House FY25 NDAA Summary
The House NDAA Grows in Size....Some Helpful and Some Less So
The House passed the FY25 NDAA after considering over 1,000 amendments. The following is our assessment of the major defense tech and acquisition elements. We focus on the notable changes relative to the original HASC FY25 NDAA bill.
The following are new provisions following the submittal of hundreds of potential amendments that were not included in the draft HASC bill which we covered in the HASC FY25 NDAA Assessment.
Acquisition Policy and Management
Sec. 802. Prohibition on Contracting with Covered Entities that Contract with Lobbyists for Chinese Military Companies
Requires that companies that work with lobbyists with CCP backed clients should be blacklisted.
Our Take: We agree. While lobbyists have to report their sources of income, it can get murky at times so this prohibition is a good blanket rule. This is likely in response to some notable DC firms being exposed for lobbying on behalf of CCP backed companies like DJI.
Sec. 808. Updated Guidance on Planning for Global Demand
USD(A&S) shall ensure guidance for MDAPs and MTA programs integrates planning for global demand under FMS, direct commercial sales, and other relevant authorities.
Our Take: We agree. It is important to consider Allies and partners as potential buyers early in the lifecycle to shape strategies, budgets, and designs. There is already guidance on Designing for Exportability so this seems to be a reinforcement provision to remind DoD to prioritize it. We do caution requiring bucketing MTA and MDAPs provisions together given MTA has different considerations (speed, risk) and are usually funded at considerably lower levels than MDAP thresholds.
Sec. 809. Prohibition on Contracting with Shipyards Controlled by a Foreign Adversary
DoD may not enter into any contract or other agreement with a shipyard controlled by a foreign adversary
Our Take: This appears logical but given currently global supply chains, this probably requires additional analysis to avoid unintended second and third order effects.
Sec. 809A. Budget Recommendations for Multiyear Procurement of Priority Items
As part of budget submissions (starting in FY26), DoD and OMB shall recommend to Congress contracts for priority items that could be considered for a multiyear contract. These priority items include:
Shipbuilding
Fighter Aircraft
Submarines
Ground Vehicle Systems
UAS
Hypersonics
Any goods needed to address supply chain disruptions and constraints.
Our Take: This is a worthy provision but conceptually this is already happening today (as indicated by the many requests for munition increases) so this appears to be an exhortation to DoD to expand its requests. The challenge however (as seen with munitions) is that multi-year authority is only one part of the puzzle. The appropriators must fund the accounts appropriately to support the multi-year request - which does not always happen today.
Sec. 809D. Review Panel on Fair and Reasonable Pricing and Contract Oversight
SECDEF shall establish a review panel on fair and reasonable pricing and contract oversight of sole-source contracts for munitions and weapons systems contracts, including related contracts for services and spare parts. The review panel shall include Director Price, Cost and Finance; DCAA Director, DCMA Director, DoD IG individual; and two experts appointed by SECDEF with expertise in contract pricing, negotiations, and oversight.
Panel shall identify an extensive and representative sample of all fixed priced contracts and subcontracts >$10M to include the last 15 years and performance is at least 75% complete. The panel shall compare and report to SECDEF and SASC/HASC a comparison of negotiated contract prices and actual cost outcomes. Determine if pricing is fair and reasonable and if excessive pricing is widespread or unique to certain weapon systems, sectors, or companies.
If any company who has entered into a contract or subcontract per 10 USC Chapter 271 (TINA) that refuses to provide actual cost information to include all internal estimates to complete for unfinished work, the IG shall use its subpoena powers to compel the delivery of requested information.
Our Take: While it is reasonable to have a group review pricing and contract oversight, this appears to focus hostility on fixed priced contracts and perceived price gouging. Subpoena powers to compel release of internal cost information is outrageous. That would immediately deter companies from doing business with the DoD and USG. Those behind this provision need to read this post on rethinking contracting norms.