Senate Lawmakers Resurrect Acquisition Reforms in Fiscal 2027 Defense Policy Bill

The Senate Armed Services Committee is reintroducing several aggressive acquisition reforms in its version of the fiscal 2027 National Defense Authorization Act (NDAA) after they were removed from the previous year's final legislation. These measures aim to curb price gouging, increase transparency in Other Transaction Agreements (OTAs), and shift default intellectual property rights toward the government. For defense contractors, these changes signal a renewed legislative push for stricter cost controls and more rigorous oversight of commercial and software acquisition pathways.

The proposed legislation introduces stringent price notification requirements for contractors involved in cost-plus, non-competitive awards. Specifically, companies would be mandated to notify the Department of Defense (DoD) within 30 days if a product or service's cost increases by more than 25% over the original bid or the previous year's price, or if it rises 50% above the price paid over the last five years. To enforce these rules, the Defense Contract Audit Agency (DCAA) would be tasked with reporting non-compliant contractors. Additionally, the bill seeks to close a loophole by barring contractors from submitting updated cost or pricing data once a contract price has been formally agreed upon, a move intended to provide the DoD with more stable pricing information during negotiations.

A significant point of contention for the industry is the "right-to-repair" provision, which would establish government-purpose rights as the default for all technical data, software, and documentation delivered under DoD contracts. Under this rule, contractors would bear the burden of proof to demonstrate why more restrictive protections are necessary. The bill also targets software acquisition by freezing 5% of the travel budget for the Office of the Under Secretary of Defense for Acquisition and Sustainment until a progress report is submitted regarding Secretary Pete Hegseth’s software acquisition memo. Lawmakers are pushing for the software pathway to become the preferred method for development, while also encouraging the use of Commercial Solutions Openings (CSOs) and Other Transaction Authority (OTA) as default solicitation approaches.

The Senate's version of the bill further emphasizes transparency and performance metrics across the defense industrial base. It requires the public disclosure of OTA awards and mandates the creation of a centralized data dashboard to monitor the operational health and efficiency of the Pentagon’s new portfolio acquisition executives. These executives will be evaluated based on key performance indicators including cost growth, schedule performance, and competition. Furthermore, the bill proposes blocking funds for the centralized commercial item capability until the DoD establishes stricter standards for determining when technologies like artificial intelligence, cloud services, and cyber capabilities should be classified as noncommercial products.

To bridge the gap between commercial and defense sectors, the legislation outlines a pilot program to recruit individuals with significant commercial acquisition experience into senior advisory roles to help shape contracting strategies. Lawmakers also proposed an elite advanced financial certification program for DoD personnel, covering complex areas such as capital structure, deal structuring, and public-private partnership models. According to former Pentagon official Stephanie Barna, the fiscal 2027 bill represents a broader effort to incentivize growth and participation within the defense industrial base. These initiatives collectively aim to modernize the Pentagon's financial and acquisition expertise while ensuring the government maintains leverage in its dealings with private contractors.