NDAA

The annual defense policy law that authorizes weapons programs and sets Pentagon priorities Congress will fund.

Also known as: National Defense Authorization Act, Defense Authorization

What it is

The NDAA is the yearly law that authorizes Department of Defense programs, spending levels, and policy. It sets ceilings and directs which platforms and initiatives get pursued. Actual money still comes through defense appropriations.

What it does

The NDAA telegraphs which weapons systems, shipbuilding lines, and technologies have congressional backing, guiding investor expectations for primes and suppliers. Program adds and cuts inside the bill move exposed names. It is a roadmap for the appropriations that follow.

The evidence

Shipbuilders and aircraft primes have moved on NDAA provisions adding or accelerating platforms they produce.

Best for

Defense primes like LMT, NOC, GD, HII, RTX; ETF ITA.

Pairs well with

appropriations, foreign-military-sale, usaspending

Use cautiously with

Authorization is not appropriation; an NDAA add without matching appropriated dollars produces no revenue.

Cautions

The bill's provisions are negotiated to the wire, so early drafts can mislead single-name theses.