DoD Wants Deeper Supplier Cost Data—but Could Its Transparency Push Undermine Commercial-First Acquisition?

The Department of Defense has spent much of the past year emphasizing faster acquisition, greater use of commercial technology, and expanded participation by companies that have traditionally avoided the federal market. A new pricing directive raises an important question: can DoD simultaneously attract commercial suppliers while demanding substantially greater visibility into how those companies—and their supply chains—make money?

An apparent August 18, 2026 memorandum from Deputy Defense Secretary Stephen Feinberg directs the acquisition workforce to obtain greater cost and pricing transparency from contractors. For negotiations involving commercial products or services valued at $10 million or more, the memorandum calls for visibility across all tiers of the supply chain and applies the expectation to contractors and subcontractors. It also seeks improved compliance with DoD’s Cost and Software Data Reporting system.

The policy objective is understandable. The Government must determine whether negotiated prices are fair and reasonable, particularly when dealing with expensive weapons systems, constrained sources of supply, and markets in which competition may be limited. Better cost information can improve negotiations and help acquisition officials identify situations in which pricing has become disconnected from underlying economic realities.

The difficulty is that commercial markets do not ordinarily operate on an open-book basis.

A commercial supplier typically prices products according to market demand, competitive positioning, intellectual property, production capacity, investment requirements, and anticipated returns—not according to whether the customer agrees with each element of the supplier’s underlying cost structure. Cost information may itself be commercially sensitive. Supplier margins, labor economics, manufacturing efficiency, and purchasing arrangements can reveal precisely the information competitors would most like to know.

The challenge becomes greater below the prime-contract level. As Professional Services Council President Stephanie Kostro observed in a recent Federal News Network interview, the Government has privity with its prime contractor, while the prime itself may have limited visibility into suppliers several tiers removed from the federal contract.

DoD’s transparency objective could therefore create a practical conflict with commercial-first acquisition. A traditional defense contractor may have systems, personnel, accounting practices, and supplier agreements designed around government cost scrutiny. A commercial company whose principal customers are elsewhere in the economy may ask a different question: why restructure its internal reporting and expose sensitive cost information for access to a comparatively small federal market?

The issue is not whether DoD should abandon pricing discipline. Rather, acquisition officials will need to distinguish between obtaining enough information to establish price reasonableness and creating a disclosure regime that discourages the very commercial companies DoD says it wants to attract.

Contractors should begin assessing where required cost information resides, what visibility they actually possess below first-tier suppliers, what information constitutes proprietary commercial data, and whether existing subcontract terms permit its disclosure. They should also distinguish carefully between certified cost or pricing data requirements and broader requests for information used to determine price reasonableness.

DoD wants better negotiating information. The success of the initiative may ultimately depend on whether the Department can obtain that information without converting commercial acquisition into traditional cost-based contracting by another name.

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Disclaimer:
This article is provided for general informational and educational purposes only and does not constitute legal, accounting, pricing, or government-contracting advice. Contractors should review applicable statutes, regulations, solicitation provisions, contract clauses, agency guidance, and specific government requests before providing cost or pricing information.