Yesterday, President Obama signed the 2014 National Defense Authorization Act (NDAA).  In addition to dictating Department of Defense funding levels for the upcoming year, it covers a host of provisions affecting the defense industry.  Here’s what’s coming in 2014.

Contractor Salary Caps

Salaries for defense and civilian agency contractors may not exceed $625,000 annually.  However, the Secretary of Defense or other relevant agency has discretion to make exceptions for certain fields (cybersecurity, medical, engineering, etc.) to ensure the government “has continued access to needed skills and capabilities.’’

Congress rejected some calls to cap contractor salaries at the President or Vice President’s salary level. According to House Armed Services Chairman Buck McKeon (R-CA), “this is an inappropriate and arbitrary comparison that will drive talent from the nation’s defense industrial base.”


The bill authorizes multiyear contracts for the procurement of E–2D aircraft and C–130J aircraft.

It restricts acquisition of Styker vehicles, Littoral Combat Ships designated as LCS 25 and LCS 26, and additional C-27J aircraft.

According to the Congressional Budget Office, the FY2014 NDAA requests only a few specific procurement and R&D programs on account of the “stringent bars against ‘earmarks’ currently observed in both the House and the Senate.”

Security Clearances

After numerous hearings in 2013 on how to reform the clearance process, it’s been determined that DOD, ODNI, and OMB must jointly develop and implement a modernization strategy for the clearance process. The plan should include

  • Electronic systems to automate and integrate the clearance application process, investigations and adjudications, and records management;
  • Technology for the continuous monitoring of information pertinent to clearance determinations;
  • Standardization of the required forms for cleared personnel (such as travel, foreign contacts, and financial disclosures); and
  • An authoritative, central and electronic repository for personnel security information, among others.

Notably, the bill envisions a risk-based approach to monitoring and reinvestigation that prioritizes cleared individuals for frequent reinvestigations and random checks, such as the personnel with the broadest access to classified information or with access to the most sensitive classified information.


DOD intends to reduce the availability of TRICARE Prime coverage to retired beneficiaries in certain areas.  The NDAA permits currently-enrolled beneficiaries to elect continued coverage in the Prime program, even if it will be eliminated for the area in which the beneficiary resides.

Congress rejected most Administration proposals to increase TRICARE fees.  These included raising the premiums paid by military retirees to participate in TRICARE and introducing enrollment fees for certain TRICARE programs.


Information technology continues to flood the defense world in 2014.   The NDAA requires the Department of Defense to, among other things,

  • create standards for cyber operations training;
  • report on the status of each military department’s capability to operate in non-permissive and hostile cyber environments;
  • conduct a mission analysis for its cyber operations; and
  • notify Congress of network cyber intrusions that result in the compromise of critical information.

DOD has until March 15, 2014 to review and approve the acquisition of cloud computing systems for the Armed Forces and Defense Agencies.  Plans must also be in place to ensure these systems are interoperable and universally accessible and usable through attribute-based access controls.

A Principal Cyber Advisor will now advise the Secretary of Defense on military cyber forces and activities.  The appointee will supervise the cyber activities of offensive missions, the defense of DOD networks, as well as oversee policy and operational considerations, resources, personnel, and acquisition and technology.

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