The Pentagon’s Aug. 18 directive seeks broader supplier cost visibility in covered $10 million negotiations while leaving the design, security controls and rollout of an API-based system unresolved. 2 12
By PAI
Sept. 1, 2026
WASHINGTON — The Pentagon has directed its acquisition workforce to seek “full transparency” into cost and pricing information across supply chains for negotiations involving products and services valued at $10 million or more, a policy move that reaches beyond the circumstances in which federal law requires certified cost or pricing data. The Aug. 18 memorandum from Deputy Secretary of War Stephen Feinberg also calls for work on an automated system that could retrieve cost information from contractors’ enterprise resource planning, or ERP, and other financial systems through application programming interfaces, known as APIs. 2
The directive does not itself establish a live connection to contractors’ systems or prescribe a uniform profit cap. Instead, it tells the Under Secretary of War for Acquisition and Sustainment to explore an automated approach and to develop fair and reasonable contract profit margins using commercial practices tailored to product or service lines. The memorandum says the department does not intend to limit profits earned through efficiencies achieved after a fair price is negotiated from a realistic baseline. 2
The distinction matters for companies that sell commercial products and services to the department. Existing procurement law already allows contracting officers to request information needed to determine whether a price is fair and reasonable. But the new memorandum combines a broad departmentwide transparency expectation with a prospective machine-to-machine data-collection concept whose technical and contractual details have not been published. 2 4 6
What Feinberg’s memorandum requires
The memorandum was addressed to senior Pentagon leaders and directors of defense agencies and field activities. It says the new transparency expectation applies “throughout all tiers of the supply chain” for negotiations at or above $10 million, “regardless of whether cost and pricing data requires certification.” For those covered actions, it says contracting officers must have access to actual cost information at the prime-contractor and supplier levels. Commercially available off-the-shelf, or COTS, items are expressly excluded from that direction. 2
The document directs the acquisition and sustainment office to explore an automated solution “consistent with commercial best practices” that would use APIs to pull cost information from ERP or other financial systems. An API is a technical interface that allows enterprise applications to integrate and communicate. NIST has said secure API development and deployment are critical to enterprise security because APIs can introduce vulnerabilities during development and use. 2 10
The wording is prospective. The memorandum says the department will explore the automated solution; it does not identify data fields, authorization methods, cybersecurity requirements, retention rules, funding, a contract clause or an implementation date. It also directs the acquisition office to update underlying issuances and regulations, signaling that further policy work is contemplated. Reporting on the memorandum has likewise identified unanswered questions about whether and how the policy would reach existing contracts. 2 12
The profit provision also is less definite than a fixed-margin regime. Feinberg directed the acquisition office to establish fair and reasonable contract margins using commercial best practices tailored to each product or service line, but the memorandum offers no percentage, methodology or published benchmark for those determinations. Its stated aim is transparency and measurement of negotiation outcomes, not a limit on efficiency gains after the government and contractor establish a realistic baseline. 2
Certified data and ordinary price analysis are different
The $10 million figure in the memo should not be confused with a universal rule that every contract above that amount requires certified cost or pricing data. Under 10 U.S.C. § 3702, an offeror expected to receive one bid on a covered prime contract entered after June 30, 2026, generally must submit certified data when the price is expected to exceed $10 million. When submission is required, the offeror, contractor or subcontractor must certify that the data are accurate, complete and current to the best of that person’s knowledge and belief. 5
Federal Acquisition Regulation, or FAR, rules bar contracting officers from requiring certified cost or pricing data in several situations, including when pricing is based on adequate competition, when prices are set by law or regulation, or when the government is buying a commercial product or commercial service. The exceptions do not prevent an officer from asking for data other than certified cost or pricing data to support a fair-and-reasonable-price determination or a cost-realism analysis. 3
For commercial acquisitions, the FAR requires price analysis even when a price appears in a catalog. It tells contracting officers first to use available government or other secondary-source data, then to request offeror information only to the extent necessary when those sources do not suffice. That information can include sales history, cost data or other relevant information, but requests involving commercial products and services should, to the maximum extent practicable, be limited to information regularly maintained in the offeror’s commercial operations. 4
