FY2017 NDAA's Substantial Impact on Federal Procurement

On Dec. 23, 2016, President Obama signed into law the National Defense Authorization Act (NDAA) for Fiscal Year 2017 (S. 2943). See P.L. 114-328, 130 Stat. 2000 (Dec. 23, 2016). As with every NDAA since FY 2010, the FY 2017 NDAA stalled in Congress before being enacted well after the start of its fiscal year. In his signing statement, the president objected to or criticized several provisions of the FY 2017 NDAA (e.g., for “impos[ing] extensive organizational changes on” DOD and for the failure to close the detention facility at Guantanamo Bay). See obamawhitehouse.archives.gov/the-pressoffice/2016/12/23/statement-president-signingnational-defense-authorization-act-fiscal.

The FY 2017 NDAA includes significant procurement-related reforms and changes, most (but not all) of which are included, as usual, in “Title VIII—Acquisition Policy, Acquisition Management, and Related Matters.” More specifically, Title VIII includes 88 provisions addressing procurement issues, as compared to 77 provisions in the FY 2016 NDAA, 37 provisions in the FY 2015 NDAA, 13 provisions in the FY 2014 NDAA, 44 in the FY 2013 NDAA and 49 in the FY 2012 NDAA. Some of these FY 2017 NDAA statutory changes will not become effective until the Federal Acquisition Regulation and Defense FAR Supplement (and, depending on the circumstances, certain other regulations) are amended. As discussed below, provisions in other titles of the FY 2017 NDAA are also important to procurement law.

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Also within 180 days of the FY 2017 NDAA’s enactment, the secretary must “issue guidance addressing the training and development of the [DOD] workforce engaged in the procurement of services, including those personnel not designated as members of the acquisition workforce.” FY 2017 NDAA § 803(b)(1). As noted in the joint explanatory statement, this amendment expands “the workforce to be developed and trained on the acquisition of services” “from the acquisition workforce to all [DOD] employees engaged in the procurement of services.” H.R. Rep. No. 114-840, at 1091 (2016) (Conf. Rep.).

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Additionally, DCAA may audit direct costs of DOD cost contracts and “shall rely on commercial audits of indirect costs without performing additional audits, except that in the case of companies or business units that have a predominance of cost-type contracts as a percentage of sales, the Defense Contract Audit Agency may audit both direct and indirect costs.” The joint explanatory statement also encourages the DCAA director “to examine the potential for electronic quality management systems to improve the ability of DCAA to conduct thorough and timely audits.” H.R. Rep. No. 114-840, at 1098 (2016) (Conf. Rep.).

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