I 

109TH CONGRESS 

2D SESSION H. R. 4654 

To provide a national innovation initiative. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 3, 2006 

Mr. SCHIFF introduced the following bill; which was referred to the Committee 

on Science, and in addition to the Committees on Energy and Commerce, 

Ways and Means, Armed Services, Judiciary, Transportation and Infrastructure, and Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions 

as fall within the jurisdiction of the committee concerned 

A BILL 

To provide a national innovation initiative. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘National Innovation Act of 2006’’. 

6 (b) TABLE OF CONTENTS.—The table of contents for 

7 this Act is as follows: 

Sec. 1. Short title; table of contents 

Sec. 2. Findings and purposes 

Sec. 3. Definitions 

TITLE I—INNOVATION PROMOTION 
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Sec. 101. President’s Council on Innovation 

Sec. 102. Innovation acceleration grants 

Sec. 103. A national commitment to basic research 

Sec. 104. Regional economic development 

Sec. 105. Development of advanced manufacturing systems 

Sec. 106. Study on service science 

TITLE II—MODERNIZATION OF SCIENCE, EDUCATION, AND 

HEALTHCARE PROGRAMS 

Subtitle A—Science and Education 

Sec. 201. Graduate fellowships and graduate traineeships 

Sec. 202. Professional science master’s degree programs 

Sec. 203. Increased support for science education through the National Science 

Foundation 

Sec. 204. Innovation-based experiential learning 

Subtitle B—21st Century Healthcare System 

Sec. 211. Sense of Congress regarding 21st century healthcare system 

TITLE III—INCENTIVES FOR ENCOURAGING INNOVATION 

Subtitle A—Research Credits 

Sec. 301. Permanent extension of research credit 

Sec. 302. Increase in rates of alternative incremental credit 

Sec. 303. Alternative simplified credit for qualified research expenses 

Subtitle B—Health and Education 

Sec. 311. Study and report on catastrophic healthcare 

Sec. 312. Lifelong learning accounts 

Subtitle C—Savings and Investments 

Sec. 321. Regulations relating to private foundation support of innovations in 

economic development 

Sec. 322. Advisory group regarding valuation of intangibles 

TITLE IV—DEPARTMENT OF DEFENSE MATTERS 

Subtitle A—Defense Research and Education 

Sec. 401. Revitalization of frontier and multidisciplinary research 

Sec. 402. Enhancement of education 

Subtitle B—Defense Advanced Manufacturing 

Sec. 411. Manufacturing research and development 

Sec. 412. Transition of transformational manufacturing processes and technologies to the defense manufacturing base 

Sec. 413. Manufacturing technology strategies 

Sec. 414. Planning for adoption of strategic innovation 

Sec. 415. Report 

Sec. 416. Authorization of appropriations 

TITLE V—JUDICIARY AND OTHER MATTERS 
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Sec. 501. Sense of Congress on retaining high-tech talent in the United States 

Sec. 502. Study on barriers to innovation 

Sec. 503. Sense of Congress on patent reform 

1 SEC. 2. FINDINGS AND PURPOSES. 

2 (a) FINDINGS.—Congress makes the following find3 ings: 

4 (1) The United States is the most innovative 

5 Nation in the world. Since our Nation’s founding, 

6 exploration, opportunity, and discovery have re7 mained essential to fulfilling our Nation’s strategic 

8 economic and political objectives. 

9 (2) In the 21st century, a well-educated and 

10 trained workforce, investment in research and devel11 opment, and a regulatory and physical infrastructure 

12 that supports innovators are essential to ensuring 

13 that the United States continues to lead the global 

14 economy on innovation. 

15 (3) America’s future economic and national se16 curity will largely depend on the creativity and com17 mitment of our Nation to unleash its innovation ca18 pacity. 

19 (4) The world has become dramatically more 

20 interconnected and competitive. Cutting edge re21 search, world-class education, and highly skilled 

22 labor pools are no longer within the sole purview of 

23 the United States. 
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1 (5) The United States investment in basic re2 search is currently insufficient to meet the chal3 lenges we face. 

