How will the FY 2019 NDAA affect government procurement?

Following the Senate’s recent passage of the Fiscal Year (FY) 2019 National Defense Authorization Act (NDAA), we are rapidly approaching the finish line for this critical piece of legislation. With the filing earlier this week of the Conference Report, H. Rept. 115-863, which embodies the agreement between the Senate and the House, it appears likely that a compromise bill will go forward to the President shortly. The NDAA contains a number of provisions that would reform the procurement process, several of which, are the focus of this week’s blog.

Section 816 – Modification of Limitations on Single Source Task or Delivery Order Contracts

For those who have been following the NDAA process, Section 814 of the Senate’s version of the FY 2019 NDAA is now Section 816 in the Conference Report. The provision would amend a justification requirement for certain single award task and delivery order contracts. It states:

Section 2304a(d)(3)(A) of title 10, United States Code, is amended by striking ‘‘reasonably perform the work’’ and inserting ‘‘efficiently perform the work’’.

As noted in a recent FAR & Beyond blog, this proposed change raises significant concerns and risks challenging the pricing and innovation vitality of the procurement system. Specifically, 10 U.S.C. 2304a(d)(3) provides the steps that must be taken should the Department of Defense (DoD) choose to avoid the preference for multiple contractors in the award of a task or delivery order contract. By substituting the word “efficiently” for “reasonably,” Section 816 injects ambiguity into the standard provided by 10 U.S.C. 2304a(d)(3) and establishes a new approach that potentially diminishes the benefits of ongoing competitive pressure.

Section 838 – Modifications to Procurement Through Commercial e-Commerce Portals

Section 834 of the House FY 2019 NDAA, which proposes modifications to the FY 2018 NDAA’s Section 846, is now Section 838 in the Conference Report. The provision, however, is revised slightly relative to the original version proposed by the House, as it would grant the General Services Administration (GSA) with additional authority to develop competitive procedures for procurements made through commercial e-Commerce portals, but it also maintains the current Micro-Purchase Threshold (MPT) of $10,000 for these procurements. Prior to the Senate Amendment, the House bill had proposed increasing the MPT for these purchases to $25,000.

In its comments submitted to GSA last week, the Coalition recommended that, at a minimum, GSA should first collect, evaluate, and share with the public any lessons learned from the recent increases to the MPT prior to implementing any further increases to the thresholds.¹ Likewise, the Coalition recommended that GSA conduct a substantive assessment of the policies underlying the laws that would be waived at the new threshold and why the government’s interests are served by waiving them. The Coalition stands ready to assist the agency in conducting this analysis.

The report also included additional language amplifying the prohibitions on the use of data by portal providers contained in Section 846 of the FY 2018 NDAA. In contracts awarded to providers, GSA must require that each provider:

“agree not to use, for pricing, marketing, competitive, or other purposes, any information, including any Government-owned data, such as purchasing trends or spending habits, related to a product from a third-party supplier featured on the commercial e-commerce portal or the transaction of such product, except as necessary to comply with the requirements of the program established in subsection (a).’’

Further, the report affirmed that GSA’s implementation should be carried out utilizing multiple contracts with multiple providers.

Section 875 – Promotion of the Use of Government-Wide and Other Interagency Contracts

Pursuant to Section 875, Section 865(b)(1) of the FY 2009 NDAA would be amended to remove the requirement for agencies to complete a determinations and findings prior to using an Office of Management and Budget (OMB) approved Government-Wide Acquisition Contract (GWAC). The Coalition applauds Congress’ decision to remove this burdensome requirement. As many of you know, the Coalition included a similar suggestion for legislative change as part of the 29 line-in, line-out recommendations that it submitted to the Section 809 Panel last Fall. Eliminating the requirement to conduct determinations and findings for GWACs will encourage agencies to leverage existing contracts to reduce unnecessary contract duplication and produce savings for the government.

Section 876 –Increasing Competition at the Task Order Level

Section 876 would allow prices to be established through competition for specific requirements at the task order, rather than the contract, level for services that are the same or similar. Specifically, when issuing a solicitation, heads of agencies would have the discretion not to include price or cost as an evaluation criterion for contract award.

The establishment of a so-called “unpriced” Schedules contract, which drives competition for agency specific service requirements at the task order level, has long been supported by the Coalition. This reform would streamline the procurement process, enhance competition, and empower the Federal government to leverage technology and improve its efforts to meet end mission goals. Accordingly, the Coalition commends Congress and the Administration for their leadership and support for the innovative acquisition approach.

These are some initial thoughts and observations regarding the Conference Report. The Coalition will provide additional insights on the FY 2019 NDAA and its complexities in the coming weeks.

Roger Waldron is the president of the Coalition for Government Procurement, and host of Off the Shelf on Federal News Radio.

¹ We note that the FY 2019 increases the MPT for DoD from $5,000 to $10,000, which is consistent with the current MPT for civilian agencies.

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