The relationship between Congress and the Pentagon over the past year has been marked by public disagreements and frustrations over lawmakers’ concerns about the Iran War, and by what some lawmakers view as politically motivated firings of top military leaders. In many ways, the House and Senate versions of the Fiscal Year 2027 National Defense Authorization Act reflect lawmakers’ efforts to check the Pentagon’s policy power.
Innovation efforts are generally a bright spot in these political battles. While the reforms proposed this year across the chambers were more modest than last year’s transformational SPEED and FoRGED Acts, lawmakers continue to advance reasonable reforms: encouraging the Pentagon to set metrics for measuring success, establishing sourcing prohibitions and supply chain risk frameworks, coordinating between various offices, setting new procedures for identifying risks or enabling sustainment, and pushing forward funding and policies enabling critical technologies. The House, in particular, continues to advance pro-industry and pro-innovation legislation, while the Senate at times has adopted a more rigid approach.
At the same time, lawmakers express worry that the Pentagon has not taken advantage of the flexible authorities it has been given over the last few years, validating concerns about the Pentagon bureaucracy’s ability to implement reform. The Senate summary of its bill highlights that it “[c]reates accountability measures for implementing generational acquisition reform from the FY2026 NDAA.” The House and the Senate both express concerns throughout the “Items of Special Interest” and “Other Matters” sections of their bills, and the Senate version in particular contains plenty of reporting requirements and travel restrictions for officials until they meet prescribed objectives.
Read on for a look into acquisition policy and contracting, program and portfolio management, organizational change and the industrial base, defense economics, data and software, talent and workforce development, and emerging tech policy.
Acquisition Policy and Contracting
This is the section where the House advances the most pro-industry provisions, from expediting commercial reforms and adjusting acquisition thresholds to advancing subcontracting negotiations and creating a team to address the Defense Federal Acquisition Regulation Supplement backlog. But the House also preserves officials’ negotiating powers and guards pre-award engagements.
Here the Senate takes a more mixed stance: opening up opportunities for small businesses, protecting missile manufacturers’ equity stakes, and establishing new pilot programs on commercial acquisition practices, but also directing the Defense Department to comply with new reporting requirements and limiting official travel.
Both the House and Senate advance similar right-to-repair legislation, albeit adjusted from the approach that failed last year. They both set government purpose rights as the default contracting mechanism. The Senate scopes these rights more narrowly and does not address how they will flow down to commercial suppliers or subcontractors on these contracts.
| House | Senate |
|---|
| Commercial Solutions | - Limits application of certain (Supplement to the) Federal Acquisition Regulation on contract clauses for commercial products (Sec. 803)
- Directs the expedited implementation of commercial acquisition reforms directed in the FY2026 bill (Sec. 877)
| - Establishes pilot program appointing experts to covered programs to better commercial acquisition practices (Sec. 805(b))
- Limits centralized commercial item capability until guidance and standards are strengthened (Sec. 814)
|
| Contractor Systems and Audit | - Clarifies and codifies procedures and requirements for processing procurement requests, contracts, receipts, and invoices electronically (Sec. 807)
- Establishes risk-based approach to surveilling contractor business systems (Sec. 808)
- Mandates a report on improving and streamlining work of defense audit agencies (Sec. 806)
| - Mandates issuance of standardized Defense Department risk management framework procedures and documentation to reduce administrative burden (Sec. 1622)
|
| Consumption-Based Solutions | - Amends existing authorities of officers working with consumption-based solutions and defines what such solutions are; and extends the anything-as-a-service FY2024 pilot program (Sec. 830)
| NA |
| Small Business | - Directs codification of program for negotiating and administering subcontracting plans for small businesses (Sec. 829)
- Amendments to the Procurement Technical Assistance Cooperative Agreement Program (Sec. 1872)
- Directs the director of the Defense Logistics Agency to create a pilot program to enable small businesses to address supply chain gaps of certain components listed on the No Bid Solicitation List (Sec. 1873)
- Establishes a pilot program to encourage small business involvement in contracting for advanced technologies (Sec. 1874)
