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[Senate Report 111-289]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 560

111th Congress                                                   Report
 2d Session                      SENATE                         111-289
_______________________________________________________________________

                      EXPORT PROMOTION ACT OF 2010

                               __________

                              R E P O R T

                                 OF THE

           COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                                   on

                                S. 3084

                                     

               September 13, 2010.--Ordered to be printed

                              ______

                     U.S. GOVERNMENT PRINTING OFFICE
89-006                   WASHINGTON : 2010

       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
                     one hundred eleventh congress
                             second session

            JOHN D. ROCKEFELLER IV, West Virginia, Chairman
DANIEL K. INOUYE, Hawaii             KAY BAILEY HUTCHISON, Texas
JOHN F. KERRY, Massachusetts         OLYMPIA J. SNOWE, Maine
BYRON L. DORGAN, North Dakota        JOHN ENSIGN, Nevada
BARBARA BOXER, California            JIM DeMINT, South Carolina
BILL NELSON, Florida                 JOHN THUNE, South Dakota
MARIA CANTWELL, Washington           ROGER F. WICKER, Mississippi
FRANK R. LAUTENBERG, New Jersey      GEORGE S. LeMIEUX, Florida
MARK PRYOR, Arkansas                 JOHNNY ISAKSON, Georgia
CLAIRE McCASKILL, Missouri           DAVID VITTER, Louisiana
AMY KLOBUCHAR, Minnesota             SAM BROWNBACK, Kansas
TOM UDALL, New Mexico                MIKE JOHANNS, Nebraska
MARK WARNER, Virginia
MARK BEGICH, Alaska
                     Ellen Doneski, Staff Director
                   James Reid, Deputy Staff Director
                     Bruce Andrews, General Counsel
                 Ann Begeman, Republican Staff Director
              Brian Hendricks, Republican General Counsel
                Todd Bertoson, Republican Senior Counsel

                                                       Calendar No. 560
111th Congress                                                   Report
                                 SENATE
 2d Session                                                     111-289

======================================================================

 
                      EXPORT PROMOTION ACT OF 2010

                                _______
                                

               September 13, 2010.--Ordered to be printed

                                _______
                                

     Mr. Rockefeller, from the Committee on Commerce, Science, and 
                Transportation, submitted the following

                                 REPORT

                         [To accompany S. 3084]

    The Committee on Commerce, Science, and Transportation, to 
which was referred the bill (S. 3084) to increase the 
competitiveness of United States businesses, particularly 
small- and medium-sized manufacturing firms, in interstate and 
global commerce, foster job creation in the United States, and 
for other purposes, having considered the same, reports 
favorably thereon with an amendment (in the nature of a 
substitute) and recommends that the bill (as amended) do pass.

                          Purpose of the Bill

  The purpose of S. 3084, as amended, is to assist U.S. 
businesses that are interested in exporting their products but 
do not otherwise have the resources or know-how to pursue 
international opportunities on their own. The bill would, 
first, increase the activities and personnel resources of the 
Department of Commerce (Department) to enhance its ability to 
carry out its mission to promote U.S. exports and allow the 
Department to increase coordination with States working on 
similar efforts. Second, the bill would increase funding for 
export grants available to industry associations and other non-
profit institutions. Third, the bill would require the 
Department to consider export potential as a factor when 
reviewing applications for manufacturing grants and innovation 
grants. Finally, the bill would require the Secretary of 
Commerce to report to Congress within 90 days of the date of 
enactment on the tariff and nontariff barriers to trade imposed 
by Columbia, South Korea, and Panama.

                          Background and Needs

  In 2008, the share of gross domestic product (GDP) resulting 
from U.S. exports reached 12.7 percent--its highest level since 
1916. In 2008, the country exported approximately $1.7 trillion 
in goods and services and the Department estimates that these 
exports supported 10.3 million jobs. Based on these figures, a 
new job was created for every $165,000 increase in export 
sales.
  Despite America's strong export sector, the U.S. has not come 
close to realizing its full export potential according to 
international trade experts.\1\ Less than one percent of U.S. 
businesses engage in exporting, and nearly 60 percent of these 
companies only trade in one foreign country. Moreover, exports 
account for a smaller proportion of American GDP than other 
leading exporting nations.
---------------------------------------------------------------------------
    \1\See, for example, the testimony of Liz J. Reilly, U.S. Chamber 
of Commerce, before the Senate Committee on Commerce, Science and 
Transportation, October 6, 2009.
---------------------------------------------------------------------------

