NDAA Section 811: New Waiver Authority—What Does It Mean?

Scott Arnold

The Senate’s markup of the 2018 National Defense Authorization Act (“NDAA”) adds new language to 10 U.S.C. § 2304 that would give the Secretary of Defense authority to waive provisions of law that result in only one responsible bidder for a contract for purposes of expanding competition. However, the new provision, which appears in Section 811 of the bill and which, if enacted, would be part of a new subsection (m) added to 10 U.S.C. § 2304, contains a significant carve-out such that it would not permit the Secretary of Defense to impose additional competition in connection with the Small Business Administration’s 8(a) program.

By way of background, 10 U.S.C. § 2304 generally requires that agencies conducting procurements for property or services “obtain full and open competition through the use of competitive procedures in accordance with the requirement of this chapter and the Federal Acquisition Regulation.” Section 2304 contains important exceptions to the requirement for agencies to obtain full and open competition, several of which are contained in 10 U.S.C. § 2304(c).

While the new subsection (m) of 10 U.S.C. § 2304 would seemingly allow the Secretary of State to waive certain provisions of law which result in only one responsible bidder for a contract, the new subsection is expressly inapplicable to the “provisions of law” contained in 10 U.S.C. § 2304(c):

Section 811 of the marked up 2018 NDAA provides as follows:

Section 2304 of title 10, United States Code, is amended by adding at the end the following new subsection:

“(m) In the event the application of any provision of law results in only one responsible bidder for a contract, the Secretary of Defense may waive such provision of law (other than subsection (c)) for purposes of expanding competition for the contract [emphasis added].”

Significantly, authorization for sole source awards under the SBA’s 8(a) program is contained in subsection c at 10 U.S.C. § 2304(c)(5), which provides that the head of an agency may use procedures other than competitive procedures when, “a statute expressly authorizes or requires that the procurement be made through another agency or from a specified source.” Because Section 8(a) of the Small Business Act, 15 U.S.C. § 637(a), is precisely this type of statute—one that “expressly authorizes or requires that the procurement be made through another agency [the SBA] or from a specified source [an 8(a) contractor]”—the new subsection (m) in 10 U.S.C. § 2304 will not authorize the Secretary of Defense to waive provisions of section 637(a) to expand competition beyond the one responsible contractor involved in sole source 8(a) set-aside procurement. Note that FAR 19.811-1, which addresses sole source 8(a) contracts, makes clear that DoD’s authority to obtain property or services through the SBA’s award of a contract to an 8(a) contractor, rather than through full and open competition, comes from 10 U.S.C. § 2304(c) and thus would not be subject to the new subsection (m) (“The award form shall cite 41 U.S.C. 3304(a)(5) or 10 U.S.C. 2304(c)(5) . . . as authority for use of other than full and open competition.” FAR 19.811-1(b)(1)).

Although the legislation does not make clear whether a particular provision of law having the tendency to reduce competition is the target of what would be the Secretary of Defense’s new waiver authority, Senate staff sources have suggested to Blank Rome’s government relations group that one objective might be to permit the Secretary to waive Buy American-type requirements when they result in only one responsible bidder. However, because Buy American-type provisions generally do not preclude the purchase of non-domestic products but rather impose an evaluation penalty on products that do not meet the applicable Buy American or similar requirements, it will be interesting to see how, if the new subsection (m) becomes law, the Secretary of Defense determines that such requirements result in only one responsible bidder for a contract.