For 58 straight years, Congress has enacted a National Defense Authorization Act (NDAA)—annual legislation that authorizes Pentagon funding and provides policy direction. Its enactment can bring significant changes to the companies providing services to the Department of Defense (DoD), and frequently to service providers for all federal government agencies.
The Senate passed its version of the Fiscal Year 2020 NDAA on June 27, 2019 and the House followed suit on July 12, 2019. PSC is working hard to ensure that the final bill recognizes the important roles and contributions contractors bring to the Department’s mission success while improving acquisition outcomes for DoD. There are numerous provisions that impact the federal contracting community that need to be ironed out before a final bill can be sent to the President. Below is a look at a few of them of particular interest to technology and professional services firms.
Software Acquisition Pathways
The Department of Defense and Congress have been focused on improving how the Department acquires and uses software—with Congress directing the Defense Innovation Board to conduct a Software Acquisition and Practices study in the FY18 NDAA. The study was completed in May 2019. Both the House and Senate bills include one of the study’s primary recommendations by directing DoD to establish a new pathway for the rapid acquisition of software applications and software upgrades that are intended to be fielded within one year.
Accelerated Payments for Small Business
The now-lapsed Executive Branch policy of accelerated payments to small business primes and subcontractors was a critical lifeline for small businesses who work in the federal market. PSC was the originator of a provision in the FY19 NDAA to make the policy permanent at DoD; this year’s House-passed bill expands this policy government-wide.
Cybersecurity Compliance and Coordination
The House bill includes a provision pushed by PSC requiring the Department to comprehensively identify all programs and requirements that aim to assist contractors with cybersecurity and cyber compliance. PSC shares the committee’s belief that “these efforts are not coordinated or deconflicted,” and believes that this provision would reduce redundancy and promote consolidation. The Senate bill would require DoD to develop a consistent, comprehensive framework to enhance the cybersecurity of the U.S. defense industrial base. This provision would provide statutory direction for the Cybersecurity Maturity Model Certification, a DoD initiative intended to provide a common compliance framework based on industry’s cybersecurity maturity and readiness.
The Section 809 Panel reported that “[t]he current state of readiness is driven by structure and strategy implications of decisions that focus on business concepts rather than the required outcome or customer measure of success or failure.” The House bill would require DoD to issue guidance on the use of material readiness metrics to assess the department’s ability to carry out the National Defense Strategy. PSC believes this proposal will increase transparency and opportunities for Congressional oversight, help to determine the progress of readiness recovery efforts, and improve acquisition outcomes.
Supply Chain Risk Management
The House bill would require the Secretary to develop tools for supply chain risk mitigation policies during the requirements generation process. It’s designed to address supply chain risks early in the acquisition process so they can tailor it appropriately through the contracting process.
The Senate bill’s supply chain language is much more expansive, requiring the Department to “rigorously optimize” the policy, processes, and procedures for supply chain risk management throughout the contracting life cycle.
Delay “Loser-pay” Pilot Program
After Congress in the FY17 NDAA directed DoD to create a new pilot program that requires companies who unsuccessfully protest contract awards to pay DoD’s costs, a comprehensive RAND report on the impact of bid protests on DoD acquisitions found that no agency or service in the department has the means of identifying or tracking its administrative costs associated with bid protests. The House-passed bill would delay the implementation of this program until those DoD costs can be calculated accurately—an essential element of the provision.
Repeal the Defense CAS Board
The creation of the Defense Cost Accounting Standards Board (CASB), as required by the FY17 NDAA, duplicates the work of the government-wide CASB and establishes a defense-unique cost accounting regime at a time when Congress has attempted to move the Department toward more commercial standards to help incentivize innovation. As the Section 809 panel highlighted: “Adding another regularly organization [the Defense CASB] is the wrong solution... [and] would almost certainly be counter-productive.” PSC is unaware of any attempt by DoD to establish a Defense CASB and therefore we believe that now is the time to repeal this requirement. The House-passed bill repeals this FY17 provision.
Progress and Performance-based Payments
Last year, DoD issued and then withdrew a proposed rule that would have made dramatic and ill-advised changes to contract finance rates for progress payments or performance-based payments. PSC aggressively countered this proposal and supports the House bill’s provision requiring Congressional and public notice before DoD may initiate any new changes to these payment provisions.
PSC has full summaries of the provisions impacting the contractor community. Contact firstname.lastname@example.org for more details.
This article was published in the Summer 2019 Service Contractor Magazine.