      DEPARTMENT OF COMMERCE'S INTERNATIONAL TRADE ADMINISTRATION

  Export promotion in the U.S. involves an array of efforts by 
businesses, trade associations, and Federal, State, and local 
government offices. Within the Federal government, 20 different 
agencies are responsible for trade promotion activities, which 
are connected through a Trade Promotion Coordinating Committee 
(TPCC) chaired by the Department. The main export promotion 
efforts at the Department are conducted by the International 
Trade Administration (ITA).
  The ITA's trade promotion efforts are spearheaded by the 
United States and Foreign Commercial Service (USFCS or 
Commercial Service), a subdivision of ITA that has trade 
specialists in 109 U.S. cities and in 77 countries. Trade 
specialists in these offices assist U.S. exporters at every 
step of the export process, including market research, overseas 
advertising, and in locating foreign buyers, distributors, and 
business partners. The three priorities of the Commercial 
Service are: 1) increasing the number of U.S. companies that 
export overseas; 2) helping smaller companies expand to new 
export markets; and 3) assisting exporters to overcome hurdles 
in foreign markets.
  Export assistance often takes the following forms:

           Matchmaking and Counseling. The Commercial 
        Service's trade specialists often recommend that U.S. 
        companies develop a partnership with an overseas agent 
        or distributor and facilitate the creation of such 
        relationships. For example, trade specialists will 
        contact a group of pre-screened overseas businesses and 
        then narrow that list based on the specific needs of 
        the U.S. company. This work is done before a company 
        makes a trip overseas, saving it time and money.

           Trade Missions. In 2008, the Commercial Service 
        supported trade missions to 27 overseas markets, with 
        420 U.S. companies participating. Such missions 
        introduce U.S. exporters to potential foreign buyers, 
        locate agents and distributors, identify joint venture 
        partners, and facilitate introductions with foreign 
        government officials.

           Commercial Diplomacy and Advocacy. In certain 
        cases, the U.S. government will weigh in on behalf of a 
        U.S. company with a foreign government to assist in 
        resolving a trade issue. These services can be 
        particularly useful for firms exporting to emerging 
        markets.

  In 2008, the Commercial Service assisted 426 U.S. companies 
that had previously never exported goods, and assisted in more 
than 3,000 transactions for firms that were exporting products 
to new markets. More than 80 percent of the 12,000 export 
transactions facilitated by the Department in 2008 were 
reported by small- and medium-sized businesses. The Department 
reports that these efforts support more than $67 billion in 
exports. Despite this success, the Commercial Service has lost 
approximately 200 employees since 2004 due to attrition and 
budgetary constraints. S. 3084 would direct the Department to 
replace those lost workers over the next five years, subject to 
appropriations.

             THE DEPARTMENT OF COMMERCE'S EXPORTECH PROGRAM

  Developed in 2006 as a pilot program by the Manufacturing 
Extension Partnership (MEP) and various other Federal and State 
agencies, ExporTech assists U.S. companies in developing a 
customized export plan. The companies meet for three one-day 
sessions over a three-month period, and, in between sessions, 
participants work with ExporTech counselors on developing their 
export plans. Throughout the program, experts are brought in to 
provide information and guidance to enable companies to 
accelerate their export plans and speed their products to 
market. In the final work session, a panel of experienced 
business professionals reviews each participating company's 
export growth plan and provides feedback. One of the keys to 
ExporTech's success is that it customizes each program to the 
participant's export needs. Each workshop includes a maximum of 
eight participating companies, allowing it to provide 
sufficient time and attention to each company's specific 
challenges.
  Since 2006, ExporTech has conducted 23 workshops with 180 
companies. The average return on investment for these companies 
is approximately 100:1. S. 3084 would provide $11 million to 
allow ExporTech to expand its service offerings nationwide.

