DOW Cost and Pricing Transparency Memo: What It Means for Resellers, Distributors and VARs

The Department of War (DOW) issued a memo on October 1, 2026, titled "Implementation of Supplier Cost and Pricing Transparency," that gives contracting officers a clearer path to request cost and pricing data from primes and their suppliers. For resellers, distributors and value-added resellers (VARs) that sell through government primes, it means more questions about your costs, your markup and your supplier quotes. Below, Sterile Services Co (SSC) breaks down the memo from the reseller side of the supply chain.

This post is a general summary for informational purposes and is not legal advice. It is based on analysis by the law firm PilieroMazza, linked at the end. Review your own contracts and talk to qualified counsel before making decisions.

Why Resellers, Distributors and VARs Should Pay Attention

Most coverage of this memo is written for prime contractors. But the memo builds on two earlier DOW memos (August 18 and September 14) and points toward flowing pricing expectations down to key suppliers. If you resell hardware, software or services into a defense program, you may be the supplier a prime has to collect data from.

In practice, that could mean a prime asks you to show how your price was built: the manufacturer or distributor cost, your margin, freight, and any fees or commissions added on top.

Key Takeaways for the Channel

• Cost data requests may reach you. Contracting officers may request actual cost data, even on contracts outside Cost Accounting Standards (CAS) coverage. Primes may pass similar requests down to resellers and distributors.
• Existing limits still apply. The Truth in Negotiations Act (TINA) limits (10 U.S.C. 3705, FAR 15.402 and 15.403) remain in place, so contracting officers must still try other ways to judge price first, such as competition and market pricing.
• Data is expected in the form you already keep it. The memo points to data in the form regularly maintained, whether CAS-compliant or GAAP. Resellers do not need a special system, but they do need records that are organized and easy to pull.
• Refusing can carry consequences. Where TINA applies and data is refused, the matter could lead to a DCAA TINA audit. For larger programs, the memo also describes contractor spend data reporting (CSDR) for ACAT II and above programs over $50 million, with a 30-day demand letter and possible withholds.
• Profit policy is being modernized. DOW is moving to profit policy by sector (hardware, software/IT and services), with tiered profit-sharing that may be flowed down to key suppliers.
• Voluntary data access is on the table. The memo discusses voluntary API or ERP push-only access, to be shaped through rulemaking.

How This Could Affect Each Part of the Channel

Resellers

Expect closer scrutiny of your markup on top of manufacturer or distributor pricing. Keep supplier quotes, invoices and the basis for your margin together for each deal, so you can explain a price quickly if a prime or contracting officer asks.

Distributors

Distributors sit in the middle of the chain and may get requests from both directions: from resellers who are asked for backup, and from primes who want to understand pricing. Consistent price lists, rebate and discount records, and clear terms on what you can share will matter more.

VARs

VARs often bundle hardware, software and services, and the memo's sector-based profit approach treats those categories differently. If your quotes combine them, be ready to show how each part was priced rather than one blended number.

What Resellers, Distributors and VARs Can Do Now

1. Organize your cost records. Keep supplier quotes, invoices and landed cost details tied to each quote in a place you can search.
2. Separate your pricing components. Make sure cost, markup, shipping, fees and any commissions can be shown line by line.
3. Review your teaming and subcontract terms. Look for data-sharing, audit and flow-down clauses and confirm you understand what you may be asked to provide.
4. Decide what is confidential. Agree in advance with partners how proprietary pricing and supplier terms will be protected when shared.
5. Talk to counsel and your prime partners early. It is easier to set expectations before a request arrives than after.

How Quote-to-Cash Tools Can Help

When every quote, invoice and commission needs a clear paper trail, a single system helps. TrackHubs, the platform built by SSC for resellers, VARs and distributors, brings quoting, invoicing and commission tracking into one place, so the numbers behind a price are easier to find. Learn more about SSC on our About Us page.

Frequently Asked Questions

Does the DOW memo apply to resellers and distributors?

The memo is aimed at contracting officers and primes, but it points to flowing pricing and profit expectations down to key suppliers, so resellers and distributors may see related requests from the primes they work with.

Do I need to change my accounting system?

The memo refers to providing data in the form regularly maintained, whether CAS-compliant or GAAP. The key is to have records that are organized and easy to produce.

Does this remove the existing limits on cost data requests?

No. The TINA limits still apply, and contracting officers must consider other ways to judge price before asking for certified cost or pricing data.

Source and Disclaimer

This summary is based on the PilieroMazza client alert dated October 13, 2026: DOW's New Cost and Pricing Transparency Memo: Key Considerations for Defense Contractors and Suppliers. The reseller, distributor and VAR discussion is SSC's own commentary. This content is for general information only and is not legal advice.