PSC Letter to Congressional Leaders re FY26 NDAA
Sent on November 3, 2025

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The Honorable Roger Wicker
Chairman
Committee on Armed Services
United States Senate
Washington, DC 20510

The Honorable Mike Rogers
Chairman
Committee on Armed Services
U.S. House of Representatives
Washington, DC 20515

The Honorable Jack Reed
Ranking Member
Committee on Armed Services
United States Senate
Washington, DC 20510

The Honorable Adam Smith
Ranking Member
Committee on Armed Services
U.S. House of Representatives
Washington DC 20515

Dear Chairman Wicker, Ranking Member Reed, Chairman Rogers, and Ranking Member Smith:

On behalf of the Professional Services Council (PSC), I am writing to express deep appreciation for your continued leadership in advancing acquisition reform as an integral element of the National Defense Authorization Act for Fiscal Year 2026 (FY26 NDAA). Your efforts reflect a clear commitment to ensuring that the Department of Defense (DoD) can rapidly acquire, field, and sustain critical capabilities in support of our national defense, while also strengthening the competitiveness and resilience of the defense industrial base (DIB). As you may know, PSC is the leading trade association and voice of the government contracting industry, representing the full range and diversity of the federal services, technology, and solutions sector. PSC’s more than 400 member companies provide mission-critical solutions in partnership with all federal agencies and range in size from start-ups to multinational organizations. Together, PSC members employ roughly 1 million Americans and earn more than $1 trillion annually in commercial and government contract revenue. Individually, these companies offer excellent value in supporting—and achieving—federal missions alongside their government colleagues.

Regarding the FY26 NDAA, our members especially commend the inclusion of key elements from theStreamlining Procurement for Effective Execution and Delivery (SPEED) Act, which represents one of the most meaningful acquisition modernization efforts in recent years. The SPEED Act addresses long-standing barriers that impede efficient acquisition and competition by:

• Revising Title 10 (§3102–§3104) to align the defense acquisition system with operational outcomes and warfighter priorities, ensuring that acquisition programs deliver capability with greater speed, accountability, and agility.
• Simplifying cost accounting and commercial buying practices through Title III (§301–§304), which enhances the Department’s ability to leverage commercial technologies and reduce regulatory burdens on innovative suppliers.
• Strengthening the acquisition workforce (§501–§503) by directing Government Accountability Office reviews and new training requirements for program managers, contracting officers, and acquisition professionals to ensure effective management, lifecycle sustainment, and innovation adoption.

Together, these reforms will streamline acquisition processes, increase participation from nontraditional and small businesses, and empower the acquisition workforce to make smarter, faster decisions in support of national security. The provisions in this letter are significant to the government contractors that we represent in critical ways discussed below. We are ready to provide more information and to meet with you and your staff on any of these comments.

Provisions which PSC supports
PSC and its members are appreciative of the efforts of both the House and Senate to make acquisition reform a priority in this year’s NDAA. Below are just a few examples of sections that will bring real change and result in better outcomes for the Department:

• House Sec. 815, Increase in Threshold for Certain Micro-Purchases
• House Sec. 301, Matters Related to Department of Defense Use of Cost Accounting Standards
• House Sec. 882, Permanent Extension of Phase Flexibility and Inclusion of Small Business Technology Transfer Program
• House Sec. 883, Authority to Make Additional Sequential Phase II Awards Under the Small Business Innovation Research Program or Small Business Technology Transfer Program
• House Sec. 1832, Data-as-a-Service for Weapon System Contracts
• Senate Sec. 868, Repeals of Existing Law to Streamline Defense Acquisition Process
• Senate Sec. 1552, Reforms Relating to Inactive Security Clearances (Sec. 1552)

Provisions for which PSC supports the intent but has concerns about implementation
The House and / or Senate versions of the bill contain provisions for which PSC supports the underlying congressional intent but about which PSC has strong concerns about implementation. As highlighted below, PSC recommends actions that will lead to better outcomes that can successfully achieve committee intent.

• Senate, Sec 827, Modifications to Other Transactions

While PSC generally supports the deliberate use of Other Transaction Authority (OTA) to streamline and accelerate the development, prototyping, and initial fielding of cutting edge, innovative solutions for the warfighter, we have strong concerns about (1) the lack of oversight and safeguards for follow-on production and (2) the potential overreliance and overuse of OTA as a de facto sole source authority.

Speed is a defining feature of Other Transaction agreements, along with increased flexibility for companies to work more closely with government customers. That said,we ask the committee to consider potential longer-term implications for vendor lock and loss of full and open competition, especially related to production and fielding at scale, that would come with exercising OTA without specific limitations over the full life-cycle of a capability set.