4 (6) Federal support for basic research in the 

5 physical sciences has consistently lagged behind that 

6 given to the life sciences in recent years. 

7 (7) Traditional measurements of innovation ca8 pacity focused solely on inputs, such as research and 

9 development spending, number of patents and value 

10 of physical infrastructure. The traditional measure11 ments are necessary but are not sufficient metrics 

12 for innovation in the 21st century’s knowledge econ13 omy. 

14 (8) Current Federal budget constraints require 

15 prioritization of spending and new programs must 

16 be funded through existing funds or through identi17 fiable funding offsets whenever possible. 

18 (9) A national, private sector-led, and govern19 ment supported plan is required if the United States 

20 is to adequately respond to the challenges of in21 creased global competition and take advantage of the 

22 opportunities this changing global dynamic presents. 

23 (b) PURPOSES.—The purposes of this Act are to— 

24 (1) make innovation a fundamental economic 

25 priority for the United States; 
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1 (2) create the most fertile policy environment 

2 for innovation to occur; 

3 (3) develop greater numbers of American sci4 entists, mathematicians, and engineers; 

5 (4) enhance the quality of math and science 

6 education at all levels; 

7 (5) increase the Federal Government’s invest8 ment in basic research, especially in the physical 

9 sciences; 

10 (6) direct greater funding toward multidisci11 plinary and frontier research where tomorrow’s inno12 vations are most likely to occur; 

13 (7) secure a strong advanced manufacturing 

14 base in the United States to ensure that as innova15 tions occur, America is poised to reap the benefits 

16 via the creation of new jobs and investment; and 

17 (8) examine both the incentives for, and bar18 riers to, innovation to better understand what addi19 tional policy changes are warranted. 

20 SEC. 3. DEFINITIONS. 

21 In this Act: 

22 (1) CONGRESSIONAL DEFENSE COMMITTEES.— 

23 The term ‘‘congressional defense committees’’ has 

24 the meaning given that term in section 101(a)(16) 

25 of title 10, United States Code. 
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1 (2) DEFENSE MANUFACTURING BASE.—The 

2 term ‘‘defense manufacturing base’’ includes any 

3 supplier of the Department of Defense, including a 

4 supplier of raw materials. 

5 (3) EXECUTIVE AGENCY.—The term ‘‘Executive 

6 agency’’ has the meaning given that term in section 

7 105 of title 5, United States Code. 

8 (4) EXTENDED PRODUCTION ENTERPRISE.— 

9 The term ‘‘extended production enterprise’’ means a 

10 system in which key entities in the manufacturing 

11 chain, including entities engaged in product design 

12 and development, manufacturing, sourcing, distribu13 tion, and user entities, are linked together through 

14 information technology and other means to promote 

15 efficiency and productivity. 

16 (5) INNOVATION.—The term ‘‘innovation’’ 

17 means the intersection of invention and insight lead18 ing to the creation of social and economic value, in19 cluding through efforts meeting fundamental tech20 nology challenges and involving multidisciplinary 

21 work and a high degree of novelty. 

22 (6) MANUFACTURING EXTENSION PARTNERSHIP

23 PROGRAM.—The term ‘‘Manufacturing Extension 

24 Partnership Program’’ means the Manufacturing 
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1 Extension Partnership Program of the Department 

2 of Commerce. 

3 (7) MANUFACTURING TECHNOLOGY PRO4 GRAM.—The term ‘‘Manufacturing Technology Pro5 gram’’ means the Manufacturing Technology Pro6 gram under section 2521 of title 10, United States 

7 Code. 

8 (8) PROFESSIONAL SCIENCE MASTERS PRO9 GRAM.—The term ‘‘professional science masters pro10 gram’’ means a graduate degree program in science 

11 and mathematics that extends science training to 

12 strategic planning and business management and fo13 cuses on multidisciplinary specialties such as busi14 ness and information technology (IT), biology and 

15 IT (bioinformatics), and computational chemistry. 

16 (9) REGIONAL INNOVATION HOT SPOTS DE17 FINED.—The term ‘‘regional innovation hot spots’’ 

18 means regions that are defined by a high degree of 

19 innovation and the availability of talent, investment, 

20 and infrastructure necessary to create and sustain 

21 such innovation. 