   THE DEPARMENT OF COMMERCE'S MARKET DEVELOPMENT COOPERATOR PROGRAM 
                                 (MDCP)

  Under MDCP, the ITA awards grants to support projects that 
enhance the competitiveness of U.S. manufacturing and service 
industries. MDCP grants establish partnerships between the 
Department and non-profit industry groups to fund long-term 
export promotion activities. Past award recipients have 
included trade associations, State departments of trade, 
regional associations of trade and economic development, 
chambers of commerce, and non-profit industry organizations. 
These groups are particularly effective in reaching small- and 
medium-sized U.S. businesses that the Department would likely 
not otherwise encounter. To qualify for a grant, an applicant 
must pledge to pay a minimum of two-thirds of the project cost 
and to sustain the project after the MDCP award period ends.
  The ITA has awarded MDCP grants since 1993. On average the 
program has generated $134 of exports for every Federal dollar 
invested. Since 1997, the MDCP has helped U.S. industry 
generate over $2.9 billion in exports. S. 3084 would authorize 
$15 million for new MDCP export promotion grants.

                         Summary of Provisions

  S. 3084, as reported, would direct the Department, subject to 
appropriations, to increase by approximately 200 the number of 
its employees whose primary responsibilities involve export 
promotion. The bill would further authorize $25 million over 
five years to the Department to be spent on improving export 
promotion for rural businesses. Additionally, the bill contains 
a Sense of the Senate section urging the Department to work 
closely with the States and enter into agreements with State 
trade agencies on export promotion to extend the reach of the 
Department's export promotion efforts. The bill would also 
require the Secretary to report to Congress on the tariff and 
nontariff trade barriers imposed by Columbia, South Korea, and 
Panama within 90 days of the date of enactment.
  In order to increase exports in the short term, the bill 
would authorize $30 million to be used by the Department to 
expand efforts by current U.S. exporters and $11 million to be 
used by the MEP to expand the ExporTech program. The bill would 
also authorize $15 million to be used by the MDCP for export 
promotion grants. In total, the bill would authorize $81 
million to the Department to improve its export promotion 
programs and direct it to increase staff levels by 200 
personnel over five years.
  Finally, the bill would allow for additional criteria to be 
used in determining MEP and the Technology Innovation Program 
(TIP) awards. Such expanded criteria would include whether an 
application has significant potential for enhancing the 
competitiveness of small- and medium-sized U.S. manufacturers 
in the global marketplace.

                          Legislative History

  On October 6, 2009, Senator Klobuchar held a hearing in the 
Subcommittee on Competitiveness, Innovation, and Export 
Promotion that examined the Federal government's role in 
promoting exports. On March 5, 2010, Senator Klobuchar 
introduced S. 3084 with Senator LeMieux. The bill was referred 
to the Committee on Commerce, Science, and Transportation. On 
June 9, 2010, the Committee met in open executive session and, 
by a voice vote, ordered a substitute amendment to S. 3084 
reported with an amendment by Senator Johanns.
  The substitute amendment sponsored by Senators Klobuchar, 
LeMieux and Kerry added four provisions to the introduced bill. 
It authorized an additional $56 million to be used within 18 
months by the Department for export promotion efforts. Of the 
total funding, $30 million is expected to be used to target and 
assist known U.S. exporters that have an immediate capacity to 
grow their international sales; $11 million is to be used to 
expand the ExporTech program; and $15 million is to be provided 
to the MDCP. The substitute amendment also incorporated a Sense 
of the Senate that the Department should work closely with the 
States to extend the reach of its export promotion efforts.
  In addition to the changes made to S. 3084 by the substitute, 
the Committee adopted an amendment by Senator Johanns that 
would require the Secretary of Commerce, within 90 days of the 
date of enactment, to report to Congress on the tariff and 
nontariff trade barriers imposed by Columbia, South Korea, and 
Panama on U.S. exports.

                            Estimated Costs

  In accordance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate and section 403 of the 
Congressional Budget Act of 1974, the Committee provides the 
following cost estimate, prepared by the Congressional Budget 
Office:
                                                     June 28, 2010.
Hon. John D. Rockefeller IV,
Chairman, Committee on Commerce, Science, and Transportation,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 3084, the Export 
Promotion Act of 2010.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susan Willie.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

S. 3084--Export Promotion Act of 2010

    Summary: S. 3084 would authorize the International Trade 
Administration (ITA) to increase the number of employees that 
promote the participation of United States companies in 
international markets. The bill also would authorize 
appropriations for various programs in the Department of 
Commerce that improve the competiveness of domestic companies 
in foreign markets.
    Based on information from the ITA, CBO estimates that 
implementing S. 3084 would cost $248 million over the 2011-2015 
period, assuming the appropriation of the necessary amounts. 
Enacting S. 3084 would not affect direct spending or revenues; 
therefore, pay-as-you-go procedures would not apply.
    S. 3084 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would not affect the budgets of state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 3084 is shown in the following table. 
The costs of this legislation fall within budget function 370 
(commerce and housing credit).