• Senate Sec. 876, Assessment of Competitive Effects of Defense Contractor Transactions

Mergers and acquisitions are a free market vehicle for companies to evolve, with the potential to provide improved services and solutions for the government. It is important to note that the contraction of the industrial base over the last 40 years isnot solely a product of mergers and acquisitions. We appreciate that both versions of the FY26 NDAA address acquisition issues, including but not limited to providing some relief from long-standing barriers and constraints that make market entrance more difficult for new or commercial companies.PSC recommends that the Armed Services Committees undertake a broader study ofallof the levers at the disposal of both the Department and Congress to improve participation and growth in the industrial base.

• Senate Sec. 867, Reform of Contractor Performance Information Requirements

PSC understands the intent of the Senate provision is (1) to reduce subjectivity and inconsistency in contractor evaluations; (2) lessen the administrative burden on contracting officers by limiting reporting to prior contractor failures or poor performance; and (3) to ensure the government can more easily identify--and presumably avoid--contractors with a history of poor performance. With that in mind, PSC believes that positive data are essential to uphold the principles of revised FAR 1.102 to “promote merit” and make contract awards to companies that “demonstrate superior ability to perform.” Without reviewing and leveraging positive evaluations and by focusing only on negative information, the merit-based system that underpins the Federal Acquisition Regulations collapses, and mediocracy prevails.

Moreover, this provision provides a competitive advantage to new and commercial firms, who have no past performance information (positive or negative) with the government, increasing risk to the government of awarding contracts to such companies. Balancing positive and negative data ensures agencies can both avoid risks and identify / reward excellence to meet program and mission objectives.

As an alternative, PSC welcomes the opportunity to work with the armed services committees on how the government can leverage past performance data in a more efficient, effective manner. Currently there are no incentives for the acquisition workforce to provide timely and accurate information, equating the evaluation process to a “box-checking exercise” rather than a meaningful effort to capture data relevant to the program, contracting, and audit offices. PSC believes that the following items should be considered for this provision:

• Positive data is essential to uphold revised FAR 1.102’s principles to “promote merit” and making awards to contractors who “demonstrate superior ability to perform.” Without positives, FAR meritocracy collapses, and mediocracy prevails. Balanced positive and negative data ensures agencies can both avoid risks and identify/reward excellence to best meet program and mission objectives. Furthermore, this provision provides an advantage to new companies who do not have past performance and increases risk to the government. PSC recommends that positive performance should still be measured and highlight positive contractor outcomes.
• Additionally, oversight at the leadership level and ratings at the agency would decrease the probability of improper and retaliatory evaluations. PSC recommends annual reviews of the effectiveness of the process (vs three years) to include a review of rebuttal content and frequency. Rebuttals should also be reviewed by the Head Contracting Authority (HCA) and adjudicated or approved according to the HCA’s review. Approval at this level will ensure that the intent of the actions laid out in the NDAA are achieved.

By working with PSC and the Department, the Armed Services Committee can identify a better approach to contractor evaluations that produces more accountability on companies, better information to the acquisition workforce, and in turn better outcomes and solutions for the Department.

Provisions which PSC opposes
Set Asides for Non-Traditional Defense Contractors

• Senate Sec. 821, Modification to Nontraditional Defense Contractor Definitions
• Senate Sec. 823, Exemptions for Nontraditional Defense Contractors
• Senate Sec. 824, Modification to Treatment of Certain Products and Services as Commercial Products and Commercial Services

The combination of these sections creates a de facto set-aside for large “nontraditional” defense contractors—resulting in decreased competition, a smaller industrial base, and a non-competitive advantage to a select few in perpetuity. When the National Defense Authorization Act for Fiscal Year 1994 (PL 103-160), defined “nontraditional”, the intent was noble: Congress sought to create alternate pathways for innovative solutions that could be more readily accessed by the government. However, changes in the federal marketplace over the past 30 years mean that some “nontraditional” companies have gained decades of experience in government contracting and grown to the size of large “traditional” defense contractors.

PSC certainly appreciates—and continues to advocate for—companies that provide commercial and / or innovative solutions; we want them to have access to the Department’s acquisition system so they can provide cutting-edge, innovative technology and solutions for the warfighter’s benefit. But in the interest of a competitive playing field that also brings efficiency and effectiveness to these same warfighters, we cannot advocate for set-asides and preferential treatment for large companies, which is what these Senate provisions would enact into law. Instead, the focus should be on leveling the playing field and providing for full and open competition, as appropriate and as required elsewhere in law, is what sets our country apart in the development and delivery of national security solutions.

