CONGRESS MAKING PROGRESS ON SPENDING. DEFENSE BILLS

The House Armed Services Committee has voted out its version of the FY’24 National Defense Authorization Act (NDAA), the bill that sets broad spending limits and strategy priorities for DOD and usually contains a host of new directives that impact procurement.  It will authorize $886 billion in total defense and defense-related spending.  At the same time, the Senate is making progress on most of its FY’24 appropriations measures, skipping subcommittee mark up and going to full committee to save time.  By comparison, there was no top-level agreement among Senate appropriators last year at this time to allow for such action, so this year’s work is a positive step.  Appropriators are under pressure to move all 12 FY’24 spending bills by the end of September lest an automatic across the board 1% sequester be triggered.  This was a provision of the debt ceiling agreement and, while it does provide an incentive for timely appropriations action, some believe that it will become a self-fulfilling prophecy as budget hawks look for ways to curtail spending.  The House NDAA will next be considered by the full House of Representatives, likely sometime before summer recess in August.  It will then have to be reconciled with the Senate-passed version, including a likely debate on whether directives prohibiting DOD from spending on social engineering issues such as DEI are included.  A final measure will likely not be implemented until sometime in October or later.  Generally, the positive pace of spending and policy action should be viewed as good news for government contractors. Getting bills in place in a timely manner helps both they and federal agencies plan better and make more strategic decisions.  There is still a long road ahead, however, and initial progress and optimism may become derailed by partisan haggling.  In the meantime, contractors should carefully track legislative developments and ensure that their views are known on any provisions that they support or oppose.