----------------------------------------------------------------------------------------------------------------
                                                                    By fiscal year in millions of dollars--
                                                              --------------------------------------------------
                                                                2011    2012    2013    2014    2015   2011-2015
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATIONGlobal Business Development:
    Estimated Authorization Level............................      12      24      36      48      59        179
    Estimated Outlays........................................      10      22      34      45      57        168
Rural Export Initiative:
    Authorization Level......................................       5       5       5       5       5         25
    Estimated Outlays........................................       4       5       5       5       5         24
Global Business Development:
    Authorization Level......................................      30       0       0       0       0         30
    Estimated Outlays........................................      26       4       0       0       0         30
ExporTech Program:
    Authorization Level......................................      11       0       0       0       0         11
    Estimated Outlays........................................       9       2       0       0       0         11
Market Development Cooperator:
    Authorization Level......................................      15       0       0       0       0         15
    Estimated Outlays........................................      13       2       0       0       0         15    Total Changes:...........................................
        Estimated Authorization Level........................      73      29      41      53      64        260
        Estimated Outlays....................................      62      35      39      50      62        248
----------------------------------------------------------------------------------------------------------------

    Basis of estimate: For this estimate, CBO assumes that the 
bill will be enacted before the end of fiscal year 2010, that 
the necessary amounts will be appropriated for each year, and 
that spending will follow historical patterns for similar 
programs. CBO estimates that implementing S. 3084 would cost 
$248 million over the 2011-2015 period, assuming appropriation 
of the necessary amounts.

Global Business Development

    S. 3084 would require the ITA to increase the number of 
employees whose primary responsibilities involve promoting the 
participation of U.S. firms in foreign markets. Within five 
years of enactment, the agency would be required to increase 
the number of staff performing those activities to the same 
number that performed this work in fiscal year 2004. Based on 
information from the ITA, CBO expects that the agency would 
need to hire about 210 additional employees over five years to 
reach that staffing level. We estimate that implementing those 
requirements would cost $168 million over the 2011-2015 period.

Other Export Initiatives

    The bill would authorize the appropriation of $81 million 
for a number of programs designed to improve the 
competitiveness of U.S. businesses in international markets. 
CBO estimates that implementing those provisions would cost $80 
million over the 2011-2015 period. Those costs would include:
         $24 million for a program to improve the 
        access of rural businesses to the global marketplace;
         $30 million to promote the expansion of small- 
        and medium-sized businesses in foreign markets;
         $11 million to expand ExporTech, a program 
        jointly sponsored by the ITA, the National Institute of 
        Standards and Technology, and educational, state, and 
        private institutions that provides technical assistance 
        to small- and medium-sized businesses that want to 
        expand into international markets; and
         $15 million to establish partnerships between 
        public institutions and private enterprises through the 
        ITA's Market Development Cooperator Program (MDCP). The 
        MDCP provides technical and financial assistance to 
        nonprofit groups representing manufacturing and service 
        industries to support projects that improve their 
        industries' competitiveness in foreign markets.
    Pay-as-you-go considerations: None.
    Intergovernmental and private-sector impact: S. 3084 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would not affect the budgets of state, 
local, or tribal governments.
    Estimate prepared by: Federal Costs: Susan Willie; Impact 
on State, Local, and Tribal Governments: Elizabeth Cove 
Delisle; Impact on the Private Sector: Sam Wice.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                      Regulatory Impact Statement

  In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following evaluation of the regulatory impact of the 
legislation, as reported:

                       NUMBER OF PERSONS COVERED

  The bill does not impose any new rules or otherwise modify 
the jurisdictional reach of the Department. Consequently, the 
Committee does not expect that it will subject any additional 
individuals or businesses to regulations.

                            ECONOMIC IMPACT

  The bill would authorize an increase of approximately 200 
employees and $81 million to the Department for specific export 
promotion programs. Based on the historical return on 
investment of these programs, S. 3084 should support the 
creation of export-based American jobs.