| - Broadens access to mentor-protege program (Sec. 861)
- Extends test program for negotiation of small business subcontracting plans until 2037 (Sec. 863)
- Directs the establishment of a program by next year to award grants to small businesses and new entrants seeking Cybersecurity Maturity Model Certification (Sec. 1626)
|
| Best Value | - Restricts Lowest Price Technically Acceptable proposals; agencies can select higher-quality proposals that provide better long-term value, not just the lowest-priced one (Sec. 802)
| NA |
| Other Transaction Authority | - Changes decision criteria for other transaction prototype projects to performance, speed, and capability alignment. Preserves official negotiation powers and encourages officials to consider whether this will expand nontraditional or small business involvement (Sec. 823)
| - Transactions involving other transactions must be publicly reported the same as other contracts (Sec. 817)
|
| Acquisition Thresholds | - Modifies inflation adjustment for acquisition thresholds to every three years and amends certain acquisition thresholds (Sec. 821)
- Requires de minimis purchases of covered materials fall below $250,000 (Sec. 827)
| NA |
| Defense Federal Acquisition Regulation | - Establishes team to address the backlog of open cases related to the Defense Federal Acquisition Regulation Supplement, and briefings until the backlog is less than 180 days (Sec. 874)
| - Defense Federal Acquisition Regulation Supplement updated to ensure government data is not subject to unauthorized disclosure or used to train commercial models (Sec. 1637)
|
| Intellectual Property and Sustainment | - Automatically applies government purpose rights to all technical data, computer software, and computer software documentation under a contract, subcontract, or other agreement, unless otherwise proven (Sec. 861)
- Establishes a voluntary ombudsman to consult on intellectual property disputes between the department and contractors (Sec. 862)
- Expands reverse engineering authority beyond just preventing obsolescence (Sec. 863)
- Amends existing guidance on intellectual property management plans for sustainment planning (Sec. 864)
- Amends existing software sustainment framework, including life cycle support for program managers (Sec. 865)
- Directs periodic reviews of life-cycle sustainment plans of major weapons systems and critical readiness items and allows for corrective action plans (Sec. 867)
| - Similar government purpose rights provision, but applies just to acquisitions of noncommercial products and services (Sec. 804)
- Similar reverse engineering provision (Sec. 832)
|
| Procurement | - Grants multiyear procurement authority to various platforms, including for seven years for 13 munitions such as Tomahawks and Patriots (Sec. 1839)
| - Limits travel funds until defense secretary issues reports on progress of the Software Pathway as the preferred pathway for software development components. Also requires description of progress on commercial solutions openings and other transactions as the defaulting solicitation for acquisitions under Software Pathway (Sec. 802)
- Directs a report and summary on multiyear procurement requirements (Sec. 803)
- Grants multiyear procurement authority to various platforms, including for 19 munitions for an unspecified length of time (Sec. 801)
|
| Pre-award Engagements | - Directs defense secretary to issue guidance on protecting covered information during pre-award engagements to minimize disclosure of improper or classified information (Sec. 1875)
| NA |
| Pricing and Reporting Requirements | - Requires that offerors report if prices or services under a cost-plus contract reach or exceed a certain price threshold (Sec. 805)
- Declares late submission of cost and pricing data is an invalid defense to contract price reductions for defective cost or pricing data (Sec. 804)
| - Similar pricing provisions (Sec. 821, 822)
- Repeals provisions requiring subcontractor offerors to submit pricing data before award (Sec. 873)
|
| Requirements Governance | - Eliminates roughly 40 reporting requirements throughout (Sec. 1081)
| - Repeals dozens of prior provisions (Sec. 1073)
|
Program and Portfolio Management
The House also takes the lead here, building in additional flexibility for portfolio acquisition executives and establishing program standards, while the Senate includes provisions to enhance testing. The House also protects contractors from payment disruption, whereas the Senate writes into law President Donald Trump’s controversial executive order on defense contractor share buybacks and dividends. This move has been widely condemned by industry groups like the Aerospace Industries Association, who argue it will disincentivize private investment, slow innovation, and drive away traditional and commercial firms. It is likely the most significant point of divergence between the House and Senate in this bill.
