United States: What Contractors Need To Know About The Proposed FY 2018 NDAA

Last Updated: November 22 2017
Article by Daniel E. Chudd, Catherine L. Chapple and Locke Bell

On November 9, 2017, Congress released its conference report on the FY 2018 National Defense Authorization Act.  The NDAA coming out of the conference committee contains numerous provisions that would affect government contractors.  Below we address five of the most significant issues for government contractors in the proposed NDAA – Bid Protests, Debriefings, the Space Corps, Other Transaction Authority, and Software and Technical Data.

Bid Protest Reforms

The FY 2018 NDAA proposed by the conference committee contains potentially significant (and some would say unnecessary) bid protest reforms, though there are a number of caveats that may reduce or eliminate the reforms' significance.  According to the NDAA, the Secretary of Defense is required to carry out a three-year pilot program to "determine the effectiveness of requiring contractors to reimburse the Department of Defense for costs incurred in processing covered protests."  The three-year pilot program is not set to begin, however, until two years after the date of enactment of the 2018 NDAA.  This will, of course, give Congress and the DOD time to review and analyze the RAND report on the effect of protests on DOD procurements (which was required in the FY 2017 NDAA), as well as any recommendations from the Section 809 panel.  Thus, it is entirely possible that, in one of the subsequent NDAAs prior to the start of the pilot program, Congress may rescind the requirement for this pilot program or propose different reforms based on those studies.

With respect to the pilot program itself, the "devil in the details" will likely be seen as the DOD develops rules and regulations to carry out the pilot program.  The FY 2018 NDAA provisions may hamstring the DOD a bit, however.  For example, "covered protests" for which costs should be reimbursed are defined as "a bid protest that was denied in an opinion issued by the Government Accountability Office."  Thus, protests that are withdrawn by the protester prior to a decision, even as a result of outcome prediction, should not be considered "covered protests."  Likewise, protests that are filed at the Court of Federal Claims will not be covered by the pilot program.  Arguably, even protest grounds that are dismissed rather than denied by the GAO may not form a "covered protest."  Contractors would be advised to keep a close eye on statements from the DOD over the next two years to learn about how the DOD intends to implement the pilot program.  We will, of course, be following along here on the blog as well.

Debriefings

Somewhat related to bid protests, though an area that may see reform in the nearer term, are the proposed enhancements to debriefings for certain classes of contracts.  The conference committee version would give DOD six months to draft new provisions relating to required debriefings on DOD contracts.  Specifically, agencies would have to provide redacted versions of written source selection award determinations to offerors, but only for procurements in excess of $100 million (or, if small business or nontraditional contractors are involved and they submit a request, contracts worth between $10 million and $100 million).  For contracts or task orders worth more than $10 million, agencies must provide oral or written debriefings – not both, as the Senate had proposed.  The Senate had also proposed requiring agencies to provide counsel or representatives with a version of the agency record, and shortening GAO timelines for decision, but neither of these changes made it out of conference.

Finally, the conference committee version would require agencies to allow for follow-up questions after debriefings and would keep the debriefing period open until answers were delivered.  A contractor would have two days in which to send additional follow-up questions after the initial debrief, which the agency would have five days to answer.  The five-day period in which to protest and receive a stay would also not begin until answers were delivered to the disappointed contractor who asked them.

Space

The House version contemplated setting up an entirely new Space Corps to manage defense-related space activities, but the conference committee version does not go that far.  Instead, Sec. 1601 would change the institutional structure within the Air Force by, most notably, establishing a Commander of the Air Force Space Command who would be responsible for overseeing the Air Force's space activities and certain other related activities for the broader Department of Defense.  The commander, who would have the rank of general while holding the role, would serve for six years; he or she would also serve as the service acquisition executive for defense space acquisitions.  The new provisions eliminate certain Air Force positions and offices, including Principal Department of Defense Space Advisor (previously known as the Department of Defense Executive Agent for Space); Deputy Chief of Staff of the Air Force for Space Operations; and the Defense Space Council.

Moreover, the revised NDAA leaves open the possibility of a new, dedicated Space Corps, in the future: the new NDAA version would also direct DOD to contract for independent researchers to come up with a plan for establishing a separate military department – outside of the Air Force – dedicated to space operations.

Additionally, the conferees' joint explanatory statement includes the following passage in relation to this provision:

The conferees note that space has been designated as a warfighting domain.  Recognizing the joint nature of this new domain, the conferees believe that United States Strategic Command should develop a concept of operations (CONOPs) on how to conduct warfighting in space.  That CONOPs should be used to guide the Services' space capabilities development and acquisition program.  The conferees expect such CONOPs to be provided to them not later than 180 days after the date of the enactment of this Act.

