U.S. Chamber of Commerce Lobbies Against Defense Stock Buyback Proposal

Twenty business groups, led by the U.S. Chamber of Commerce, are lobbying to block a bipartisan proposal that would restrict stock buybacks by the largest Pentagon contractors.

The effort pits major players in the business community against an idea with buy-in from progressives, populist Republicans and President Donald Trump, who have said they’re frustrated with the pace of weapons production and questioned whether corporate profits are prioritized ahead of military readiness.

The lobbying push comes as the House Rules Committee prepares to consider Monday evening whether the proposal, which is one of 1,300 amendments offered, will get a vote when the House takes up its annual defense policy bill this week.

A coalition that includes the chamber, Business Roundtable, National Association of Manufacturers and the Aerospace Industries Association argued that the provision in the defense policy bill would hurt investors, discourage companies from doing business with the government and set a “troubling precedent” for federal meddling in corporate decision-making.

“This amendment raises serious concerns about an unprecedented expansion of the federal government’s role in restricting lawful corporate governance and capital allocation decisions made by businesses,” the groups wrote in a letter sent Friday to the House Rules Committee and shared with NOTUS.

Punchbowl was first to report on it.

“The amendment would also impose new uncertainty, compliance burdens, and unnecessary bureaucracy at precisely the wrong time for the defense industrial base,” the letter added. “Congress and the [Pentagon] have spent years working to attract more commercial firms, technology companies, venture capital, and private investment into the defense sector in order to accelerate innovation and strengthen national security capabilities.”

Reps. Chris Deluzio (D-Pennsylvania) and John Garamendi (D-California) offered an amendment that would bar certain contractors that get most of their business from the Pentagon from repurchasing their own shares while holding Defense Department contracts without a waiver from the defense secretary.

Supporters of the proposal say the restrictions are needed because major defense contractors have struggled to deliver weapons on time and have spent billions of dollars rewarding shareholders instead of investing more aggressively in factories and production capacity.

The broader idea has gained ground in Congress. The Senate Armed Services Committee this month approved a provision championed by Sens. Elizabeth Warren (D-Massachusetts), Josh Hawley (R-Missouri) and Mike Lee (R-Utah) that would go even further than the House proposal. It would bar the Pentagon from signing contracts with companies that buy back stock, pay dividends or make other capital distributions unless they obtain a waiver tied to a qualifying defense investment plan.

The senators said the five largest defense contractors have spent more than $100 billion on stock buybacks and dividends since 2020 — more than twice what they spent on capital expenditures.

That proposal closely tracks Trump’s executive order in January, which accused some contractors of putting investor profits ahead of warfighting capacity and readiness. It directed the Pentagon to restrict buybacks, dividends and executive incentive pay for contractors the Pentagon determines to be underperforming, failing to invest enough or producing too slowly.

Deluzio’s amendment takes a different approach. It would apply to a narrower group of contractors that get most of their revenue from the Pentagon and more than $100 million annually from Pentagon contracts, and it addresses only stock buybacks.

In a separate letter to House Armed Services Committee leaders, the Aerospace Industries Association, the sector’s largest trade group, argued that defense companies are already investing heavily in workers and manufacturing capacity. It warned that the amendment would “undermine our shared priority of accelerating defense production and expanding the defense industrial base.”