Therefore, PSC offers two common-sense recommendations for consideration. First, Congress should ensure that any reforms in this area reduce regulatory burdens for the entire DIB, and companies of all sizes, with varying business models. In the interest of national security, we need the rising tide to raise all ships. Second, Congress should establish limitations vis-à-vis the “nontraditional” defense contractor definition, requiring those qualifying companies to graduate from their “nontraditional” status (e.g., like small businesses grow beyond their set-aside status). Taken together, these two recommendations will incentivize “nontraditional” companies to offer solutions to the defense enterprise while ensuring that over the longer-term, our nation can avoid market distortions that result from longer-term reliance on set-asides and preferential treatment beyond the original intent. It is also important to consider how to reduce regulatory burdens as small and / or “nontraditional” businesses when they transition into the commonly applied rules and regulations. Regulatory relief is also imperative to enable greater speed and agility for traditional defense contractors.

• House Sec. 863, Requirement for Contractors to Provide Reasonable Access to Repair Materials and Senate Sec. 836, Instructions for Continued Operational Readiness, S. 2209 Warrior Right to Repair Act of 2025

Rather than parse the multiple amendments provided by the House and Senate, PSC would like to focus on the core issues with the effort associated with “Right to Repair”—which represents strongly-held positions on whether the government should seize intellectual property from their contracting partners. In general, PSC has no objections allowing servicemembers to access needed repair equipment that keeps them operationally ready; indeed, it is truly unfortunate that there have been instances where due to contract language agreed by the government and company alike, servicemembers were not able to have such access in certain situations.

That said, it is widely known that the Department already has the authority to address this issue and can already incorporate the necessary repair clauses into contracts. For example, in May 2025, the Secretary of Defense directed the Department to include those clauses in contracts.

Rather than add unnecessarily to the statutory basis for these actions—and potentially add redundancy and confusion to existing flexibilities—PSC recommends that Congress take the following actions in this area:

• Due diligence in acquisition to include participation from contracting officers to program managers and end users from requirements development to implementation. There are proposals in the House and Senate versions of the FY26 NDAA that promote these activities.
• Investment by the DoD in its acquisition workforce and its intellectual property cadre to protect the government’s interest in negotiating such issues before contract award. Contractors are partners to the government, performing only the work required by contract. The government needs to equip its acquisition professionals with improved training—and develop true expertise--in intellectual property and technical data rights policies to ensure contracts are clear on these issues.
• The Department needs to develop parameters with the intellectual property required to accomplish national security missions. A blanket provision requesting all intellectual property on a contract will not lead to better outcomes; rather, it will result in less participation from the commercial and nontraditional contractors who cannot cede control over their carefully developed and closely held “crown jewels” that translate into their competitive advantage Simply put, intellectual property developed by companies is what keeps them in business, allowing them to offer new, innovative solutions to the government. There is a middle ground that should be considered, such as the “Data-as-a-Service” language from the House-passed NDAA or additional, collaborative discussions between the government and its contracting partners on licensing agreements.

• Amendment to H.R. 3838 – Preference for Domestic Procurement of Professional Services

An amendment offered during House consideration pursues a worthy goal of establishing a preference for American companies in professional services contracts. However, the wording would likely hurt longstanding American companies that currently have foreign ownership. Many companies working in the USA, while officially headquartered in countries who are our allies, they employ thousands of American citizens including many former veterans. To comply with existing DoD security requirements, such companies establish a U.S. entity under Foreign Ownership, Control or Influence requirements with the Defense Counterintelligence and Security Agency. The Trump Administration has recently developed additional requirements addressing security risks and prohibitions for countries of concern.

Also important to note is that these U.S. subsidiary companies all pay U.S. taxes. We will be hurting American citizens who are employed by these companies from countries that are U.S. allies by implementing this amendment as written. We are assuming the positive intent of this amendment to preclude foreign adversaries from participating in government work, but this amendment will not accomplish that goal. We hope the committees will take this into consideration and not further erode competition for best price and solutions from industry.

PSC and its more than 400 member companies appreciate the hard work of both House and Senate Armed Services Committees, and we thank you for your kind consideration of our comments. We stand ready to amplify or further clarify our comments here and to add comments on other provisions of interest and look forward to our future collaboration.

Sincerely,

James W. Carroll
Chief Executive Officer
CC: Members of the House and Senate Committees on Armed Services