President Trump Issues Executive Order Enhancing Minerals Provenance and Diligence Requirements for Defense Contractors

On July 20, 2026, U.S. President Donald Trump issued an executive order (EO) directing several actions to precipitate defense contractors’ transition to domestic or allied sources of materials critical to U.S. defense supply chains, including critical minerals.

Overview of the EO

The EO focuses on three major requirements: (1) restricting the grant of waivers under 10 U.S.C. § 4872; (2) requiring fulsome mapping of defense-related critical supply chains; and (3) requiring contractors to qualify alternative sources of critical materials/components.

Waivers – 10 U.S.C. § 4872 prohibits procurement of certain “covered materials”¹ by the Secretary of Defense (the Secretary) but allows for the waiver of such requirements if the covered material (i) cannot otherwise be procured at a reasonable price (4872(c)(1)) or (ii) is necessary to accept the end item for national security interests (4872(e)). 

Beginning January 1, 2027, the EO directs such waivers to be issued only if several conditions are met, including demonstration of “exhaustive efforts” to acquire compliant covered material. Importantly, failure to qualify a compliant supplier shall not by itself constitute nonavailability for waiver purposes.

Waivers also require description of a mitigation plan to remove the noncompliant covered material from supply chains, with strict projected timelines for implementation of those efforts, and the Secretary is directed to take action against any prime contractor or subcontractor for failure to implement a mitigation plan approved under this framework.

Mapping – The EO also directs the Secretary to swiftly develop implementation guidance (within 180 days of the EO) and, within 90 days of such guidance, regulations to require “all prime contractors and subcontractors at any tier” to map critical supply chains for defense-related acquisitions related to U.S. national security.

The regulations are required to include provisions that contractors:

• submit a complete “indentured Bill of Materials” tracing all components, parts, equipment, software and materials back to the origin of the associated raw materials;
• establish and implement written procedures to proactively vet all suppliers and subcontractors that support the critical supply chain, including at a minimum a screening for financial, foreign ownership/control/influence (FOCI), and manufacturing and supply risks (each as defined in the EO);
• prohibit use of covered material supplied by an unreliable foreign supplier (defined as any person subject to the FOCI of a covered nation under 10 U.S.C. § 4872(f)(2));
• implement timely mitigation actions to reduce the likelihood or impact of each identified risk, including corrective action plans; and
• track active mitigation actions and provide certain notifications/reports.

Alternative Source Qualification – The EO further directs that within 180 days of the EO, the Secretary shall initiate regulatory action to (i) identify existing acquisitions that relate to U.S. national security and (ii) require associated contractors that source material or components from an unreliable foreign supply to, as soon as possible subject to law and other constraints, qualify and utilize an alternative source.

Under the EO, a contractor’s failure to qualify such an alternative source would constitute grounds for suspension or termination of task orders or even termination of an existing contract.

What Can Companies Do to Prepare?

While the EO adds to the Trump administration’s efforts to reorient supply chains and address identified security concerns, the foundational economic and operational realities will not change overnight. Particularly for critical minerals, supplies and processing capabilities take time to come online. Therefore, the EO creates tension between short-term and long-term priorities. Companies must consider how to resolve this tension in the context of their own businesses.

Below are three steps to inform such strategies:

1. Identify monitoring priorities. The EO leaves several key decisions, such as what supply chains relate to national security, to the Secretary. Additionally, the EO does not specify certain obligations — such as what is required to demonstrate “exhaustive efforts” for alternative sources of covered materials under 10 U.S.C. § 4872. These decisions will affect both the scope and extent of such new requirements.
   
   Companies also need to consider where the EO’s requirements may intersect with their own operations. Not all contracts will be equally exposed, or on the same time horizons. For example, under the 2026 National Defense Authorization Act, gallium and germanium are being added to under 10 U.S.C. § 4872’s restrictions for “covered materials” by late 2027, at which time the EO’s waiver restrictions would already be in place. 
2. Assess existing supply chain data and gaps. The data requirements contemplated by the EO are substantial. An initial step is to determine what data is already on hand from existing diligence efforts and potential options to fill in what is missing. However, this must also consider how responsive existing systems are to the particular expectations of the EO. For example, while the EO’s approach to FOCI leverages a definition set forth in 32 CFR 117.11(a)(1), it does not restrict FOCI to impacts on classified matters.
   
   Companies should also consider data quality and how they will assess the sufficiency of evidence, including for the required bill of materials and for any waivers they may still need to request.
3. Execute (strategically) on response paths. The EO takes a multi-pronged approach to influencing contractors’ supply chains. Therefore, company responses likewise need to plan for an array of implications. Depending on the results of the above steps, companies may need to consider actions such as resourcing efforts to locate alternative supply sources, engaging with suppliers or other diligence vectors to fill additional data needs, and both developing and socializing core aspects of any action plans to address deficiencies in current sourcing compared to the EO’s expectations.
   
   All of these are better able to be achieved with runway. Qualification of alternative sources takes time and may also require weighing the need for potential capital deployment as many alternative suppliers are still in the early stages of commercialization. Additionally, many actions to respond to the EO may have knock-on ramifications that will need to be considered — whether with respect to other laws (e.g., other supply chain diligence obligations or China’s countervailing industrial and supply chain security measures) or within the company (including internal controls/reviews needed and demands on functions such as technical teams or finance).

Ultimately, the EO signals continued emphasis on rerouting supply chains with whatever tools the current administration has at its disposal. These challenges will not be solved overnight, either for the government or for those contracting with it. But the best-positioned contractors under this new framework will be those that can offer a coordinated response to the U.S .government’s expectations, considering both their own operations and the realities faced in the broader sourcing ecosystem.

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¹“Covered minerals” include samarium-cobalt magnets, neodymium-iron-boron magnets, various forms of tungsten and tantalum, as well as (pursuant to the 2026 NDAA) gallium, germanium, and molybdenum.