NDAA Veto Stymies Small Biz Contracting Improvements

October 28, 2015

pic-whitehouseOn Oct. 22, President Barack Obama vetoed the National Defense Authorization Act for Fiscal Year 2016 (H.R. 1735/NDAA) which included several provisions designed to help small businesses. This is only President Obama’s fifth veto of his presidency. The administration indicated that the legislation was vetoed because the legislation would have appropriated $38 billion to the Department of Defense through overseas contingency funds, and would have circumvented budget caps on defense spending. This veto derails a number of provisions in the NDAA aimed at helping small business contractors.

Some of the specific sections of the NDAA that would have been beneficial to small business contractor had the president not vetoed the bill, include:

  • Sections 862 and 863 deal with the bundling and consolidation of contracts. Agencies must identify and justify the practice; the rationale will be laid out at the beginning of solicitation.
  • Section 864 prohibits the application of the non-manufacturer rule to small service contractors. This reverses a 2014 Court of Federal Claims case that had expanded the application of the same rule beyond manufacturing and made it applicable to the procurement of services as well.
  • Section 865 ensures small business procurement advocates at the SBA have the proper skills and training.
  • Section 867 will help small businesses compete as team members and joint ventures by allowing the past performance of all team members to be considered when competing for large contracts.
  • Section 868 improves the scoring of agencies and their small business utilization.
  • Section 869 creates an independent office to hear size challenges and to review the SBA’s process to decide size standards.
  • Section 871 creates accountability for agency executives to meet their subcontracting goals.
  • Section 872 requires the Department of Defense to report any small business subcontracting shortfalls.
  • Section 873 makes it easier for small businesses to obtain compliant bonds.

The Senate voted 70-27 to approve the conference report of the NDAA on Oct. 7. Twenty Senate Democrats voted to approve the measure. The House had previously passed the bill by a vote of 270-156 on Oct. 1.

The House is scheduled to reconsider the bill on Nov. 5, in an attempt to override President Obama’s veto. Such an override is unlikely because the measure passed the House 20 votes shy of what would be necessary to override the veto. Furthermore, while the NDAA passed with a veto-proof majority in the Senate, Senate Minority Leader Harry Reid (D-Nev.) has already indicated that if called upon, his party would sustain the president’s veto.

NSBA is disappointed that President Obama did not sign these small business contracting provisions into law. However, it looks forward to working with both the House and Senate to ensure the next iteration of the defense authorization bill contains similar provisions to help small businesses.