| House | Senate |
|---|
| Program Management Structure and Portfolio Acquisition | - Allows portfolio acquisition executives to issue performance ratings, contract restructuring actions, recommend that a contract be terminated, and designate contractors for high performance preference; directs the undersecretary for acquisition and sustainment to establish contractor performance metrics to be used by portfolio acquisition executives (Sec. 801)
- Grants the portfolio acquisition executive authority to shift up to 10 percent of their research, development, test, and evaluation budget to procurement to better transition successful prototypes to production (Sec. 833)
- Creates portfolio acquisition standards and accounts to speed acquisition of autonomous systems (Sec. 834)
- Establishes a pathfinder program to reshape the interservice requirements process and provide support on operational context, solutions, and system operability. Designed to limit bureaucracy, speed capability delivery, and better align decisions with data and budgeting (Sec. 835)
- Directs Army secretary to develop tailored acquisition pathways for the deployment of nontraditional munitions (Sec. 872)
| - Limits Army secretary’s travel until they confirm Army portfolio acquisition executives are certified acquisition professionals (Sec. 876)
- Similar provision encouraging tailored acquisition pathways for munitions, including a pilot program on air defense interceptors (Sec. 212)
|
| Payments | - Restricts defense secretary from disrupting contractor progress payments without evidence or lawbreaking. If the contractor corrects action, payment can only be withheld for 60 days (Sec. 811)
| - Enforces prior executive order limiting defense contractors from repurchasing shares or paying dividends. Allows the department to take action after an unsuccessful remediation plan, including to suspend payments and waivers, and limit awarding of future contracts (Sec. 815)
- Limits defense secretary from modifying contracts or intervening in internal affairs of missile manufacturers (Sec. 813)
|
| Testing | - Directs the department to establish and maintain a repository of public and private U.S. test and evaluation facilities to expedite test and evaluation for emerging technologies (Sec. 215)
| - Improves alternative testing and evaluation for software acquisition pathways (Sec. 211)
- Directs the department to restore testing capacity of the Ronald Reagan Space and Missile Test Range (Sec. 1541)
|
Organizational Change and the Industrial Base
The House and Senate both take industrial base strength and supply chain security seriously in these bills, with additional provisions for supply chain visibility and manufacturing. The Senate proposes significant organizational reform in the Pentagon, creating new positions and redesignating the assistant secretaries of defense. Consequentially, the Senate permits — but does not require — the White House and Pentagon to establish the new United States Robotic and Autonomous Systems Command, a consequential addition that would allow for a combatant command to be organized around a specific technology for the first time. The addition has drawn public criticism from the Air and Space Forces Association, which alleges it may unintentionally slow the integration of drones, and advocates for the coordination of drones alongside other aircraft.
| House | Senate |
|---|
| Organizational Reform | - Readjusts the responsibilities of the Defense Innovation Unit to ensure it coordinates with service portfolio acquisition executives to identify acquisition problems and identify solutions (Sec. 214)
| - Codifies Science, Technology, and Innovation Board to advise department on emerging technical problems and solutions (Sec. 221)
- Redesignates and reorganizes under secretary of defense for personnel and readiness and assistant secretaries of defense (Sec. 904)
- Designates new undersecretary of defense for cyber, information, and networks (Sec. 905)
- Allows the White House and Pentagon to establish a United States Robotic and Autonomous Systems Command to improve adoption, doctrine development, and training for drones across domains (Sec. 917)
|
| Industrial Base | - Encourages Defense Department to use money and authority to strengthen solid rocket motor industrial base and second sourcing and expedite approvals. Expresses displeasure with equity investments being used for this purpose (Sec. 1663)
| - Requires Army secretary to update guidance for the Army Organic Industrial Base (Sec. 323)
- Requires establishment of an acquisition and sustainment strategy for aircraft spare parts (Sec. 325)
- Requires second sources for solid rocket motors of certain munitions (Sec. 833)
- Requires defense secretary to review and brief on certain minerals to address sourcing and industrial capacity problems (Sec. 834)
- Requires defense secretary to designate an existing or new office or official within the Department of Defense to lead the identification, assessment, prioritization, and mitigation of risks to critical defense sites in the defense industrial base, including privately owned or commercially operated facilities (Sec. 1066)
|
| Supply Chain Resiliency and Sourcing Restrictions | - Institutes a tiered framework for sourcing restrictions for some critical materials; enhances waiver authorities; and expedites qualification for new sources (Sec. 1803)
- Requires that even small purchases of electronics be made from authorized manufacturers or dealers (Sec. 1807)
- Revises Defense Supplement to the Federal Acquisition Regulation to give preference to domestic contractors when procuring professional services (Sec. 1813)
