What You Need To Know

• Defense contractors, tech companies, and technology investors should familiarize themselves with new innovation opportunities and programs in the recently approved Fiscal Year 2024 National Defense Authorization Act.
• The act invests in emerging and climatetech, including quantum computing, hydrogen-powered vehicles, and “forever chemical” remediation.
• It also promotes artificial intelligence and facilitates the adoption of innovation, including efforts to consolidate data centers and leverage commercial data center solutions, as well as programs designed to encourage the Department of Defense to adopt AI for general operations and specific military applications.
• Additionally, the act seeks to improve semiconductor supply chain cybersecurity to prevent intellectual property theft and disruption caused by cyber-attacks.

The Fiscal Year 2024 National Defense Authorization Act (“FY2024 NDAA”) continues the national security imperative to enhance the country’s scientific and technological developments and to adopt emerging technologies and innovation. Signed into law on December 22, 2023, the FY2024 NDAA (full text here) authorizes a budget for notable innovation opportunities and programs that may align with the strategic roadmaps of defense contractors, tech companies, and technology investors. Here are a few highlights:

Investing in Emerging Technologies and Climatetech

• Creates a prize program for innovations to destroy perfluoroalkyl substances (so-called “forever chemicals”) and broadens the availability of technical assistance for communities dealing with contamination related to the Department of Defense (“DoD”)
• Establishes a pilot program to test and evaluate how quantum and quantum-hybrid applications may solve technical programs and provide needed capabilities
• Budgets for researching and developing fuel cells for next-generation electric combat vehicles and for using hydrogen as a fuel source

Funding for Autonomous Technologies

• Allocates resources to accelerate development of semiautonomous adversary air platform systems, as well as the research and development of intelligent autonomous systems for seabed warfare

Developing the Space Domain

• Provides guidance to DoD to adopt commercial capabilities and directs the use of middle-tier acquisition authority for rapidly fielding satellites and associated systems for Tranches 1-3 of the Space Development Agency’s proliferated warfighter space architecture
• Directs the establishment of transparent regulations for entering into agreements and receiving cost reimbursements for providing goods and services to commercial entities conducting space launch activities at Space Force bases.

Semiconductor Supply Chain and Cybersecurity

• Directs the creation of a pilot program to improve supply chain cybersecurity for semiconductor design, manufacturing, assembly, packaging, and testing
• Improves supply chain cybersecurity, which is intended to protect against cyber-driven intellectual property theft and reduce the risk of disruptions caused by cyberattacks.

Promoting Artificial Intelligence

• Directs DoD to develop and implement a process to assess and report the development and functioning of artificial intelligence technologies
• Requires DoD to evaluate technology—including applications, tools, and models—to detect and watermark generative artificial intelligence
• Authorizes an artificial intelligence bug bounty program
• Creates studies, strategies, and pilot programs designed to promote adoption of artificial intelligence into the DoD’s general operations and specific military applications with the assistance of experts

Facilitating Adoption of and Investment in New Innovation

• With data as the fuel for AI, the FY2024 NDAA continues to promote efforts to consolidate data centers and leverage commercial data center solutions. It directs the Administrator of the Office of Electronic Government to create and issue guidance to covered agencies on minimum requirements for creating and operating new data centers and also mandates that heads of such agencies prioritize leveraging commercial data center solutions—including hybrid cloud, multi-cloud, co-location, interconnection, or cloud computing—rather than acquiring, overseeing, or managing custom data center infrastructure in determining whether to establish or continue to operate an existing data center.
• The “anything-as-a-service" pilot program seeks to facilitate on-demand access to new capabilities with a fixed price per unit based on actual usage.
• The FY2024 NDAA establishes the Office of Strategic Capital to “develop, integrate, and implement capital investment strategies proven in the commercial sector to shape and scale investment in critical technologies and assets.” It focuses on identifying and prioritizing promising critical technologies that could benefit defense agencies. It also authorizes a pilot program providing capital supporting eligible entities that are developing technologies that align with DoD’s needs.

*Law clerk Judd Chamaa also contributed to the preparation of this alert.