                                PRIVACY

  The Committee does not anticipate that the bill would have 
any adverse impact on the personal privacy of individuals.

                               PAPERWORK

  While the Committee does not anticipate a major increase in 
paperwork burdens resulting from the passage of this 
legislation, the legislation would require one report from the 
Department to be issued within 90 days of the date of 
enactment. The Secretary of Commerce, in consultation with the 
United States Trade Representative (USTR), must report to 
Congress on the tariff and nontariff trade barriers imposed by 
Columbia, South Korea, and Panama on U.S. exports. USTR 
currently produces a similar report--the National Trade 
Estimate Report--which will significantly assist in the 
creation of the Department of Commerce report.

                   Congressionally Directed Spending

  In compliance with paragraph 4(b) of rule XLIV of the 
Standing Rules of the Senate, the Committee provides that no 
items contained in the bill, as reported, meet the definition 
of congressionally directed spending items under the rule.

                      Section-by-Section Analysis

Section 1. Short title.

  Section 1 would provide that the bill may be cited as the 
Export Promotion Act of 2010.

Section 2. Commerce Department global business development and 
        promotion activities.

  Section 2 would direct the Department to increase the number 
of full-time employees whose primary responsibilities involve 
promoting or facilitating participation by U.S. businesses in 
the global marketplace. The number of employees would be equal 
to the number at the Department in 2004. In carrying out the 
section, the Department would take such action as necessary to 
ensure that its global marketplace promotional activities 
include efforts focused on small and medium-sized businesses. 
The section would authorize appropriations of such sums as 
necessary for fiscal years 2011 through 2015.

Section 3. Improved access to global markets for rural businesses.

  Section 3 would authorize $25 million over 5 years to the 
Department to focus its activities on improving access to the 
global marketplace for rural businesses.

Section 4. Additional funding for interstate commerce and global 
        business development activities of the Department of Commerce.

  Section 4 would authorize $30 million in additional funds to 
be used within 18 months by the Department to promote or 
facilitate participation by U.S. businesses in the global 
marketplace. In obligating and expending the funds, the 
Secretary would give preference to activities that assist small 
and medium-sized businesses, create or sustain the greatest 
number of jobs in the United States, and obtain the maximum 
return on investment.

Section 5. Additional funding for the ExporTech program.

  Section 5 would authorize $11 million to be used within 18 
months by the MEP to expand the ExporTech program.

Section 6. Additional funding for the market development cooperator 
        program of the Department of Commerce.

  Section 6 would authorize $15 million for the ITA to award 
MDCP grants in order to establish public-private partnerships 
to underwrite a portion of the start-up costs for new export 
projects. These funds must be used within 18 months. The 
underwriting for each project would not exceed one-third of the 
total start-up costs or $500,000, whichever is less. In 
obligating and expending the funds, the Secretary would give 
preference to small and medium-sized businesses and to 
activities that create or sustain the greatest number of jobs 
in the United States and obtain the maximum return on 
investment.

Section 7. Hollings manufacturing extension partnerships; technology 
        innovation program.

  Section 7 would allow for additional criteria to be used in 
determining MEP and TIP awards. Such expanded criteria would 
include whether an application has significant potential for 
enhancing the competitiveness of small and medium-sized U.S. 
manufacturers in the global marketplace.

Section 8. Sense of the Senate concerning Federal collaboration with 
        States on export promotion issues.

  Section 8 would provide the Sense of the Senate that the 
Secretary of Commerce should enhance Federal collaboration with 
the States on export promotion by: (1) providing the necessary 
training to the staff at State international trade agencies; 
and (2) entering into agreements with State international trade 
agencies to deliver USFCS offerings in their local communities 
in order to extend the outreach of USFCS programs.

Section 9. Report on tariff and nontariff barriers.

  Section 9 would require the Secretary of Commerce within 90 
days to report to Congress on the tariff and nontariff barriers 
imposed by Columbia, South Korea, and Panama on U.S. exports.

                        Changes in Existing Law

  In compliance with paragraph 12 of rule XXVI of the Standing 
Rules of the Senate, changes in existing law made by the bill, 
as reported, are shown as follows (existing law proposed to be 
omitted is enclosed in black brackets, new material is printed 
in italic, existing law in which no change is proposed is shown 
in roman):

           NATIONAL INSTITUTE OF STANDARDS AND TECHNOLOGY ACT

SEC. 25. REGIONAL CENTERS FOR THE TRANSFER OF MANUFACTURING TECHNOLOGY.

