Changes Impacting Contractors in the FY 2015 National Defense Authorization Act
On December 12, 2014, Congress passed the National Defense Authorization Act (NDAA) for Fiscal Year 2015. The $585 billion bill funds the Pentagon’s activities in FY 2015. Within this massive bill, there are number of items of interest to government contractors, including:
- Design Build Contracting. Section 814 gives contracting officers more authority to increase the number of offerors for Design-Build contracts. Current law requires design-build solicitations to be a two-phase procurement. The solicitation states the maximum number of offerors permitted to submit proposals for the second phase of the procurement. The limit on offerors is currently five, “unless the agency determines with respect to an individual solicitation that a specified number greater than 5 is in the Government’s interest and is consistent with the purposes and objectives of the two-phase selection process.” 10 U.S.C. § 2305a(d). Section 814 allows a written determination by a contracting officer that a number greater than five is in the Government’s best interest under the two phase procurement. Approval of this contracting officer determination is by “the head of the contracting activity, delegable to a level no lower than the senior contracting official within the contracting activity.” This approval at a much lower level should lead to more opportunities for design-build contractors.
- No Reverse Auctions. Section 824 bans the use of reverse auctions for the procurement of design-build construction unless specifically authorized in another law. This provision was supported by the Association of General Contractors of America. Construction contracts were viewed as being unsuitable for reverse auctions due to having many variables as to budget and owner needs compared to commodities manufactured with little or no variability.
- Service Contracting Spending Cap. Section 813 extends the caps on dollars spent on contract services by the military. Service contracts may only be awarded up to the amounts in the FY 2010 NDAA. Moreover, the 10-percent-per-fiscal-year reductions in spending for contracts that are “inherently governmental” functions continue. Contractors can continue expect fierce competition for services contracts based on Section 813’s continuation of the spending cap.