Small Business Provisions in the 2021 National Defense Authorization Bill

Published: August 26, 2020

Federal Market AnalysisNational Defense Authorization ActPolicy and LegislationSmall Business

The legislation has small business provisions that impact policy, operations, and acquisitions at the Department of Defense and beyond.

Each fiscal year (FY) the US Congress passes a National Defense Authorization Act (NDAA) covering broad provisions for the Department of Defense (DOD) and defense-related activities in other federal departments. It is very common for Congress to use the NDAA to address acquisition and other contracting policy priorities – including small business contracting – that drive acquisition policy and practice at the DOD and across federal agencies.

To date, the bill is still in process of being finalized, but the House of Representatives has passed their version, H.R. 6395 and the Senate has passed their version, S. 4049. The most recent version of the amended bill text is available on the H.R. 6395 page and has been placed on the Senate’s legislative calendar for consideration, but it is still unclear of the timing of likely final passage.

Looking at the House and Senate drafts and what has made it into the current version there are several small business related provisions that likely may make it into the final reconciled bill that goes to the president for signing.

Provisions under consideration in the draft FY 2021 NDAA include:

  • Small Business Verification Process: Transfers the verification and certification of veteran owned small businesses (VOSB) or service-disabled veteran owned (SDVO) businesses to the Small Business Administration. Requires that Veterans Affairs provide to SBA verification of an individual’s status as a veteran or a service-disabled veteran, but otherwise moves most functions to the SBA. The agencies have two years to make the transition.
  • Increasing SB Participation: Directs OMB to submit to Congress within four months a plan to increase small business participation in agency-wide or government-wide contracts (GWACs), including best in class (BIC) contracts. The plan would need to be implemented within the two months following submission.
  • 8(a) Program Extension: Enables small businesses participating in the 8(a) program to extend their participation by 1 year, regardless of whether the business previously elected to suspend participation in such program pursuant to guidance from the SBA.
  • Adjustments for Scope Increases: Authorizes a small business performing a federal construction contract to submit a timely request for an equitable adjustment to the agency if the contracting officer directs a change in the work within the general scope of the contract without the agreement of the small business.
  • Category Management Exemption: Amends the Small Business Act to exempt 8(a) and specified other contracts classified as tier 0 in the Spend Under Management tiered maturity model from all Category Management rules and requirements, and for successor strategies for contract consolidation.
  • SB Joint Venture Past Performance: Amends the Small Business Act to direct SBA to establish regulations requiring:
    • Contracting officers to consider the record of past performance of a small business’s participation in a joint venture when evaluating the past performance the small business.
    • Small businesses to inform contracting officers of the duties and responsibilities the small business carried out as part of the joint venture.
  • Past Performance of SB Sub-contractors: When a small business that was a first tier subcontractor on a contract is submitting an offer for a solicitation, this provision requires the prime contractor for that contract to submit to the contracting agency issuing the solicitation, or to the small business, a record of the small business’s past performance.
    • Contracting officers are instructed to consider such past performance in evaluating the small business’ offering for a prime contract. SBA and FAR rules are to be amended or revised to reflect the requirements.

Provisions to address ongoing issues and enhance small business contracting at the DOD and beyond are familiar inclusions in the yearly NDAA. Many of the above provisions take incremental actions that would build on existing and past efforts to advance small business participation in the federal marketplace as well as improve how agencies administer their small business programs.