- Directs briefing on aluminum supply chain security (Sec. 1815)
- Bans various Chinese-sourced materials
| - Directs review of textile industrial base (Sec. 839); establishes a cross-functional team to improve supply chain resiliency and stability for the textile industrial base (Sec. 841)
- Establishes pilot program for sourcing antimony and copper as byproducts of mineral production (Sec. 848)
- Adjusts restrictions on circuit boards (Sec. 844)
- Directs establishment of program for expediting the processing of some Source Approval Requests, expands qualifying categories (Sec. 875)
- Bans various Chinese-sourced products
|
| Supply Chain Visibility | - Establishes a Defense-wide program to better see, assess, predict, and respond to risks across the supply chain of the defense industrial base (Sec. 1810)
- Orders a report on supply chain dependencies in biotechnology equipment and services (Sec. 1811)
| - Establishes supply chain risk management integration cell to conduct oversight on risk management activities and tools; determine risk; oversee supply chain transparency programs; manage data and commercial integration (Sec. 831)
|
| International Cooperation | - Requires establishment of position for synchronizing research, development, testing, evaluation, integration, and industrial cooperation between the United States and Israel (Sec. 219)
- Requires defense secretary to include foreign military sale demand into industrial base preparation (Sec. 1817)
| - Similar United States-Israel Defense Technology Cooperation initiative (Sec. 1217)
- Directs defense secretary to create a Ukraine Strategic Defense Innovation Working Group to explore co-development, technology transfer frameworks, and drone advising (Sec. 1224)
- Directs defense secretary to engage with German officials on co-development and production of munitions and missiles (Sec. 1228)
|
| Manufacturing | - Expands use of defense industrial base fund to include drydock, ship repair infrastructure, and microelectronics packaging (Sec. 1831)
- Directs working group on advanced manufacturing solutions to critical readiness supply (Sec. 1834)
- Offers new guidance for avoiding the dissemination of critical information on advanced part manufacturing to malign actors (Sec. 1835)
| - Directs Army secretary to determine if additive manufacturing for rocket propellant systems should be established as a program of record (Sec. 232)
|
| Restrictions | NA | - Consolidates and rationalizes in U.S. Code existing procurement restrictions on covered countries (Sec. 811)
- Entities entering a covered contract with the Defense Department must submit details on operations related to China (Sec. 883)
|
Defense Economics
Defense economics is buzzy in Washington this year, and both chambers advance a provision to track and mitigate adversary capital in the defense industrial base. While the House adopts a more hands-off approach, the Senate further establishes oversight and reporting requirements related to equity investments, indicating that oversight over the Defense Department’s new tools may only grow.
| House | Senate |
|---|
| Adversarial Capital | - Requires the establishment of an office within the Office of Industrial Base Policy that assesses and mitigates risks from adversary capital in technology and the industrial base and establishes risk capability (Sec. 1816)
| - Commensurate provision (Sec. 842)
|
| Equity Investments | NA | - Requires ownership review of Defense Department equity stakes (Sec. 901, 1052)
- Requires notification to Congress for debt and equity investments (Sec. 1053)
- Limits Industrial Base Fund money from being used for equity investments, requires under secretary of defense for acquisition and sustainment to review investments (Sec. 1054)
|
| Economic Defense Unit | - Creates a program funding line but does not structure
| - Establishes the mandate and reporting requirements for the Economic Defense Unit (Secs. 901, 1055)
|
Data and Software
The House advances a useful provision on modular open systems approach, and the Senate directs the department to create a data center infrastructure strategy.
| House | Senate |
|---|
| Data and Software Solutions | - Clarifies that a modular open systems approach should be pre-tailored to system purpose, lifecycle, and additional system factors to support broader adoption. Also forces creation of digital repositories to store architectures and artifacts from such approaches (Sec. 824)
- Directs defense secretary to revise budgeting guidance and allow for fund execution for software capabilities throughout their lifecycle through various appropriations (Sec. 1521)
| - Requires a report by 2028 on a data center infrastructure strategy, including for private data centers built on military installations (Sec. 1625)
|
| Data Governance | - Establishes a pilot program for a cloud laboratory to generate high-quality data for authorized researchers (Sec. 232)
| NA |
Talent and Workforce Development
Both the House and Senate continue to guide the modernization of the acquisition workforce, with the House putting forward comprehensive provisions on talent management, workforce initiatives, and performance metrics. The Senate adopts a narrower approach, focusing on metrics and performance objectives, and ensuring that all acquisition officials are qualified. The Senate establishes further oversight on the Business Operators for National Defense program, whereas the House directs the department to create further plans on recruiting critical minerals, advanced manufacturing, and tech talent.
