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For engineering and construction firms, the most consequential provisions are concentrated in Division B—Military Construction Authorizations, particularly Title XXVIII, which governs how projects may be planned, contracted and delivered.

For the first time, Congress has expressly authorized progressive design-build for military construction. Section 2809 permits the military departments to use “accelerated design-build and progressive design-build procedures” for MILCON projects, removing long-standing uncertainty about whether collaborative, qualifications-based delivery models are permissible under federal law.

Progressive design-build allows owners to select teams based on qualifications and collaborate during early design before negotiating final price, rather than locking in cost at the proposal stage. State and local agencies have used the approach on complex projects but previously lacked a clear statutory footing within the Defense Dept.

The significance is practical: the law now supports earlier contractor and designer involvement on projects where scope, site conditions and sequencing risks are difficult to define upfront, including shipyard work, industrial facilities and overseas posture projects.

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Multi-year Contracting Authority Extends Beyond Maintenance

The NDAA also expands DOD’s ability to contract construction work over multiple years. Section 2814 authorizes multiyear contracting authority for certain military construction projects, allowing agencies to structure delivery beyond single-year execution windows.

This authority is distinct from traditional annual MILCON contracting and is intended to improve cost control, workforce continuity and scheduling certainty on large or phased programs. For contractors, it opens the door to longer planning horizons and potentially fewer stop-start procurements on major installations.

SIDEBAR

What the FY 2026 NDAA Changes for Contractors

A U.S. Navy submarine is docked at a military waterfront facility, one of many aging naval assets driving congressional focus on long-term shipyard modernization and updated contracting authorities in the FY 2026 National Defense Authorization Act.

Photo by DenisProduction.com/Adobe

In parallel, Section 2816 authorizes cost-plus-incentive-fee contracts for selected projects under the Navy’s Shipyard Infrastructure Optimization Program, acknowledging the technical complexity and risk profile of dry dock modernization and waterfront recapitalization work.

Beyond delivery, the law reinforces long-term demand signals. Section 2803 requires the military departments to develop and update 20-year infrastructure improvement plans, formalizing a multidecade planning framework for bases, depots and industrial facilities.

Other provisions expand eligible project types and flexibility. Section 2807 explicitly includes demolition projects in the Defense Community Infrastructure Program, while Section 2804 strengthens requirements related to water management and security on military installations—areas likely to generate follow-on civil and environmental work.

Collectively, the enacted authorities point toward procurement shifts that ENR readers will want to watch closely. Agencies now have statutory backing to place greater emphasis on qualifications-based selection, early preconstruction services and phased price development, particularly on complex or high-risk projects.

Firms with integrated design, cost modeling, and constructability expertise are likely better positioned, as owners gain the flexibility to defer final price commitments until design maturity improves. Multiyear authority also favors teams capable of sustaining workforce and supply-chain capacity across longer delivery timelines.

Implementation will fall primarily to the U.S. Army Corps of Engineers, Naval Facilities Engineering Systems Command and Air Force Civil Engineer Center, which are expected to issue internal acquisition guidance interpreting the new authorities before applying them to upcoming procurements.

Early adoption is expected on technically complex projects—such as shipyard recapitalization, depot modernization and Indo-Pacific posture upgrades—but timing will depend on agency guidance and FY 2026 appropriations.

As with prior defense authorization bills, the law authorizes policy rather than appropriates funding. Still, by embedding delivery reform directly into statute, the FY 2026 NDAA establishes a durable framework that could materially change how military construction is planned, contracted and delivered over the next decade—well beyond a single budget cycle.