                            [15 U.S.C. 278k]

  (a) Creation and Support of Centers; affiliations; merit 
review in determining awards; objectives.--The Secretary, 
through the Director and, if appropriate, through other 
officials, shall provide assistance for the creation and 
support of Regional Centers for the Transfer of Manufacturing 
Technology (hereafter in this Act referred to as the 
``Centers''). Such centers shall be affiliated with any United 
States-based nonprofit institution or organization, or group 
thereof, that applies for and is awarded financial assistance 
under this section in accordance with the description published 
by the Secretary in the Federal Register under subsection 
(c)(2). Individual awards shall be decided on the basis of 
merit review. The objective of the Centers is to enhance 
productivity and technological performance in United States 
manufacturing through--
          (1) the transfer of manufacturing technology and 
        techniques developed at the Institute to Centers and, 
        through them, to manufacturing companies throughout the 
        United States;
          (2) the participation of individuals from industry, 
        universities, State governments, other Federal 
        agencies, and, when appropriate, the Institute in 
        cooperative technology transfer activities;
          (3) efforts to make new manufacturing technology and 
        processes usable by United States-based small- and 
        medium-sized companies;
          (4) the active dissemination of scientific, 
        engineering, technical, and management information 
        about manufacturing to industrial firms, including 
        small- and medium-sized manufacturing companies; and
          (5) the utilization, when appropriate, of the 
        expertise and capability that exists in Federal 
        laboratories other than the Institute.
  (b) Activities of Centers.--The activities of the Centers 
shall include--
          (1) the establishment of automated manufacturing 
        systems and other advanced production technologies, 
        based on research by the Institute, for the purpose of 
        demonstrations and technology transfer;
          (2) the active transfer and dissemination of research 
        findings and Center expertise to a wide range of 
        companies and enterprises, particularly small- and 
        medium-sized manufacturers; and
          (3) loans, on a selective, short-term basis, of items 
        of advanced manufacturing equipment to small 
        manufacturing firms with less than 100 employees.
  (c) Duration and Amount of Support; Program Descriptions; 
Applications; Merit Review; Evaluations of Assistance; 
Applicability of Patent Law.--
          (1) The Secretary may provide financial support to 
        any Center created under subsection (a) for a period 
        not to exceed six years. The Secretary may not provide 
        to a Center more than 50 percent of the capital and 
        annual operating and maintenance funds required to 
        create and maintain such Center.
          (2) The Secretary shall publish in the Federal 
        Register, within 90 days after the date of the 
        enactment of this section, a draft description of a 
        program for establishing Centers, including--
                  (A) a description of the program;
                  (B) procedures to be followed by applicants;
                  (C) criteria for determining qualified 
                applicants;
                  (D) criteria, including those listed under 
                paragraph (4), for choosing recipients of 
                financial assistance under this section from 
                among the qualified applicants; and
                  (E) maximum support levels expected to be 
                available to Centers under the program in the 
                fourth through sixth years of assistance under 
                this section.
        The Secretary shall publish a final description under 
        this paragraph after the expiration of a 30-day comment 
        period.
          (3)(A) Any nonprofit institution, or group thereof, 
        or consortia of nonprofit institutions, including 
        entities existing on August 23, 1988, may submit to the 
        Secretary an application for financial support under 
        this subsection, in accordance with the procedures 
        established by the Secretary and published in the 
        Federal Register under paragraph (2).
          (B) In order to receive assistance under this 
        section, an applicant for financial assistance under 
        subparagraph (A) shall provide adequate assurances that 
        non-Federal assets obtained from the applicant and the 
        applicant's partnering organizations will be used as a 
        funding source to meet not less than 50 percent of the 
        costs incurred for the first 3 years and an increasing 
        share for each of the last 3 years. For purposes of the 
        preceding sentence, the costs incurred means the costs 
        incurred in connection with the activities undertaken 
        to improve the management, productivity, and 
        technological performance of small- and medium-sized 
        manufacturing companies.
          (C) In meeting the 50 percent requirement, it is 
        anticipated that a Center will enter into agreements 
        with other entities such as private industry, 
        universities, and State governments to accomplish 
        programmatic objectives and access new and existing 
        resources that will further the impact of the Federal 
        investment made on behalf of small- and medium-sized 
        manufacturing companies. All non-Federal costs[,] 
