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FY2016 NDAA's Substantial Impact On Federal Procurement

On Nov. 25, 2015, President Obama signed into law the National Defense Authorization Act for Fiscal Year 2016 (S. 1356). See P.L. 114-92. As with very NDAA since FY 2010, the FY 2016 NDAA stalled in Congress before being enacted well after the start of its fiscal year. However, unlike other recent NDAA legislation, on Oct. 22, 2015, the president vetoed the initial version of the FY 2016 NDAA passed by Congress (H.R. 1735), because, among other reasons, the bill failed to authorize funding for defense-related spending “in a fiscally responsible manner.” See (President Obama’s Oct. 22, 2015 veto message); see also (President Obama’s Nov. 25, 2015 signing statement for the FY 2016 NDAA).

The president’s FY 2016 budget request exceeded the discretionary spending caps imposed by the Budget Control Act of 2011, P.L. 112-25, 125 Stat. 240, but included a proposal to avert sequestration by increasing the caps and offsetting the increased spending through tax law changes. H.R. 1735 would have authorized essentially the full amount of defense appropriations requested by the president, but would have done so without changing the discretionary spending caps. In his veto message, the president contended that the bill “relie[d] on an irresponsible budget gimmick” that would have avoided breaking the spending cap by using $38 billion in Overseas Contingency Operations (OCO) funding, which is exempt from the spending caps, to fund the president’s requested defense base budget. The president rejected the bill due to his concern that use of OCO funding to support the defense base budget would “not provide the stable, multi-year budget upon which sound defense planning depends.” The president also objected that the bill’s circumvention of defense spending caps without providing similar relief for nondefense spending “further harms our national security by locking in unacceptable funding cuts for crucial national security activities carried out by non-defense agencies.”

Accordingly, the president vetoed this initial version of the FY 2016 NDAA. The Bipartisan Budget Act of 2015 (BBA), signed into law by the president on Nov. 2, 2015, resolved this impasse. See P.L. 114-74. The BBA raises the FY 2016 and FY 2017 discretionary spending caps for both defense and nondefense programs and adjusts the discretionary spending limit for OCO appropriations for both national defense and international relations.

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