House Passes NDAA

May 25, 2016

pic-flag-contractingOn May 17, the House approved the FY 2017 National Defense Authorization Act (NDAA/H.R. 4909). The annual legislation sets policy and spending priorities for the Department of Defense (DoD), and is also commonly the vehicle for including changes to the government contracting/procurement process. H.R. 4909 authorizes $610 billion in spending for the DoD and also makes a number of changes to the procurement process.

The legislation was approved by a vote of 277-147 with almost all Democratic members of the House, including Ranking Member of the House Committee on Armed Services, Rep. Adam Smith (D-Wash.) voting against the legislation. Importantly, there is enough Democratic support for the legislation to sustain a veto by President Barack Obama. Last year’s FY 2016 NDAA was initially vetoed by the president before the legislation was finally passed just before the end of the year. One of the primary concerns with this legislation is that it pulls $23 billion overseas contingency funds to supplement the Pentagon’s base budget. This would all but guarantee that the next president would need to request supplemental funding for overseas operations early in 2017. The administration has threatened to veto this legislation, in part, over this funding controversy.

Of significance to small businesses, the House version of the FY 2017 NDAA redrafts Section 15 of the Small Business Act, covering requirements for small business procurements, in plain language. Also included in the legislation is a pilot program for small businesses without a past performance rating as a prime contractor performing as a first tier subcontractor for a covered contract to request a past performance rating. This past performance rating can then be used to establish past performance for a prime contract. The Mentor-Protégé program, reauthorized last year, is being further reformed to ensure that prior to the award of contracts the mentor and protégé are truly separate entities.

The Senate version of the NDAA, S. 2943, was approved by the Senate Committee on Armed Services on May 12, with full Senate floor consideration expected to take place later this week. Importantly, that legislation will permanently reauthorize the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs within the DoD and increase accountability for meeting small-business contracting targets. However, once that legislation is finally approved by the Senate, it is expected that the conference committee settling differences between the House and Senate bills will not immediately happen and could be delayed through the summer.

NSBA supports transparency and predictability in the federal contracting and procurement process. It is also hopeful that this years NDAA will avoid the drawn-out approval process that mired the FY 2016 NDAA last year. In addition to providing necessary funding to the Department of Defense, the NDAA has historically been an invaluable catalyst for change in the government contracting and procurement processes and leveling the playing field for small-business contractors.