        contributed by such entities and determined by a Center 
        as programmatically reasonable and allocable under MEP 
        program procedures are includable as a portion of the 
        Center's contribution.
          (D) Each applicant under subparagraph (A) shall also 
        submit a proposal for the allocation of the legal 
        rights associated with any invention which may result 
        from the proposed Center's activities.
          (4) The Secretary shall subject each such application 
        to merit review. In making a decision whether to 
        approve such application and provide financial support 
        under this subsection, the Secretary shall consider at 
        a minimum (A) the merits of the application, 
        particularly those portions of the application 
        regarding technology transfer, training and education, 
        and adaptation of manufacturing technologies to the 
        needs of particular industrial sectors, (B) the quality 
        of service to be provided, (C) geographical diversity 
        and extent of service area, and (D) the percentage of 
        funding and amount of in-kind commitment from other 
        sources.
          (5) Each Center which receives financial assistance 
        under this section shall be evaluated during its third 
        year of operation by an evaluation panel appointed by 
        the Secretary. Each such evaluation panel shall be 
        composed of private experts, none of whom shall be 
        connected with the involved Center, and Federal 
        officials. An official of the Institute shall chair the 
        panel. Each evaluation panel shall measure the involved 
        Center's performance against the objectives specified 
        in this section. The Secretary shall not provide 
        funding for the fourth through the sixth years of such 
        Center's operation unless the evaluation is positive. 
        If the evaluation is positive, the Secretary may 
        provide continued funding through the sixth year at 
        declining levels. A Center that has not received a 
        positive evaluation by the evaluation panel shall be 
        notified by the panel of the deficiencies in its 
        performance and shall be placed on probation for one 
        year, after which time the panel shall reevaluate the 
        Center. If the Center has not addressed the 
        deficiencies identified by the panel, or shown a 
        significant improvement in its performance, the 
        Director shall conduct a new competition to select an 
        operator for the Center or may close the Center. After 
        the sixth year, a Center may receive additional 
        financial support under this section if it has received 
        a positive evaluation through an independent review, 
        under procedures established by the Institute. Such an 
        independent review shall be required at least every two 
        years after the sixth year of operation. Funding 
        received for a fiscal year under this section after the 
        sixth year of operation shall not exceed one third of 
        the capital and annual operating and maintenance costs 
        of the Center under the program.
          (6) The provisions of chapter 18 of title 35, United 
        States Code, shall (to the extent not inconsistent with 
        this section) apply to the promotion of technology from 
        research by Centers under this section except for 
        contracts for such specific technology extension or 
        transfer services as may be specified by statute or by 
        the Director.
  (d) Acceptance of Funds.--
          (1) In general.--In addition to such sums as may be 
        appropriated to the Secretary and Director to operate 
        the Centers program, the Secretary and Director also 
        may accept funds from other Federal departments and 
        agencies and under section 2(c)(7) from the private 
        sector for the purpose of strengthening United States 
        manufacturing.
          (2) Allocation of funds.--
                  (A) Funds accepted from other Federal 
                departments or agencies.--The Director shall 
                determine whether funds accepted from other 
                Federal departments or agencies shall be 
                counted in the calculation of the Federal share 
                of capital and annual operating and maintenance 
                costs under subsection (c).
                  (B) Funds accepted from the private sector.--
                Funds accepted from the private sector under 
                section 2(c)(7), if allocated to a Center, 
                shall not be considered in the calculation of 
                the Federal share under subsection (c) of this 
                section.
  (e) MEP Advisory Board.--
          (1) Establishment.--There is established within the 
        Institute a Manufacturing Extension Partnership 
        Advisory Board (in this subsection referred to as the 
        ``MEP Advisory Board'').
          (2) Membership.--
                  (A) In general.--The MEP Advisory Board shall 
                consist of 10 members broadly representative of 
                stakeholders, to be appointed by the Director. 
                At least 2 members shall be employed by or on 
                an advisory board for the Centers, and at least 
                5 other members shall be from United States 
                small businesses in the manufacturing sector. 
                No member shall be an employee of the Federal 
                Government.
                  (B) Term.--Except as provided in subparagraph 
                (C) or (D), the term of office of each member 
