As the House and Senate Armed Services Committees prepare to mark up the Fiscal Year 2024 National Defense Authorization Act (NDAA), they are very likely to consider a number of China-related measures that have been recommended by the national security community and which could enjoy bipartisan support. These recommendations are generally focused on countering Chinese influence in the United States or increasing the United States’ relative power advantage in the Pacific region.
Based on the Chairman’s mark of the 2024 NDAA, released to the public last week, the House Armed Services Committee (HASC) remains concerned about China’s cooperation with Russia and vulnerabilities created by U.S. reliance on supply chains that depend on China. The mark includes provisions initiating Department of Defense (DoD) studies and reports on U.S. and DoD supply chains for certain critical materials, including graphite, magnesium, and tungsten, which the U.S. largely depends on China to produce. It also directs that DoD identify its top-five vulnerabilities in chemical and basic material supply chains, which are dominated by China and Russia, and communicate those gaps to the U.S. biomanufacturing industrial base. And it prohibits the Secretary of Defense from procuring certain chemicals for munitions — so-called “energetics,” a broad category of explosive and propellant materials used in rockets and missiles — from any country other than a narrow set of U.S. allies and partners. Finally, Section 1232 of the Chairman’s mark raises the alarm on Chinese-Russian nuclear cooperation, noting that Russia is providing China with highly enriched uranium for its fast-breeder nuclear reactors and directing DoD and other key agencies to develop a strategy to limit Russia’s nuclear proliferation activities.
As HASC and the Senate Armed Services Committee (SASC) gear up for full committee markups this week, it is almost certain that additional China-related measures will be introduced as amendments to the Chairman’s mark in both committees. Many expect Representative Mike Gallagher, who is both a senior member of the HASC and Chairman of the House Select Committee on the Strategic Competition Between the United States and Chinese Communist Party, to be particularly active in submitting China-focused amendments that reflect legislative and policy recommendations developed by the Select Committee. Among measures that could be included are ideas recommended by Robert O’Brien, who served as National Security Adviser during the previous administration. O’Brien outlined 15 recommendations in a recent Foreign Affairs article, including selectively prohibiting Chinese investments in the United States (such as purchases of U.S. farmland); amplifying U.S. investments in naval and missile capabilities; and discouraging U.S. investment in China. O’Brien raises also the idea of a new CHIPS Act (which established incentives for domestic semiconductor production) to boost domestic production of other critical materials.
Markup of the 2024 NDAA was delayed as Democrats and Republicans worked out a bill to suspend the debt limit and establish government-wide spending caps earlier this year. We will know the full content of the HASC bill on or around June 22, when markup is scheduled to conclude. The marked-up SASC bill is not expected to be made public until it is filed on the Senate floor, likely not until after July 4.
Given the impact that China-related measures will have on U.S. acquisition policies and procedures, the NDAA will have significant implications for government contractors that must at times navigate the U.S.-China relationship. We will continue to monitor the evolution of the NDAA in both chambers of Congress and issue further updates as the bill moves forward.