The statute provides related protections. It requires reasonable limits on requests for commercial sales data and says information concerning commercial products or services that is exempt under the Freedom of Information Act may not be disclosed outside the federal government. It also provides that an offeror that does not make a good-faith effort to satisfy a reasonable request for uncertified data may be ineligible for award if the contracting officer cannot establish price reasonableness by other means, subject to a best-interest determination. 6
Those rules explain why the memorandum’s scope is consequential but also why its practical operation is unsettled. It directs access to actual supplier costs for defined $10 million negotiations, including where certification is not required, while the standing statutory and regulatory framework remains focused on information necessary to reach a price-reasonableness determination. How the department will reconcile any standardized data pipeline with rules governing necessity, scope and commercially maintained data will depend on implementation. 2 4 6
CSDR deadline is a separate management action
The memorandum also addresses Cost and Software Data Reporting, or CSDR, a longstanding data-collection system rather than a new API program. Feinberg said thousands of reports were delinquent and ordered the acquisition office to work with the Pentagon’s cost-assessment office and the military services to have delinquent prime-contractor and subcontractor reports submitted within 30 days. It also directs use of submitted CSDR data to assess sole-source contracts over time and calls for cost-effectiveness comparisons in noncommercial sole-source acquisitions where CSDR is not in use. 2
Under DoD Instruction 5000.73, CSDR is the department’s primary source of cost data for acquisition programs exceeding $100 million in then-year dollars. The instruction says systematic cost-data collection supports credible estimates for current and future programs, and that CSDR reporting may extend from program initiation through the end of a system’s life cycle. Congress has directed the Pentagon’s cost-assessment office to develop the policies and collection method needed to gather quality cost data for cross-program estimates and comparisons. 7 8
That CSDR work is distinct from the memorandum’s $10 million negotiation threshold. The former concerns program cost data and management of major acquisition programs; the latter sets a broader expectation for cost visibility in covered negotiations. The policy joins the two under an overarching effort to improve negotiating leverage and assess program value, but they are governed by different mechanisms and thresholds. 2 7
Tension with the commercial-acquisition agenda
The cost-transparency memorandum arrives alongside a Pentagon acquisition strategy that emphasizes commercial participation and reduced burden. The 2025 strategy says commercial products and services should be considered the default approach where consistent with statute, calls for greater use of commercial solutions offerings and other transactions, and commits to guidance and tools intended to broaden the industrial base. It also calls for alignment of government Cost Accounting Standards with generally accepted accounting principles to reduce barriers for new and nontraditional contractors. 9
The strategy also advocates direct-to-supplier relationships where they serve the government’s interests, particularly at fragile supply-chain nodes. That aim provides one rationale for better visibility below prime contractors, but it does not resolve the handling of suppliers’ commercially sensitive data or the burden of submitting it. 9
The Aerospace Industries Association, which represents aerospace and defense companies, said in a June 2025 submission that government-unique cost-accounting, commercial-acquisition, cost-and-pricing and audit requirements can deter commercial and nontraditional firms. After Feinberg’s memo, an association spokesperson said that detailed disclosures through every supply-chain tier risk adding years to acquisition timelines and erecting new barriers to delivery. Those are industry assessments, not an established measure of the memorandum’s eventual effects. 11 12
There is historical support for treating entry barriers as a material implementation issue. In a 2017 review based on interviews with 12 innovative companies that did not typically do business with the Pentagon, the Government Accountability Office found that participants cited process complexity, government-specific terms, long contracting timelines, intellectual-property concerns and budget uncertainty as deterrents. The selected interviews do not forecast the outcome of the 2026 policy, but they document the concerns that implementation will need to address. 13
The decisions ahead
The department’s immediate directive is clear: acquisition officials are to seek cost transparency in covered negotiations, remediate delinquent CSDR reports and use the resulting information more systematically. The largest operational questions remain unresolved: what data will be requested; which parties will bear the cost of making it available; how commercial and proprietary information will be protected; and whether the eventual API approach will supplement or replace conventional submissions. 2 12
For now, the policy does not erase the legal distinction between certified cost or pricing data and other information used in price analysis, nor does it eliminate the commercial-product exception from certified-data rules. Its effect will turn on the regulations, contract terms, technical standards and acquisition guidance that follow. The Govcon Giants LinkedIn post that drew attention to the issue correctly identified the memorandum’s importance, but the primary document shows that direct financial-system access and margin methods remain proposals for implementation rather than completed requirements. 1 2 3 4