| House | Senate |
|---|
| Acquisition Training | - Establishes department-wide acquisition workforce data analytics capabilities for strategic planning and performance evaluation, using commercially available tools when possible (Sec. 851)
- Establishes a chief acquisition talent officer to lead enterprise acquisition workforce strategy and talent management (Sec. 852)
- Codifies key performance objectives for the acquisition workforce (Sec. 853)
- Requires civilians in critical acquisition positions display competency in objectives such as using modern acquisition authorities and pathways (Sec. 854)
| - Establishes metrics and performance objectives for acquisition professionals (Sec. 805)
- Limits Army secretary’s travel until the Army certifies that all portfolio acquisition executives are certified acquisition officials (Sec. 876)
|
| Workforce Changes | - Prevents Defense Department from writing minimum education requirements for contractors unless justified, taking into account skills and additional work experience (Sec. 1881)
- Expands responsibilities of advanced manufacturing working group to analyze past workforce pilot programs, study problems related to recruiting and retaining talent, and recommend solutions (Sec. 1882)
- Directs defense secretary to support workforce initiatives for developing a critical minerals workforce (Sec. 1883)
| - Mandates quarterly briefings on the activities of the Business Operators for National Defense program, including on participants, conflicts of interest, metrics for success, and cost (Sec. 1057)
|
| STEM Talent | - Establishes a pilot program for recruiting technical early-career talents (Sec. 1111)
| NA |
Emerging Tech Policy
The House bill orders various strategies for emerging technologies. The Senate version thoroughly addresses threats from emerging technology and creates a new Science, Technology, and Innovation Board. Both chambers reorganize space acquisitions and establish varying levels of oversight over autonomous systems, although the Senate details over a dozen provisions on artificial intelligence.
| House | Senate |
|---|
| Quantum | - Orders defense secretary to develop a policy on the development and acquisition of quantum computing systems (Sec. 251)
| - Requires Defense Department to use asymmetric post-quantum cryptography algorithms by 2030 (Sec. 1631)
|
| Bio | - Establishes a prize competition for research, development, and commercialization of biotechnologies for priority areas (Sec. 227)
| - Directs defense secretary to develop biosecurity evaluation standards and practices for addressing biothreats that may arise from AI models (Sec. 1654)
- Prohibits defense contractors from providing digital sequences of synthetic DNA, RNA, or proteins to foreign entities of concern (Sec. 882)
|
| Space | - Eliminates Space Development Agency and Space Rapid Capabilities Office, redesignates a portfolio acquisition executive (Sec. 1601)
| - Similar repeals to allow for space acquisition reorganization (Sec. 1509)
|
| Autonomous Systems | - Directs defense and service secretaries to establish standards for common operating systems for drones (Sec. 165)
- Mandates defense secretary establish test and training corridors for small drone and counter-drone systems, and additional capabilities (Sec. 221)
- Requires some unmanned surface vessels to be entirely manufactured in America (Sec. 836)
- Directs the Defense Autonomous Warfare Group to develop and implement a strategy for acquiring, sustaining, and operationalizing small unmanned surface vessels (Sec. 1027)
| - Expands provisions promoting the U.S. drone industrial base to ensure subcomponents are not manufactured by covered countries (Sec. 847)
|
| AI | - Establishes a department-wide program for reporting, analyzing, and fixing AI incidents and vulnerabilities (Sec. 1502)
- Allows the Defense Department to ban and remove certain AI platforms from systems (Sec. 1522)
- Directs a framework for the rapid deployment of AI on enterprise platforms (Sec. 1523)
- Directs the department to review policies and guidance relating to autonomous weapons systems and AI-enabled targeting or planning systems (Sec. 1524)
| - Requires a competitive process for procuring AI models, cloud computing and systems, data infrastructures, and foundation models while ensuring the government maintains exclusive data rights; ensures interoperability and no vendor lock-in (Sec. 1637)
- Establishes a department-wide technical and procedural ecosystem to enable agentic scaling (Sec. 1641); agentic security standards (Sec. 1642); assessment of the effect of GenAI.mil on the workforce (Sec. 1643) and operational readiness (Sec. 1649); orders the department to develop a strategy for adversarial AI (Sec. 1645); requires the Defense Department to remain responsible and ethical in AI development (Sec. 1647) and ensure human oversight (Sec. 1653); to update an existing data strategy and implementation plan (Sec. 1648); sourcing requirements for outputs (Sec. 1650); and prototype secure data centers (Sec. 1655)
|
The House and the Senate have drafted fairly different bills this year, each focusing on its own policies and technologies. They diverge considerably, for example, in their respective visions for the integration of autonomous systems into the Pentagon, and on the extent to which the government should interfere in the workings of defense contractors.
But they are consistently united in one thing: their instinct to compel Pentagon leadership to utilize recently expanded authorities to promote much-needed change in the way the department acquires and fields innovative technologies.
Madeline Field is the assistant editor of Cogs of War, a vertical on defense technology and industrial issues brought to you by War on the Rocks.
Image: Midjourney
**Please note, as a matter of house style, War on the Rocks will not use a different name for the U.S. Department of Defense until and unless the name is changed by statute by the U.S. Congress.
