A Few Interesting Items in the Draft House NDAA for FY 2026

Last week, the House Armed Services Committee released H.R. 3838, which is a draft markup of the House of Representatives’ version of the National Defense Authorization Act (NDAA) for Fiscal Year 2026. According to Senate Majority Leader, John Thune, the Congress hopes to get a final version of the NDAA passed and sent to the President’s desk by the end of September. Whether that is possible remains to be seen, so for now industry will need to content itself with reviewing the draft versions of the bill that are coming out of the Senate and House committees. Today’s article takes a brief look at the draft markup of the House version of the bill, which it calls the “Streamlining Procurement for Effective Execution and Delivery and National Defense Authorization Act for Fiscal Year 2026.”

As an aside, the markup contains provisions in a variety of statuses. Some seem complete, while others appear to be still in progress. There are also some items of special interest included.

Small Business Matters

Section 852 is the only one dealing with small business in any detail. It authorizes the Department of Defense (DOD) to award one additional sequential Phase II Small Business Innovation Research (SBIR) Program award or one additional sequential Phase II Small Business Technology Transfer (STTR) Program award each fiscal year for continued work on projects for which a small business concern received a Phase I award.

The House requests that the Secretary of Defense minimize the number of awards made under this authority and limits the funds allocated to 3% of the funds allocated to the SBIR program or STTR program of the DOD, as applicable.

Software-Defined Hardware Programs

Title XVIII of the markup contains an item of special interest called “Streamlining Procurement for Effective Execution and Delivery.” This Title concerns several subjects, including the following:

Middle-tier Acquisition Authority for Rapid Prototyping and Fielding – The HASC directs the Secretary of Defense to brief them on (1) opportunities to utilize contracting authorities to accelerate the integration of autonomy-enabling software into DOD programs and projects and (2) an assessment of existing barriers to a software company serving as a prime contractor for such programs.

Comment – This language appears to imply that the HASC wants the DOD to find ways to bypass the need for systems integrators to handle autonomy integration, an approach that would be consistent with recent reviews of consulting contracts at the DOD.

Addressing the Backlog of Defense Federal Acquisition Regulation Supplement (DFARS) Cases – The HASC notes that there are more than 50 open DFARS cases, 39 of which implement provisions enacted in prior NDAAs. Additionally, more than 25% of these open cases have been pending for more than 5 years. This includes a case on contractor business system oversight originating in the NDAA for Fiscal Year 2017!

The HASC therefore directs the Under Secretary of Defense for Acquisition and Sustainment to review the DOD’s rulemaking processes, identify roadblocks, and propose solutions for removing the backlog.

Comment – Final rules coming from closing these cases will undoubtedly affect industry partners. They may even affect specific programs. Those interested in seeing which DFARs cases remain open as of July 2025 should click here.

Leveraging Lessons Learned to Strengthen the U.S. Industrial Base – Recognizing there is a national crisis in industrial production, this section requires the Secretary of Defense to identify the ways that DOD’s acquisition policies may be delaying the delivery of needed capabilities, define lessons learned from conflicts in the Middle East and Europe, and recommend ways the Defense Industrial Base (DIB) can be strengthened to provide a “surge” capability for military production.

Comment – Strengthening the DIB has been a concern for several years now. If this provision makes it into the final NDAA it could result in changes to acquisition policy that speed the procurement of capabilities. This would be a welcome change for both DOD customers and industry partners alike.