House passes joint NDAA bill for FY23 with vendor inflation relief

Bill adds $45 billion; has small business measures

      The House on Dec. 8 approved the $858 billion national defense authorization bill that would add $45 billion to President Joe Biden’s request for the Defense Dept. The department’s portion of the bill is $847 billion.

      The Senate is expected to pass the James M. Inhofe National Defense Authorization Act (NDAA) for Fiscal 2023 shortly, and Biden is expected to sign it.

      The legislation includes Section 822, which is a provision for “extraordinary relief due to inflation impacts” for federal contractors. The bill gives the Secretary of Defense temporary authority to modify fixed-priced contracts to provide an economic price adjustment.

      It also includes a number of small business provisions, although full details on all such provisions were not immediately available.

Bill passage

      The NDAA is an annual must-pass bill. The House passed its version in July; however, plans for a vote on the Senate’s version were disrupted by the results of the November elections, which flipped control of the House to Republicans.

      After the presumptive incoming House Speaker, Kevin McCarthy, R-CA, suggested that the NDAA may get overhauled when the Republicans take control of the House in January, lawmakers rushed to complete the bill.

      House and Senate leaders of the Armed Services Committees put together a Joint Agreement, which formed the basis of the NDAA that passed the House on Dec. 8. The Senate vote is anticipated this week.

Inflation Relief

      The NDAA passed by the House would amend the law on Extraordinary Contractual Relief--Public Law 85-804-- to give the Secretary of Defense temporary authority to modify the fixed-priced contracts of contractors facing increased costs due to inflation.

      According to a bill analysis by PilieroMazza PLLC, these are the conditions for the inflation relief:

• It applies to fixed-price contracts only;
• It is limited to DOD prime contractors and subcontractors only;
• DOD may not request additional accommodations for obtaining the relief;
• Expanded authority for the relief expires on Dec. 31, 2023;
• The relief is discretionary and allows consideration of indirect costs;
• The threshold for requiring approval for the relief from an assistant secretary or deputy would be raised to $500,000, from currently $50,000.

      According to PilieroMazza, the NDAA suggests relief will be available for cost increases “due solely to economic inflation,” creating some uncertainty about how to define that. Guidance on how the relief will be applied is to be released within 90 days after passage.

Small Business Measures

      The NDAA contains six provisions for small businesses in “Subtitle F - Small Business Matters.” They are:

• Section 871, which originated from the House version, would codify the Small Business Administration’s scorecard for small business procurement;
• Section 872 would modify the “SBIR” and “STTR” programs, from House version;
• Section 873 would allow access to data on bundled or consolidated contracts, from House version;
• Section 874 would require DOD to create a small business integration working group, from the Senate version;
• Section 875 requires a demonstration of commercial due diligence tools and processes to identify attempts by malicious foreign actors to gain access to emerging technology, from Senate; and
• Section 876 would require each military department to develop metrics to assess mission effectiveness of the SBIR and STTR programs, from the House.

More Information:
NDAA text: https://bit.ly/3Bt1Q58
Rules Committee Joint Explanatory: https://bit.ly/3iWhGik
PilieroMazza: https://bit.ly/3YhviVB

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