Select Acquisition Provisions in the FY 2022 National Defense Authorization Act

Key Takeaways

• Congress is authorizing the exploration of avenues beyond Other Transaction Authority for the DOD to procure and test commercial technologies.
• The focus on adopting commercial and emerging technologies hints concern is high that the U.S. is falling behind peer competitors.
• DOD’s stated modernization priorities hint at areas where the exploration of commercial technology could take place first.

After having passed a draft version of the National Defense Authorization Act back in September, the U.S. House of Representatives ended up scrapping much of it in favor of taking up the U.S. Senate’s version of the NDAA. This new version of the NDAA (S. 1605) passed the House on December 7, 2021.

The new bill contains several provisions concerning the Department of Defense’s acquisition of commercial technologies that will be of interest to industry. This post discusses a few of these provisions and the possible implications for the defense technology market.

Acquiring Commercial Technologies

Sec. 807 Assessment of Impediments and Incentives to Improving the Acquisition of Commercial Products and Commercial Services. Calls for an assessment identifying impediments to the DOD’s acquisition of commercial technologies including 1) policies, regulations and oversight processes; 2) acquisition workforce training and education; 3) the role of requirements in determining acquisition pathways; 4) the role of competitive procedures and source selection procedures; 5) the role of planning, programming and budgeting; 6) systemic biases in favor of custom solutions; 7) risks presented to contracting officers and acquiring officials; and 8) potential reforms that do not impose additional burdensome and time-consuming constraints on the acquisition process. ?

Sec. 834. Pilot Program to Accelerate the Procurement and Fielding of Innovative Technologies. This section instructs the Secretary of Defense to establish a competitive, merit-based pilot program to accelerate the procurement and fielding of innovative technologies with respect to (1) reducing acquisition or life-cycle costs; (2) addressing technical risks; (3) improving the timeliness and thoroughness of test and evaluation outcomes; and (4) rapidly implementing such technologies to directly support defense missions.

Market Implications: The DOD has already received the authority from Congress to explore the adoption of commercial technology via prototypes acquired through Other Transaction Agreements (OTAs). These new provisions appear to side-step the OTA procurement method by authorizing the Secretary of Defense to identify and test new ways of acquiring commercial capabilities. Industry should keep an eye on this pilot effort because it may lead the DOD to explore the use of a web-based ecommerce-style enterprise marketplace where capabilities can be purchased as easily as ordinary consumers using Amazon, Wal-Mart, or eBay. Should the DOD move in that direction – even as a pilot program – it could provide a business opportunity for cloud providers.

Emerging Technologies

Sec. 833 Pilot Program on Acquisition Practices for Emerging Technologies. Directs the DOD to establish a pilot program for accelerating the transition of emerging technologies into acquisition programs or into operational use. The Under Secretary of Defense for Acquisition and Sustainment shall identify and award agreements for at least four new projects supporting high-priority defense modernization activities, with special consideration given to offensive missile capabilities; space-based assets; personnel and quality of life improvement; energy generation and storage; and any other area activities the Under Secretary determines appropriate.

Market Implications: Although this provision only authorizes another pilot program, the implications of a successfully-executed pilot could be far-reaching. The provisions mentioned above make it clear that DOD is looking for ways to accelerate the acquisition and use of commercial technologies. Emerging technologies fall under this same rubric. This provision provides the DOD with the flexibility to test additional, new technology acquisition methods, potentially creating business opportunity for companies offering sensor, Internet of Things and analytics-based solutions.