NDAA Proposals Mix Good with the Not So Good

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Recently, the Defense Department sent Congress legislative proposals for the fiscal year 2021 National Defense Authorization Act. Like much in this pandemic year, these came late in the cycle but could affect some foundational aspects on how industry partners with the department to deliver capabilities and services to warfighters.

Beneficial proposals include amending the Defense Production Act to address critical shortfalls; security vetting for risks associated with allegiance, foreign influence and foreign preference; and several addressing modernization.

The nation’s reliance on items from peer competitors continues to impact critical programs raising concerns of a sudden loss of supply. The department’s proposal postures the DPA Title III program to mitigate shortfalls in the supply chains for rare earths; critical chemicals for missiles and munitions; hypersonic and strategic systems; and radiation-hardened electronics. This would remove spending limits based on anticipated funding needs to sustain long-term investments.

Regarding vetting, proposed legislation would clarify populations for which the department has authority to use the centralized screening process established under U.S. code while not increasing or decreasing those affected. This would provide the authority to screen lawfully obtained personally identifiable information of all individuals participating in Defense Department-funded research to determine whether they pose a threat to critical technologies relevant to national security.

This would be accomplished by screening for undue foreign influence, participation in foreign talent programs such as China’s Thousand Talents Program, and other personnel security concerns. While the department lacks authority to screen non-defense affiliated individuals participating in Pentagon-funded research, this proposal provides an approach to decrease risk.

There are, however, significant areas of concern. Key among them is to change the classification of the future years defense program. The department proposes to no longer produce an unclassified budget projection. While the National Defense Industrial Association shares leadership’s concern about protecting information critical to national security, it does not believe unclassified resourcing projections — provided since 1989 — put the nation at risk.

The future years defense program provides for critical public and congressional oversight and investment signaling to the defense industrial base. If the unclassified budget projection warrants the classification of certain data, it should be by exception.

Besides the stated security fears, the department expressed concern for sharing too much information with industry. This unfounded worry is a serious step back from the transparency and collaborative efforts the Pentagon has championed.

Most troubling, classifying the program will disproportionately hurt small businesses and hinder current and future competition. Small businesses, nontraditionals and new entrants have limited investment dollars and limited insights into classified programs. They need access to dependable information to shape their research-and-development decisions. Issuing only a classified future years defense program places these companies at a distinct disadvantage.

Also troubling is a proposal affecting the “Disclosure of Certain Sensitive Information to DoD Contractors.” It would take the litigation exception model from 10 U.S. Code 129 allowing sensitive information to be turned over for the express purpose of litigation and expand it outside this context.

In the current framework, non-disclosure agreements are between the government and the litigation support contractors. The proposal would allow disclosure to a broad category of information to support contractors who would be signing non-disclosure agreements with the government and not the primary contractor. From an industry perspective, this gives the contractor zero visibility of whom outside the government has access to the information.

Moreover, it may cause companies to face ramifications for unknown disclosures while there is no incentive for the government to track non-disclosure agreements or breaches of them. An agreement between the government and a covered support contractor does not provide the owner of the “sensitive information” with adequate ability to enforce the owner’s rights in a timely and direct manner against a covered support contractor misusing the information. This makes holding the breaching party accountable extremely difficult.

Lastly, the Pentagon proffered a proposal regarding performance-based payments that would reverse congressional reforms by recoupling their total costs incurred. Congress explicitly decoupled performance-based payments from incurred costs by amending the contract financing statute to read “[p]erformance-based payments shall not be conditioned upon costs incurred in contract performance but on the achievement of performance outcomes.” This proposal would ignore policy guidance from Congress to focus on performance outcomes rather than costs.

The Federal Acquisition Regulation clause on the payments does not include a limitation to total cost incurred and no other agency routinely limits performance-based payments to total costs incurred.

The department would better advance the interests of both the warfighters and taxpayers by negotiating meaningful performance milestones and ensuring contractors meet those milestones prior to receiving payments.

With attention back on legislating and eventually passing an NDAA, the association looks forward to Congress incorporating the best of these proposals and giving the department and the services the policy guidance and resources they need to carry out the National Defense Strategy.

Jonathan Kupperman is a legislative policy associate at NDIA.

Topics: Defense Department