National Defense Authorization Act (NDAA)

Demystifying the National Defense Authorization Act (NDAA)

Understanding the National Defense Authorization Act

The National Defense Authorization Act (NDAA) is a pivotal legislation passed annually by Congress to shape the policies and structure of United States defense agencies. While the actual allocation of military funding requires separate appropriations bills, the NDAA serves as a platform for defining defense priorities, instituting organizational reforms within military entities, and outlining the utilization of funds.

In addition to its focus on the Department of Defense, the NDAA extends its scope to encompass various military-related programs managed by other government bodies, such as the Department of Energy's nuclear weapons initiatives and the Federal Bureau of Investigation's counterintelligence operations.

Key Takeaways:

The NDAA empowers Congress to establish defense policy priorities and funding allocations.
It encompasses a broad array of issues and agencies beyond the Department of Defense, including programs administered by other governmental bodies.
The NDAA's passage for the fiscal year 2021 marked a significant milestone, representing 60 consecutive years of congressional approval.
Despite its primary focus on defense, the NDAA often becomes a platform for incorporating unrelated legislative measures, leveraging its bipartisan support.

How Defense Spending Is Approved

Historically, determining the U.S. defense budget was solely the prerogative of the House and Senate Appropriations committees. However, the process underwent a transformation in 1961, evolving into a two-step procedure involving both authorization and appropriation. This adjustment aimed to provide greater oversight to committees responsible for defense policy, enhancing their control over financial allocations.

The NDAA serves as a guide for the utilization of defense funding, while the actual allocation is sanctioned through appropriations bills. The process typically commences in February when the White House presents the federal budget for the upcoming fiscal year to Congress. Subsequently, the House and Senate Armed Services committees commence the drafting process for the NDAA, often organizing subcommittees to address specific aspects like military personnel and cybersecurity.

Upon the completion of committee hearings, both chambers independently craft and pass their versions of the NDAA bill. In instances where discrepancies arise between the House and Senate bills, a conference committee is convened to reconcile differences and formulate a unified conference report. Upon approval, the legislation awaits the president's signature to become law.

The Only Veto Override of the Trump Administration

The NDAA for the 2021 fiscal year, amounting to $741 billion, marked a historic event as Congress successfully overrode President Donald Trump's veto. Despite the president's objections, which included non-defense-related issues such as social media regulations and troop withdrawal timelines, the bill garnered overwhelming support from both houses of Congress.

Aside from addressing the president's concerns, the 2021 NDAA incorporated several crucial defense-related provisions. These included a pay raise for troops, provisions for paid family leave, measures against discrimination, initiatives to counter Chinese military expansion in the Indo-Pacific region, and enhancements to cybersecurity protocols.

Tougher Rules Against Money Laundering and Terrorism Financing

In addition to its defense-related provisions, the NDAA for fiscal year 2021 introduced measures aimed at combating money laundering and terrorism financing. Notably, the inclusion of the Corporate Transparency Act mandates greater transparency from corporations and limited liability companies (LLCs) regarding their ownership structures.