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Through FY2023 Defense Authorization Bills, Congress Looks To Tighten Federal Procurement Sourcing Requirements And Accelerate Acquisitions – Government Contracts, Procurement & PPP


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Congress returned this week from the Thanksgiving holiday to
face a full agenda and a short runway to “keep the lights
on” in the federal government.

In late September, President Biden signed a continuing
resolution that funds the government through December 16, 2022.
That date is quickly approaching, and a number of must-pass
measures — including the annual National Defense
Authorization Act (“NDAA”), which specifies budgets and
policies of the Defense Department — remain unfinished

Tossed in the mix this year is a notable interest among
lawmakers in both the House and Senate to use the authorization and
appropriations processes to secure reforms to federal procurement
policy. Accordingly, organizations that contract or do business
with the federal government would be wise to track the often
fast-paced and ever-evolving funding negotiations as the end of the
calendar year (and with it, the 117th Congress) grows nearer.

Through the NDAA for Fiscal Year 2023, Congress appears primed
to tighten sourcing and domestic content requirements in federal
procurement, fast-track certain acquisitions, and clarify the
effect of new executive orders on existing government contracts,
among other procurement-related proposals. For example:

  • Tightened Sourcing and Domestic Content Requirements and
    Banning Business with Russia

    • In July, the House of Representatives passed its version of the
      NDAA for FY23. Sec. 807 of the House NDAA would enhance domestic
      content requirements for “major defense acquisition
      programs” by increasing the Buy American Act cost thresholds
      for such programs.

    • Sec. 803 of the Senate’s version of the NDAA — which
      awaits further consideration by the full Senate — would
      prohibit the Secretary of Defense from entering into, extending, or
      renewing “a contract to procure any major defense acquisition
      program” that contains items made in China or by companies
      owned or controlled by China.

    • Sec. 5866 of the House NDAA would prohibit federal agencies
      from entering into, extending, or renewing a contract “with a
      company that continues to conduct business operations in territory
      internationally recognized as the Russian Federation,” unless
      and until Russia’s military aggression in Ukraine ceases. This
      prohibition is subject to limited exceptions, such as contracts for
      humanitarian purposes.

  • Accelerating Certain Defense Acquisitions and “Other
    Transaction” Authority

    • Sec. 804 of the Senate NDAA would revise and codify Defense
      Department rapid acquisition procedures for responding to
      “urgent operational needs,” including “combat
      emergencies,” cyber attacks, and other exigencies. It grants
      authority for the Secretary of Defense to waive, in certain
      instances, “any provision of law or regulation
      addressing…the solicitation, selection of sources, and award of
      the contracts for procurement of the capability to be

    • Sec. 817 of the House NDAA would clarify the Defense
      Department’s authority to carry out certain prototype projects
      as follow-on production contracts without using competitive
      procedures, “even if explicit notification was not listed
      within the request for proposal for the transaction[.]”

  • Addressing Contract Changes Compelled by Executive

    • Sec. 821 of the Senate NDAA would clarify that the addition
      into an existing contract of a clause implementing an executive
      order “shall be treated as a change directed by the
      contracting officer pursuant to, and subject to, the Changes clause
      of the underlying contractual instrument.” This could have the
      effect of assisting contractors who seek equitable adjustments when
      new executive orders come to bear on existing contracts.

These reflect just a topline sampling of procurement reforms
contemplated in the House and Senate versions of the NDAA. Of
course, both chambers of Congress must pass the same legislation
— not simply their own respective versions of it. And while
the House passed its bill earlier this year, further action awaits
in the Senate on its own version. In the meantime, House and Senate
leaders have been “preconferencing” the NDAA and working
out their differences prior to the start of the lame duck

As Congress has passed an NDAA for over 60 consecutive years,
there is political pressure to sustain that tradition and enact a
final bill by year end. With an incoming Republican-led House,
however, there is also political pressure to temporarily delay
further consideration of the NDAA into January 2023 and, thus, the
beginning of the new Congress.

While it remains to be seen whether the final NDAA hews closer
to the Senate or House versions of the bill, it is reasonable to
expect at least some of these proposed procurement reforms will
eventually find their way to the President’s desk.

Accordingly, government contractors of all sizes should be
cognizant of how such reforms may impact their competitiveness and
compliance risks in 2023 (and thereafter). If you have questions,
please reach out to these Venable authors as we continue to monitor
the NDAA’s progress.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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