The fiscal 2026 defense policy bill introduced major changes to how the Pentagon buys goods and services — congressional leaders called it “the most significant acquisition reforms in a generation.” However, several important measures were weakened or removed altogether before the bill was finalized.
Now, some of the proposals that didn’t make it through last year’s negotiations are reappearing in the Senate Armed Services Committee’s draft of the fiscal 2027 authorization bill, building on reforms already passed in the 2026 National Defense Authorization Act.
For example, one provision would require contractors to alert the Defense Department whenever the cost of a product or service rises more than 25% above the original contract bid or the price the government paid for it in the previous calendar year. Contractors would also need to flag prices that are 50% higher than what the government has paid for the same item over the past five years.
This requirement would apply to cost-plus contracts awarded without competitive bidding. Defense contractors would have to report price increases to the Defense Department within 30 days of becoming aware of the cost growth. The bill also directs the Defense Contract Audit Agency to identify any contractors that fail to meet these price notification requirements.
This concept isn’t new — lawmakers have been advocating for measures to prevent excessive price hikes for some time, but a comparable provision was stripped from last year’s defense policy bill.
In a similar vein, both the House and Senate attempted last year to close the loophole that permits companies to submit cost and pricing data after a contract price has already been agreed upon, but those proposals were cut from the final bill. Supporters of the proposal argued it would “empower the Defense Department to enter into contracts with sufficient pricing information.”
Now, Senate lawmakers are once again attempting to prohibit contractors from “submitting updated cost or pricing data after the date of agreement on the price of a contract.”
Right-to-repair provisions are also returning — Senate lawmakers are pursuing a different strategy on this issue this year that industry groups are expected to strongly oppose, just as they did last year.
A provision in the Senate’s draft of the bill would establish government-purpose rights as the default for technical data, software, and software documentation delivered under Defense Department contracts unless contractors can justify the need for more restrictive protections. The measure also aims to extend government-purpose rights to “detailed manufacturing and process data for the purposes of operations, maintenance, installation, and training under certain urgent and emergency conditions.”
The House Armed Services Committee put forward a comparable provision in their version of the bill.
Building on 2026 reforms
Last year’s legislation placed a strong emphasis on making it easier for the Defense Department to purchase commercial products.
Senate lawmakers now want to withhold 5% of the office of the under secretary of defense for acquisition and sustainment’s travel budget until it delivers a report on how the Defense Department is carrying out Defense Secretary Pete Hegseth’s software acquisition memo.
Specifically, lawmakers are seeking an update on the department’s progress in adopting the software pathway as the “preferred pathway for all software development components of business and weapon system programs.” They also want details on the department’s efforts to make commercial solutions openings and other transactions authority the standard solicitation and contracting methods for acquiring capabilities under the software pathway.
Another provision aims to block funding for the centralized commercial item capability until the department issues departmentwide guidance on implementing commercial requirements enacted in the fiscal 2026 NDAA and adopts stricter criteria for determining when software, artificial intelligence, cyber capabilities, cloud services, and other technologies should be classified as noncommercial products.
Additionally, lawmakers are seeking greater transparency around other transaction agreements — a provision in the bill would mandate public disclosure of OTA awards.
Workforce
Last year, the Defense Department began transitioning its program executive offices to “portfolio acquisition executives.” Senate lawmakers now want the department to establish key performance indicators for all program acquisition executives, assessing them on cost growth, schedule performance, competition, and use of rapid acquisition authorities.
Lawmakers would also require the Pentagon to build a centralized data dashboard that would “provide real-time visibility into the operational health, strategic growth, and efficiency of each program acquisition executive portfolio.”
Furthermore, the provision would require DoD to launch a pilot program recruiting “individuals with significant experience in commercial acquisition” into senior advisory roles. These experts would help shape acquisition strategies and assist contracting officers in applying commercial acquisition procedures, including commercial solution openings.
Lawmakers also proposed establishing a pilot training program that would “establish, evaluate, and refine the training and qualifications necessary for an elite advanced financial certification” within the Defense Department.
Participants would receive instruction in areas such as capital structure fundamentals, deal structuring, public-private partnership models, and execution frameworks.
Overall, while the fiscal 2026 NDAA concentrated primarily on overhauling the Pentagon’s acquisition system, the Senate’s fiscal 2027 bill expands that effort.
“The 2027 bill is going to have to open the spectrum a bit, open the aperture and take a good, hard look at what more we can do to incentivize growth, development, participation in the defense industrial base,” former Pentagon official Stephanie Barna told Federal News Network.
The bill is now headed to the Senate floor.
If you would like to contact this reporter about recent changes in the federal government, please email anastasia.obis@federalnewsnetwork.com or reach out on Signal at (301) 830-2747.
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