are framed as implementing Executive Order 14372, "Prioritizing the Warfighter in Defense Contracting," signed Jan. 7, 2026.

Why a Longtime Acquisition Hand Calls the Feinberg Memo "Adversarial"

The Feinberg memo has drawn pointed criticism for cutting against the Pentagon's own reform messaging. In a Sept. 8, 2026 commentary for Federal News Network, longtime acquisition consultant David Berteau argued the memo directly undercuts Defense Secretary Pete Hegseth's own November 2025 push to transform acquisition and the administration's parallel Revolutionary FAR Overhaul push to streamline procurement and attract innovative companies.

"It says to industry, indirectly but unmistakably, 'We don't trust you. We are not partners; we are adversaries,'" Berteau wrote of the Feinberg memo's approach.

Berteau also questioned whether the added reporting burden would actually deliver better pricing data to the government. "Based on my long experience on both the government side and for contractors, nothing in this memo will help the government get dramatically better information on contractor costs," he wrote, arguing the memo substitutes blanket demands for the kind of targeted, negotiated access that has historically worked.

How a $10 Million Line Undoes a Concession Congress Just Made

The $10 million threshold in Feinberg's memo lands on the same number Congress just moved in the contractors' favor. The fiscal year 2026 National Defense Authorization Act raised the threshold for requiring certified cost or pricing data from $2.5 million to $10 million, a change contractors had sought for years to keep smaller deals out of the most burdensome disclosure regime. Feinberg's memo reimposes transparency obligations at that same $10 million line — but does it through a policy memo rather than a statutory change, effectively restoring by directive what Congress had just eased by law for anything above that floor.

A Third Directive Feeds an Industry Warning About Timelines

Federal News Network's Aug. 26, 2026 reporting tied the Feinberg memo to two other recent moves — a July 31 comptroller letter and Duffey's facilitization-cost memo — that industry now reads as a single coordinated tightening trend rather than three unrelated policy actions. The Aerospace Industries Association weighed in with a warning about the cumulative effect on program schedules.

"This approach risks adding years to acquisition timelines, creating new barriers to delivering critical capabilities to our troops," the association said, according to the Federal News Network report on the three initiatives.

Legal analysis from Hunton Andrews Kurth underscored how far the Feinberg memo reaches down the supply chain, noting that the memo directs the acquisition workforce to secure "full transparency" into cost and pricing information "at every tier of the supply chain, from prime contractors down through subcontractors" — not just the prime holding the contract, but every subcontractor and supplier beneath it, regardless of tier or contract size once the $10 million threshold is crossed.

What It Means for Contractors

Contractors on sole-source deals between $50 million and $500 million should expect a new streamlined peer review triggered at a threshold twenty times lower than before, with facilitization costs — tooling, capital equipment, plant investment — drawing specific scrutiny under the Duffey memo's criteria. Anyone holding or bidding on a contract at $10 million or above should prepare to produce detailed cost and pricing data even where the law does not require certified data at that dollar level, since Feinberg's memo applies regardless of legal threshold. That obligation flows down: subcontractors and suppliers at every tier are in scope, not just the prime contractor. Companies should also watch for further guidance from the Under Secretary of Acquisition and Sustainment on the proposed API-based tool for direct access into contractors' ERP and financial systems, since that mechanism — if built — would change how cost data moves between contractor back offices and Pentagon reviewers. Government contracts counsel should flag the tension between these memos and the administration's own acquisition-transformation and FAR-streamlining initiatives when negotiating data rights and disclosure scope on new awards.

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