Reports indicate that the U.S. Department of Defense has alerted defense contractors to prepare for an upcoming comprehensive performance review. The review aims to identify contractors deemed to have inadequately fulfilled their contractual obligations. The information was reportedly conveyed to the industry in a communication sent over the weekend. This initiative stems from an executive order signed by U.S. President Donald Trump in January, which threatens to cancel contracts for defense companies that engage in stock buybacks or dividend payments while performing poorly. In a statement to The Hill on Monday, Pentagon chief spokesperson Sean Parnell confirmed that the Defense Department has completed a preliminary review of defense contractors to determine whether companies are investing in their production capabilities or prioritizing dividend payments and stock buybacks. Parnell stated that contractors have been notified, and the Pentagon has now entered an "extended review period," during which the Department will make "non-compliance determinations." According to the executive order, contractors identified by the Pentagon will have 15 days to submit corrective action plans detailing how they will address production delays. Previous reports have highlighted that U.S. defense contractors are facing conflicting pressures: the Pentagon demands accelerated weapons production, while investors continue to expect stable dividends and returns. Executives from companies including Raytheon Technologies (RTX), Lockheed Martin (LMT), Northrop Grumman (NOC), and L3Harris Technologies (LHX) have stated they are increasing production of missiles, rocket components, and other systems under pressure from the Defense Department to replenish depleted inventories.