Gifts Delivered by the Fiscal Year 2024 NDAA

For an early holiday treat, Congress has completed work on the Fiscal Year 2024 National Defense Authorization Act (NDAA) by overwhelming bipartisan votes in both the House and Senate; the bill was sent to the President on December 14, 2023, and the White House indicated that the President will sign it into law. This is the 63^rd consecutive year that Congress has enacted, and the President signed, an annual authorization act for the Department of Defense and related activities. However, except for the fiscal year 2019 NDAA, no NDAA has been enacted before the start of a federal fiscal year since 1997.[1]

This 1,627 page conference report, which includes both the bill text and the joint explanatory statement of conferees, has a lot of presents wrapped in the package. Some of the presents reflect provisions that the Congress has adopted. Some of the presents reflect provisions that were passed by either the House or the Senate but are not included in the final version. There are provisions relating to the Department of Defense, of course, but also extensive provisions relating to military construction and the national security functions of the Department of Energy, as well as complete fiscal year authorizations for the Department of State and for the Intelligence Community. Going into conference, the combined versions of the House and Senate-passed NDAAs totaled over 4,000 pages.

While many of the policy provisions in the NDAA do not require appropriations to become effective, the DoD programs, military construction and numerous health and other benefits programs do require the enactment of appropriations. So far, for fiscal year 2024 which began on October 1. 2023, the entire Federal Government is operating under a Continuing Resolution (CR) providing the appropriations necessary for the operation of the government, but only at the levels enacted for fiscal year 2023. Funding needs to be provided for DoD and related activities prior to the expiration of the CR on February 2, 2024;[2] funding for military construction and most of the civilian agencies will expire on January 19, 2024. While there is less controversy over the desired funding increases to be provided to DoD for fiscal year 2024, there is still a need for action and ensuring that the final DoD appropriations aligns with the bipartisan (but not unanimous) agreement contained in this NDAA. We’ll be carefully watching for subsequent action on appropriations, and we are assisting companies in dealing with the various scenarios that could or would arise during the upcoming funding debate.

For U.S. Government contractors, the primary source of good cheer or sadness can be found in title 8 of Division A of the NDAA, covering acquisition policy and related matters, in 47 separate sections of the title (although not numbered in numerical sequence because of the organizational structure of the title). Fifty-five acquisition provisions that had passed either the House or Senate were not included in the final conference version.

While Centre’s thorough analysis of the provisions in title 8 and throughout the NDAA is still underway, there are some important provisions from title 8 worth highlighting immediately.

Section 802 provides modifications to the truthful cost or pricing data submission requirements and reports. This issue has drawn attention recently because of the reemergence of Transdigm’s refusal to provide certain uncertified cost or pricing data to DoD. Congress directs the Under Secretary of Defense for Acquisition and Sustainment (USDA&S) to refine the parameters for what constitutes a “denial” of a request for such information.

Section 805 would now prohibit DoD from procuring certain goods, services and technologies from entities identified as Chinese military companies.

Section 812 addresses seeks to prevent conflicts of interest from entities that provide certain consulting services to DoD. This issue stems in part from the concerns of a “conflict of interest” for DoD when certain companies have provided consulting services to the Chinese Government, the Chinese Communist Party, or certain Chinese military companies.

Section 822 would expand DoD’s authority to use “other transaction authority” for installation and facility prototyping.

Section 852 expands DoD’s mentor-protégé program to permit the use of a cooperative agreement or partnership intermediary agreement in addition to a “contract.”

Section 863 would raise the government-wide goal for Service-Disabled Veteran-Owned Small Business (SDVOSB) from three percent to five percent, while Section 864 would eliminate the authority for DoD to count towards its SDVOSB achievement awards made to companies who have self-certified their status as an SDVOSB but are not certified as such by SBA.

Most of these provisions will require changes to the government-wide Federal Acquisition Regulation (FAR) or at least the DoD FAR Supplement (DFARS). We’ll be engaging with the FAR Council and the DoD acquisition council as they seek comments on or begin the implementation of these provisions.

However, many of the provisions that passed the House or the Senate were not included in the final conference report. Among those key acquisition policy provisions that were dropped from the conference report are:

• A pilot program on payment of costs for denied GAO bid protests;
• The repeal of the “bona fide” office rule for 8(a) contracts with DoD;
• Changes to modify the requirement for submission of certain cost or pricing data when required under the Truthful Cost or Pricing statute;
• Requirements to improve the timeline of payments made to DoD small business subcontractors; and
• Adding the SBA Administrator as a voting member of the FAR Council.

In addition to the acquisition policy provisions in this year’s NDAA, there are numerous restrictions related to China or Chinese activities, cybersecurity, new standards for federal data centers, and others. Many of these provisions originated in stand-alone legislation that has been added through NDAA amendments in their respective chambers.

It’s an obvious benefit to the Department of Defense and to the DoD military and civilian employees to have the NDAA enacted in the first quarter of fiscal year 2024, although sooner would have been better. It will also aid contractors because DoD will have time to plan for the solicitation and award of contracts worth billions of dollars in annual spending. But enactment of the necessary appropriations is a critical and essential companion for the entire process to work.

Centre Law will continue our in-depth review of the NDAA for provisions affecting contractors. If you have any questions or need any additional information, please do not hesitate to contact the author or the Centre Law attorney with whom you normally work.

[1] Figure A-1 in CRS Report R47869: FY 2023 NDAA: Overview of Funding Authorizations (Dec 7, 2023), at page 40, available at https://crsreports.congress.gov/product/pdf/R/R47869.

[2] Acccounting for over 80 percent of the total dollar value of all annual federal appropriations.