The fiscal 2026 defense policy bill contained some significant reforms to defense acquisition processes — congressional leaders said the legislation would deliver “the most significant acquisition reforms in a generation.” But several key provisions were scaled back or dropped entirely from the final version of the bill.
Now, some of the ideas that failed to survive negotiations last year are resurfacing in the Senate Armed Services Committee’s version of the fiscal 2027 authorization bill while building on existing reforms enacted in the 2026 National Defense Authorization Act.
One measure, for instance, requires contractors to notify the Defense Department if the cost of a product or service increases by more than 25% from the agreed contract bid or from what the government paid for the item in the previous calendar year. Contractors would also have to notify the government if the price is 50% higher than what the government has paid for the same item in the last five years.
The provision would apply to cost-plus contracts awarded without competition. Defense contractors would have to notify the Defense Department about price increases within 30 days of becoming aware of the rising costs. The bill also requires the Defense Contract Audit Agency to report any contractors that fail to comply with the price notification requirements.
This is nothing new – lawmakers have been pushing legislation that seeks to curb price gouging for a while, but a similar provision was removed from last year’s defense policy bill.
Similarly, last year both the House and Senate sought to close the loophole that allows companies to submit cost and pricing data after contract price is agreed upon, but those proposals were removed from the final bill. Lawmakers backing the proposal said it would “empower the Defense Department to enter into contracts with sufficient pricing information.”
Now, Senate lawmakers once again seek to bar contractors from “submitting updated cost or pricing data after the date of agreement on the price of a contract.”
Right-to-repair is also making a comeback — Senate lawmakers are taking a different approach to the issue this year that industry will fiercely oppose, just like last year.
A provision in the Senate’s version of the bill would make government-purpose rights the default for technical data, software and software documentation delivered under Defense Department contracts unless contractors can demonstrate the need for more restrictive protections. The measure also seeks to include government purpose rights for “detailed manufacturing and process data for the purposes of operations, maintenance, installation, and training under certain urgent and emergency conditions.”
The House Armed Services Committee introduced a similar provision in their version of the bill.
Building on 2026 reforms
Last year’s legislation package focused heavily on making it easier for the Defense Department to buy commercial products.
Senate lawmakers now want to freeze 5% of the office of the under secretary of defense for acquisition and sustainment’s travel budget until it submits a report on how the Defense Department is implementing Defense Secretary Pete Hegseth’s software acquisition memo.
Specifically, lawmakers want an update on the department’s progress on the adoption of the software pathway as the “preferred pathway for all software development components of business and weapon system programs.” They also want to know about the department’s efforts to make commercial solutions openings and other transactions authority the default solicitation and contracting award approaches for buying capabilities under the software pathway.
Another provision also seeks to block funding for the centralized commercial item capability until the department issues departmentwide guidance on implementing commercial requirements enacted in the fiscal 2026 NDAA and adopts stricter standards for determining when software, artificial intelligence, cyber capabilities, cloud services and other technologies should be treated as noncommercial products.
In addition, lawmakers want more transparency around other transaction agreements — a provision within the bill would require public sharing of OTA awards.
Workforce
Last year, the Defense Department began replacing its program executive offices with “portfolio acquisition executives.” Senate lawmakers now want the department to develop key performance indicators for all program acquisition executives, evaluating them on cost growth, schedule performance, competition and use of rapid acquisition authorities.
Lawmakers would also require the Pentagon to create a centralized data dashboard that would “provide real-time visibility into the operational health, strategic growth and efficiency of each program acquisition executive portfolio.”
In addition, the provision would require DoD to launch a pilot program bringing “individuals with significant experience in commercial acquisition” into senior advisory roles. Those experts would help shape acquisition strategies, support contracting officers in the use of commercial acquisition procedures, including commercial solution openings.
Lawmakers also proposed creating a pilot training program that would “establish, evaluate and refine the training and qualifications necessary for an elite advanced financial certification” within the Defense Department.
Participants would receive training in areas such as capital structure fundamentals, deal structuring and public-private partnership models and execution frameworks.
Overall, while the fiscal 2026 NDAA focused primarily on reforming the Pentagon’s acquisition system, the Senate’s fiscal 2027 bill broadens that effort.
“The 2027 bill is going to have to open the spectrum a bit, open the aperture and take a good, hard look at what more we can do to incentivize growth, development, participation in the defense industrial base,” former Pentagon official Stephanie Barna told Federal News Network.
The bill is now headed to the Senate floor.
If you would like to contact this reporter about recent changes in the federal government, please email anastasia.obis@federalnewsnetwork.com or reach out on Signal at (301) 830-2747.
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