House Removes Anti-Innovation Provisions from NDAA

Two anti-innovation provisions from the Senate-passed National Defense Authorization Act have been removed by the House. One would have undermined the spectrum auction deal made in the One Big, Beautiful Bill and another would have prevented American technology from reaching global markets.

The NDAA, which Congress passes every year to maintain our military, is widely seen as a “Christmas tree” various congressional priorities. The text released by the House on Sunday mostly resists this urge by dropping the worst provisions of the Senate version – and House leadership deserves credit for delivering a cleaner bill.

Members of Congress often try to insert all kinds of unrelated bills that would never carry on their own into this must-pass legislation. The NDAA will never fail to pass, so members naturally try to attached pet projects to a moving vehicle.

Members of the Armed Services Committees in both House and Senate tend to resent provisions they do not see as directly impacting defense policy getting shoehorned into their annual package. They can, however, use the pretext of “national security” to insert their own priorities when they have some tangential connection to defense.

This is precisely what happened when Republicans on the Senate Armed Services Committee included two anti-innovation provisions in their version of the NDAA. The first of these would have given the deep state a veto over Congressionally-mandated spectrum auctions.

The One Big, Beautiful Bill mandated that the Federal Communications Commission auction off government-controlled airwaves to the private sector. The biggest holder of inefficiently used government spectrum is (unsurprisingly) the Department of Defense, so the Pentagon lobbied hard to undo the deal Republicans had reached back in the spring.

A provision of the Senate version “prohibits any modifications to the Department’s systems in key spectrum bands without joint certification from the Secretary of Defense and Chairman of the Joint Chiefs of Staff.” In plain English, the Senate-passed NDAA grants a veto to the deep state over what was already signed into law through reconciliation. There is nothing to prevent the Pentagon from refusing to agree to any auction, defeating the purpose of the Big Beautiful Bill’s commerce title. Like Darth Vader, they were altering the deal and expected everyone else to put up with it.

Spectrum auctions have generated over $233 billion since 1994 while wireless investment has added $260 billion to GDP. Of this, $118 billion has come in since just 2018 – demand is growing. Auctions not only raise non-tax federal revenue, which helps the math work in the budget process, but also accelerate investment and innovation. If the Pentagon had been required to approve every auction the FCC wanted to conduct, the auctions would never happen. House leadership wisely recognized this and stripped the provision from their bill.

The other bad idea in the NDAA was the GAIN AI Act. It would essentially give American companies right of first refusal to buy advanced AI chips from American producers before they are exported. While export controls can slow down other countries’ own technological development, they cannot stop it forever and inevitably result in black market smuggling.

The GAIN AI Act is not even a full export control since American companies could still export our high-end microchips and graphics processing units under its terms as long as they reveal all of their proprietary information to the Department of Commerce and offer steep discounts to Americans first. Our innovators would be allowed to sell abroad and keep American tech as the global leader as long as they are willing to lose money domestically in the process.

GAIN AI is a market distortion that would make it harder for chipmakers to recoup their investments and harder for friendly countries to buy our tech. It would do this out of fear that a Chinese buyer might purchase them second-hand and might use them for military purposes, if they could buy them at scale. Even if one supports export controls on leading technology, this is not an effective way to go about them.

The House of Representatives’ version of the NDAA is vast improvement over the Senate-passed bill. It protects innovation and promotes both liberty and American tech leadership globally. Congress should preserve these changes in final passage.