2024 National Defense Authorization Act

President Biden signed into law the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2024 on December 22, 2023. The yearly legislative measure provides direction on the policies and financial allocations for defense agencies. It covers procurement-related areas and will lead to regulatory actions, resulting in new contract requirements under the Defense Federal Acquisition Regulation Supplement (DFARS) and modifications to Department of Defense (DoD) acquisition policies.  

The FY24 NDAA authorizes $886.3 billion for national defense discretionary programs. The diagram below details the funding levels across accounts:

Key provisions for government contractors include: 

• Cost and Pricing (sections 824, 826, 827) 
• Small Business Contracting (sections 862, 863, 864, 865) 
• Commercial Contracting (sections 801, 811, 813, 875) 

Cost and Pricing 

Section 824 clarifies that the DoD is authorized to use appropriated funds to cover claims for relief for contractors and subcontractors affected by inflation. This authority for relief is extended until December 31, 2024.  

Section 826 prolongs the DoD’s ability to amend fixed-priced contracts, allowing for economic price adjustments to counteract the impact of inflation. 

Section 827 requires that the DFARS be revised to: 

1. exempt all software contract and subcontracts from Earned Value Management System (EVMS) requirements 
2. impose EVMS requirements for cost or incentive contracts with a value between $20 million and $50 million 
3. require contractors to use an EVMS for all awarded contracts with a value between $50 million and $100 million 

Small Business Contracting 

Section 862 shortens the timeframe for contractors to notify the contracting officer of overdue payments to subcontractors from 90 days to 30 days. This provision empowers contracting officers to adjust the contractor’s past performance information due to an unjustified delay in making timely payments to a subcontractor, both before and after closeout. Additionally, it mandates contractors to collaborate with contracting officers to facilitate full payment to the subcontractor.  

Section 863 raises the government-wide target for participation for Service-Disabled Veteran-Owned Small Businesses (SDVOSBs) in federal contracts from 3 to 5 percent. 

Section 864 eliminates the small businesses’ capability to self-certify as an SDVOSB. Going forward, certification by the Small Business Administration is required for each prime contract and subcontract award considered for meeting SDVOSB goals.   

Section 865 necessitates the inclusion of a new clause compelling contracting officers to consider the past performance of affiliates when assessing offers from small businesses.  

Commercial Contracting 

Section 801 stipulates that, upon request from a contractor or subcontractor proposing the relevant product or service, the DoD is obligated to disclose its memorandum on whether the specific product or service is determined to be commercial or noncommercial.  

Section 811 directs the DoD to create an efficient process for formulating its contract requirements, with specified objectives aimed at swiftly confirming the suitability of commercial products and services to fulfill the needs of the DoD.  

Section 813 mandates that the Secretary of Defense must conduct a minimum of four acquisition exercises per year to procure innovative commercial products and services through general solicitation competitive procedures.  

Section 875 requires DoD to undertake a study to assess the feasibility and advisability of three aspects: 

1. establishing a default determination that acquired products and services are commercial and exempt from a commerciality determination, 
2. requiring a determination of noncommercial status before utilizing procedures outside of FAR Part 12, and 
3. enforcing the use of commercial procedures under FAR Part 12 unless a product or service is determined not to be commercial. 

 Find the FY24 NDAA here: FY24 NDAA