While this addition is not included within the statutory text, DOD is expected to respond.  The development of this CONOPs will no doubt raise interesting questions of law and is something we will be monitoring.

Other Transaction Authority

In July, the Senate Armed Services Committee used its report on the Senate version of the NDAA for FY18 to voice its strong support for DOD's expanded use of its other transaction authority and other transaction agreements (OTAs):

[T]he committee remains frustrated by an ongoing lack of awareness and education regarding other transactions, particularly among senior leaders, contracting professionals, and lawyers. This lack of knowledge leads to an overly narrow interpretation of when OTAs may be used, narrow delegations of authority to make use of OTAs, a belief that OTAs are options of last resort for when Federal Acquisition Regulation (FAR) based alternatives have been exhausted, and restrictive, risk averse interpretations of how OTAs may be used.  These behaviors force innovative projects and programs into unnecessarily restrictive contracting methods, needlessly adding bureaucracy, cost, and time.

S. Rept. 115-125. The Committee recognized that "[m]aking use of OTAs, and their associated flexibility, may require senior leaders and Congress to tolerate more risk." Id.

It appears Congress hopes to mitigate this risk through education and training of the acquisition workforce rather than any new oversight mechanisms, at least for the time being.  In conjunction with doubling the dollar-value thresholds for DOD's authority to enter into OTAs for prototyping projects — and specifying that these thresholds apply to individual transactions, not overall projects — the FY18 NDAA would require the Secretary of Defense to ensure the management, technical, and contracting personnel responsible for awarding and administering OTAs maintain minimum levels of continuous experiential learning.

The FY18 NDAA also would institute a preference for OTAs in the execution of "science and technology and prototyping programs."  Although the Senate version of the bill would have instituted this preference outright, the final version out of conference limits it to "circumstances determined appropriate by the Secretary."

Finally, the FY 18 NDAA would amend DOD's statutory OTA authority to reference OTA consortia for the first time.  These consortia, built around technical focus areas and composed of often hundreds of industry and academic institutions, are an integral piece of DOD's current and future acquisition landscape.  The FY18 NDAA would specify that, in any prototype subprojects awarded through a consortium to one or more of its members, DOD may provide for the award of a follow-on production contract without further competition.  The codification of this authority, in conjunction with Congress' encouragement, is sure to lead to continued (and perhaps accelerated) growth in DOD's use of OTAs over traditional procurement contracts, a development the procurement community should meet with both excitement and a healthy dose of circumspection.

Software and Technical Data

After the Senate proposed to upend DOD's decades-old framework for distinguishing rights in technical data and rights in software by wedging computer software into the statutory definition of technical data, the post-conference version of the NDAA for FY18 thankfully adopted a much more metered approach.  Under the final version of the bill, DOD would be required, in the acquisition of noncommercial computer software, to "consider, to the maximum extent practicable," the acquisition of all software and related materials necessary to reproduce the software from source code, test the software, and deploy working binary files on system hardware.  To build from this in the future, Congress mandated three pilot programs focused on iterative development and open source software.

With regard to open source software, the conference report removes Senate language that would require DOD to manage all unclassified custom-developed computer software as open source software and publish the software in a public repository, opting instead simply to implement pre-existing Office of Management and Budget policy requiring release of at least 20 percent of new custom-developed code as open source software.  See Office of Management and Budget Memorandum M-16-21, "Federal Source Code Policy: Achieving Efficiency, Transparency, and Innovation through Reusable and Open Source Software" (Aug. 8, 2016).  We expect to see continued action around the initiative to manage DOD software as open source software, as Congress sees "establishing an appropriate repository for open source software [as] critical for maintaining security and also to fostering a community of collaborative software experts."  Although still in its early stages, Congress noted its pleasure with the success of DOD's recent Code.mil open source software initiative.

After substantial changes in last year's NDAA, the NDAA for FY18 gives DOD regulators attempting to update the technical data regulations a chance to catch their breath.  The bill would implement only a requirement to negotiate price for technical data prior to selecting a contractor for the engineering and manufacturing development (EMD) or production phase of a major weapon system, and institute a preference, to the maximum extent practicable, for specially negotiated licenses for technical data to support major weapon systems and subsystems.  Congress intends these provisions to "encourage program managers to negotiate with industry to obtain the custom set of technical data necessary to support each major defense acquisition program rather than, as a default approach, seeking greater rights to more extensive technical data than is necessary."  A laudable goal, for sure, and one we are skeptically hopeful will play out in practice.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Daniel E. Chudd
Locke Bell
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions