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On Monday, August 13, 2018, President Trump signed into law the H.R. 5515, the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (FY 2019 NDAA), the earliest an NDAA has been signed in over a decade.  The FY 2019 NDAA includes several provisions relevant to contractors, including replacing the definition of “commercial item” with “commercial product” and “commercial services,” discouraging the use of lowest price technically acceptable contracting, and a clause designed to accelerate payments to small businesses.

  • Section 822 requires DoD to: (1) study the frequency and effects of bid protests involving the same contract award or proposed award that have been filed at both the Government Accountability Office and the Court of Federal Claims; and (2) develop a plan, by December 1, 2019, for an expedited bid protest process for DoD procurements valued at less than $100,000.
  • Section 836 eliminates the statutory term “commercial item” – which encompassed both products and services – and creates two new, separately defined terms: “commercial product” and “commercial service.”  This section of the NDAA also makes numerous other statutory changes to reflect the new terminology and to identify where statutory provisions apply to commercial products, commercial services, or both.  These changes are effective January 1, 2020.  This section further requires DoD to submit an implementation plan to the Committees on Armed Services of the House and Senate that includes not only a timeline for substantive and technical conforming changes but also policy reviews, such as analysis of the extent to which commercial products and services should be treated similarly.
  • Section 838 grants the General Services Administration additional authority to develop competitive procedures for procurements made through commercial e-commerce portals.  For these procurements, the NDAA maintains the current Micro-Purchase Threshold (MPT) of $10,000, unlike earlier versions that had proposed increasing the MPT to $25,000.
  • Section 852 directs DoD to make prompt payments to small business concerns, with the goal of making payment within 15 days of receiving an invoice.
  • Section 866 allows the Secretary of Defense or a military department Secretary to “authorize use” of a contractor’s technical data during  pending litigation at an agency Board of Contract Appeals (Board) or the United States Court of Federal Claims (Court) to determine the extent of the government’s rights in that data.  To exercise this authority, the Secretary need only provide notice to the contractor (or subcontractor) and determine in writing that “compelling mission readiness requirements” will not permit awaiting the Board’s or Court’s final decision.
  • Section 873 requires the Department of Defense (DoD) to collect, analyze, and leverage data around the use of its Other Transaction Authority Agreements (OTAs) and to use that data to update policy and guidance related to the use of OTAs.
  • Section 875 removes the requirement for agencies to complete a Determination & Findings prior to using an Office of Management and Budget approved Government-Wide Acquisition Contract.
  • Section 880 encourages federal agencies to avoid, to the maximum extent practicable, the use of lowest-price, technically acceptable source-selection criteria in procurements predominately for the acquisition of: (i) “information technology services, cybersecurity services, systems engineering and technical assistance services, advanced electronic testing, audit or audit readiness services, health care services and records, telecommunications devices and services, or other knowledge-based professional services;” (ii) “personal protective equipment;” or (iii) “knowledge-based training or logistics services in contingency operations or other operations outside the United States, including in Afghanistan or Iraq.”
  • Section 881 permanently extends the authority provided in Section 806 of the Ike Skelton National Defense Authorization Act for Fiscal Year 2011 (Public Law 111–383) regarding the management of supply chain risk, and allows the Secretaries of Defense, Army, Navy, or Air Force to exclude certain sources for the purpose of reducing supply chain risk, and limit the disclosure of information relating to the basis for such exclusions.
  • Section 885 requires DoD to develop a process and procedures for limiting foreign access to technology through contracts, grants, cooperative agreements, or other transactions, when such limitation is in the interest of national security.
  • Section 890 requires DoD to establish a pilot program to reform and accelerate the contracting and pricing processes associated with contracts in excess of $50,000,000; the program may include no more than ten contracts, and none of the selected contracts may be part of a major defense acquisition program.

Some of these provisions (along with many other noteworthy sections) require promulgation of regulations that will bear close scrutiny by contractors.