The FY 2026 NDAA and the convergence of national security, capital, and enterprise risk

The FY 2026 National Defense Authorization Act reflects a continued and deliberate shift in how Congress uses defense authorization legislation. The Act is not limited to funding defense programs or refining acquisition processes. Instead, it advances a broader policy objective that integrates national security considerations into capital allocation, technology governance, and the development and operation of energy and infrastructure assets.

For companies and investors operating in technology, energy, infrastructure, and private capital markets, the NDAA increasingly functions as a forward-looking policy signal. Issues that once arose primarily in the context of government contracting now shape enterprise risk management, investment diligence, and long-term business strategy. Legal and compliance considerations tied to national security are no longer episodic. They are structural.

Technology and AI: National Security as a Governance Expectation

The FY 2026 NDAA continues Congress’s focus on advanced and dual-use technologies, including artificial intelligence, by embedding oversight and risk-management concepts directly into defense authorization. The Act reflects concern not only with how the Department of Defense acquires technology, but with how US companies develop, finance, and scale technologies that could present national security risks if transferred, replicated, or accessed by foreign actors.

For technology companies, including those without a traditional defense customer base, the NDAA reinforces rising expectations around internal governance. Data management, system transparency, and foreign participation in development or financing are increasingly relevant to national security assessments. These considerations are no longer confined to classified programs or sensitive contracts. 
They are becoming part of the baseline regulatory environment for advanced technology companies operating in global markets.

For in-house legal and compliance teams, this shift underscores the need to evaluate technology governance and AI risk frameworks alongside export controls, CFIUS exposure, and government contracting obligations. The boundaries between these regimes continue to narrow, particularly as national security policy increasingly informs technology regulation.

Procurement Reform as a Strategic and Investment Signal

The procurement and acquisition reforms reflected in the FY 2026 NDAA are often viewed narrowly as changes affecting defense contractors. In practice, they function as a signal to the broader market regarding how the federal government intends to engage with industry over the long term. The Act continues to emphasize speed, interoperability, and government access to technology and data, while recalibrating how regulatory burden is allocated between industry and the government.

The NDAA’s focus on modular open systems, data rights, and flexible acquisition pathways reflects a policy objective of preserving government leverage over critical technologies while encouraging broader participation from non-traditional contractors and commercial providers. These requirements have implications beyond contract administration. They influence product design, intellectual property strategy, and long-term revenue models, particularly where government demand may become a meaningful driver of growth.

The Act also continues Congress’s effort to adjust cost and pricing regimes in ways that affect both compliance risk and investment economics. Proposed changes to the thresholds for Cost Accounting Standards applicability are a notable example. While often characterized as technical, these changes can materially affect pricing flexibility, audit exposure, and internal control requirements for companies operating at the margins of traditional defense contracting or entering the market through acquisition or platform investment strategies.

For some businesses, higher CAS thresholds may reduce compliance friction and facilitate integration into larger corporate or portfolio structures. For others, particularly those scaling quickly or acquiring government-facing capabilities, CAS exposure may remain a meaningful consideration that affects cost structure, diligence scope, and post-closing compliance obligations. In either case, CAS status should be assessed early and treated as a strategic input rather than a downstream contract administration issue.

For infrastructure developers, technology platforms, and private capital investors, procurement reform under the NDAA increasingly shapes how assets are valued and structured. Data ownership, audit risk, and cost-accounting obligations can influence exit optionality and long-term strategic flexibility. Taken together, these reforms underscore that acquisition policy is no longer merely an operational concern, but a factor that informs investment strategy and enterprise risk management.

Energy and Infrastructure as National Security Assets

The FY 2026 NDAA reinforces the treatment of energy and infrastructure as core national security assets. Provisions addressing nuclear security, infrastructure modernization, and system resilience reflect a broader view of defense readiness that extends beyond traditional military installations.

Energy companies and infrastructure sponsors should expect heightened oversight and reporting requirements where projects intersect with federal programs or national security priorities. The Act’s emphasis on long-term planning, transparency, and interagency coordination signals that participation in these sectors will increasingly require mature compliance and risk-management capabilities.

Infrastructure under the NDAA is defined broadly and includes digital systems, data platforms, and monitoring technologies. As a result, cybersecurity, data governance, and interoperability considerations are becoming central to infrastructure compliance analysis. Companies operating in these spaces should expect national security considerations to play a more prominent role in project development, financing, and operations.

Private Capital and Foreign Exposure

One of the most significant implications of the FY 2026 NDAA is its impact on private capital. The Act reinforces the principle that national security risk follows capital, not just contracts. Congressional focus on foreign contributions, cost-sharing arrangements, and technology ownership reflects growing concern about indirect foreign influence in sensitive sectors.

Private equity funds, infrastructure investors, and other sponsors should anticipate increased scrutiny of foreign investor relationships, consultant engagements, and supply chain dependencies at both the fund and portfolio company levels. These issues can affect eligibility for government business, regulatory risk, and reputational exposure.

For investment committees, the NDAA highlights the importance of incorporating national security considerations into diligence and governance processes early in the investment lifecycle. This includes evaluating how portfolio companies manage foreign relationships and how those relationships may be perceived as policy priorities evolve.

Considerations for Legal, Compliance, and Executive Leadership

The FY 2026 NDAA should be viewed as part of a continuing policy trajectory rather than a standalone legislative event. Companies and investors should assess whether existing governance, compliance, and diligence frameworks adequately address the convergence of national security, technology, and capital markets reflected in the Act.

Areas of focus include enterprise-level risk mapping that connects technology development, data governance, supply chains, and foreign exposure; review of contractual and intellectual property strategies in light of data rights and modular system expectations; and enhanced diligence and oversight of foreign investment and commercial relationships.

Board-level engagement is increasingly important. National security considerations are now embedded in business risk in ways that directly affect growth strategy, valuation, and long-term resilience.

Conclusion

The FY 2026 NDAA makes clear that national security policy is shaping the rules of engagement for energy, technology, infrastructure, and private capital markets. Organizations that anticipate these shifts and integrate legal, compliance, and strategic planning will be better positioned to manage regulatory complexity while pursuing new opportunities.

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_{This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.}

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