22 (10) SERVICE SCIENCE.—The term ‘‘service 

23 science’’ means curriculums, research programs, and 

24 training regimens, including service sciences, man25 agement, and engineering (SSME) programs, that 
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1 exist or that are being developed to teach individuals 

2 to apply technology, organizational process manage3 ment, and industry-specific knowledge to solve com4 plex problems. 

5 (11) SMALL BUSINESS INNOVATION RESEARCH

6 PROGRAM.—The term ‘‘Small Business Innovation 

7 Research Program’’ has the meaning given that 

8 term in section 2500(11) of title 10, United States 

9 Code. 

10 (12) SMALL BUSINESS TECHNOLOGY TRANSFER

11 PROGRAM.—The term ‘‘Small Business Technology 

12 Transfer Program’’ has the meaning given that term 

13 in section 2500(12) of title 10, United States Code. 

14 (13) SSME.—The term ‘‘SSME’’ means the 

15 discipline known as service sciences, management, 

16 and engineering that— 

17 (A) applies scientific, engineering and 

18 management disciplines to tasks that one orga19 nization performs beneficially for others, gen20 erally as part of the services sector of the econ21 omy; and 

22 (B) integrates computer science, operations 

23 research, industrial engineering, business strat24 egy, management sciences, and social and legal 

25 sciences, in order to encourage innovation in 
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1 how organizations create value for customers 

2 and shareholders that could not be achieved 

3 through such disciplines working in isolation. 

4 TITLE I—INNOVATION 

5 PROMOTION 

6 SEC. 101. PRESIDENT’S COUNCIL ON INNOVATION. 

7 (a) IN GENERAL.—The President shall establish a 

8 President’s Council on Innovation (in this section referred 

9 to as the ‘‘Council’’). 

10 (b) DUTIES.—The Council’s duties shall include— 

11 (1) monitoring implementation of legislative 

12 proposals and initiatives for promoting innovation, 

13 including policies related to research funding, tax14 ation, immigration, trade, and education that are 

15 proposed in this and other Acts; 

16 (2) in consultation with the Director of the Of17 fice of Management and Budget, developing a proc18 ess for using metrics to assess the impact of existing 

19 and proposed policies and rules that affect innova20 tion capabilities in the United States; 

21 (3) identifying opportunities and making rec22 ommendations for the heads of executive agencies to 

23 improve innovation, monitoring, and reporting on 

24 the implementation of such recommendations; 
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1 (4) developing metrics for measuring the 

2 progress of the Federal Government with respect to 

3 improving conditions for innovation, including 

4 through talent development, investment, and infra5 structure improvements; and 

6 (5) submitting an annual report to the Presi7 dent and Congress on such progress. 

8 (c) MEMBERSHIP AND COORDINATION.— 

9 (1) MEMBERSHIP.—The Council shall be com10 posed of the Secretary or head of each of the fol11 lowing: 

12 (A) The Department of Commerce. 

13 (B) The Department of Defense. 

14 (C) The Department of Education. 

15 (D) The Department of Energy. 

16 (E) The Department of Health and 

17 Human Services. 

18 (F) The Department of Homeland Secu19 rity. 

20 (G) The Department of Labor. 

21 (H) The Department of the Treasury. 

22 (I) The National Aeronautics and Space 

23 Administration. 

24 (J) The Securities and Exchange Commis25 sion. 
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1 (K) The National Science Foundation. 

2 (L) The Office of the United States Trade 

3 Representative. 

4 (M) The Office of Management and Budg5 et. 

6 (N) The Office of Science and Technology 

7 Policy. 

8 (2) CHAIRPERSON.—The Secretary of Com9 merce shall serve as chairperson of the Council. 