                of the MEP Advisory Board shall be 3 years.
                  (C) Classes.--The original members of the MEP 
                Advisory Board shall be appointed to 3 classes. 
                One class of 3 members shall have an initial 
                term of 1 year, one class of 3 members shall 
                have an initial term of 2 years, and one class 
                of 4 members shall have an initial term of 3 
                years.
                  (D) Vacancies.--Any member appointed to fill 
                a vacancy occurring prior to the expiration of 
                the term for which his predecessor was 
                appointed shall be appointed for the remainder 
                of such term.
                  (E) Serving consecutive terms.--Any person 
                who has completed two consecutive full terms of 
                service on the MEP Advisory Board shall 
                thereafter be ineligible for appointment during 
                the one-year period following the expiration of 
                the second such term.
          (3) Meetings.--The MEP Advisory Board shall meet not 
        less than 2 times annually, and provide to the 
        Director--
                  (A) advice on Manufacturing Extension 
                Partnership programs, plans, and policies;
                  (B) assessments of the soundness of 
                Manufacturing Extension Partnership plans and 
                strategies; and
                  (C) assessments of current performance 
                against Manufacturing Extension Partnership 
                program plans.
          (4) Federal Advisory Committee Act.--In discharging 
        its duties under this subsection, the MEP Advisory 
        Board shall function solely in an advisory capacity, in 
        accordance with the Federal Advisory Committee Act.
          (5) Report.--The MEP Advisory Board shall transmit an 
        annual report to the Secretary for transmittal to 
        Congress within 30 days after the submission to 
        Congress of the President's annual budget request in 
        each year. Such report shall address the status of the 
        program established pursuant to this section and 
        comment on the relevant sections of the programmatic 
        planning document and updates thereto transmitted to 
        Congress by the Director under subsections (c) and (d) 
        of section 23.
  (f) Competitive grant program.--
          (1) Establishment.--The Director shall establish, 
        within the Centers program under this section and 
        section 26 of this Act, a program of competitive awards 
        among participants described in paragraph (2) for the 
        purposes described in paragraph (3).
          (2) Participants.--Participants receiving awards 
        under this subsection shall be the Centers, or a 
        consortium of such Centers.
          (3) Purpose.--The purpose of the program under this 
        subsection is to develop projects to solve new or 
        emerging manufacturing problems as determined by the 
        Director, in consultation with the Director of the 
        Centers program, the Manufacturing Extension 
        Partnership Advisory Board, and small and medium-sized 
        manufacturers. One or more themes for the competition 
        may be identified, which may vary from year to year, 
        depending on the needs of manufacturers and the success 
        of previous competitions. These themes shall be related 
        to projects associated with manufacturing extension 
        activities, including supply chain integration and 
        quality management, and including the transfer of 
        technology based on the technological needs of 
        manufacturers and available technologies from 
        institutions of higher education, laboratories, and 
        other technology producing entities, or extend beyond 
        these traditional areas.
          (4) Applications.--Applications for awards under this 
        subsection shall be submitted in such manner, at such 
        time, and containing such information as the Director 
        shall require, in consultation with the Manufacturing 
        Extension Partnership Advisory Board.
          (5) Selection.--Awards under this subsection shall be 
        peer reviewed and competitively awarded. The Director 
        shall select proposals to receive awards--
                  (A) that utilize innovative or collaborative 
                approaches to solving the problem described in 
                the competition;
                  (B) that will improve the competitiveness of 
                industries in the region in which the Center or 
                Centers are located; and
                  (C) that will contribute to the long-term 
                economic stability of that region.
          (6) Program contribution.--Recipients of awards under 
        this subsection shall not be required to provide a 
        matching contribution.
          (7) Global marketplace projects.--In making awards 
        under this subsection, the Director, in consultation 
        with the Manufacturing Extension Partnership Advisory 
        Board and the Secretary of Commerce, may take into 
        consideration whether an application has significant 
        potential for enhancing the competitiveness of small 
        and medium-sized United States manufacturers in the 
        global marketplace and may give a preference to 
        applications for such projects to the extent the 
        Director deems appropriate, taking into account the 
        broader purposes of this subsection.

                                  
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