10 (3) COORDINATION.—The chairperson of the 

11 Council shall ensure appropriate coordination be12 tween the Council and the National Economic Coun13 cil and the National Security Council. 

14 (d) DEVELOPMENT OF INNOVATION AGENDA.— 

15 (1) IN GENERAL.—The Council shall develop a 

16 comprehensive agenda for strengthening the innova17 tion capabilities of the Federal Government and 

18 State governments, academia, and the private sector 

19 in the United States. 

20 (2) CONSULTATION.—The comprehensive agen21 da required by paragraph (1) shall be developed in 

22 consultation with appropriate representatives of the 

23 private sector, scientific organizations, and academic 

24 organizations. 
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1 SEC. 102. INNOVATION ACCELERATION GRANTS. 

2 (a) GRANT PROGRAM.—The President shall establish 

3 a grant program, to be known as the ‘‘Innovation Accel4 eration Grants Program’’, to support and promote innova5 tion in the United States. Priority in the awarding of 

6 grants shall be given to projects that meet fundamental 

7 technology challenges and that involve multidisciplinary 

8 work and a high degree of novelty. 

9 (b) AWARDING OF GRANTS THROUGH DEPARTMENTS

10 AND AGENCIES.— 

11 (1) FUNDING GOALS.—The President shall en12 sure that it is the goal of each Executive agency that 

13 finances research in science, mathematics, engineer14 ing, and technology to allocate at least 3 percent of 

15 the agency’s total annual research and development 

16 budget to funding grants under the Innovation Ac17 celeration Grants Program. 

18 (2) ADMINISTRATION.— 

19 (A) IN GENERAL.—Each head of an Exec20 utive agency awarding grants under paragraph 

21 (1) shall submit a plan for implementing the 

22 grant program within such Executive agency to 

23 the Director of the Office of Science and Tech24 nology Policy and the Director of the Office of 

25 Management and Budget. The implementation 

26 plan shall be submitted not later than 90 days 
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1 after the date of enactment of this Act. The im2 plementation plan may incorporate existing ini3 tiatives of the Executive agencies that promote 

4 research in innovation as described in sub5 section (a). 

6 (B) REQUIRED METRICS.—The head of 

7 each Executive agency submitting an implemen8 tation plan pursuant to this section shall in9 clude metrics upon which grant funding deci10 sions will be made and metrics for assessing the 

11 success of the grants awarded. 

12 (C) GRANT DURATION AND RENEWALS.— 

13 (i) IN GENERAL.—Any grants issued 

14 by an Executive agency under this section 

15 shall be for a period not to exceed 3 years. 

16 (ii) EVALUATION.—Not later than 90 

17 days prior to the expiration of a grant 

18 issued under this section, the Executive 

19 agency that approved the grant shall com20 plete an evaluation of the effectiveness of 

21 the grant based on the metrics established 

22 pursuant to subparagraph (B). In its eval23 uation, the Executive agency shall consider 

24 the extent to which the program funded by 
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1 the grant met the goals of quality improve2 ment and job creation. 

3 (iii) PUBLICATION OFREVIEW.—The 

4 Executive agency shall publish and make 

5 available to the public the review of each 

6 grant approved pursuant to this section. 

7 (iv) FAILURE TO MEET METRICS.— 

8 Any grant that the Executive agency 

9 awarding the grant determines has failed 

10 to satisfy any of the metrics developed pur11 suant to subparagraph (B), shall not be el12 igible for a renewal. 

13 (v) RENEWAL.—A grant issued under 

14 this section that satisfies all of the metrics 

15 developed pursuant to subparagraph (B), 

16 may be renewed once for a period not to 

17 exceed 3 years. Additional renewals may be 

18 considered only if the head of the Execu19 tive agency makes a specific finding that 

20 the program being funded involves a sig21 nificant technology advance that requires a 

22 longer timeframe to complete critical re23 search, and the research satisfies all the 

24 metrics developed pursuant to subpara25 graph (B). 
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1 SEC. 103. A NATIONAL COMMITMENT TO BASIC RESEARCH. 

2 (a) PLAN FOR INCREASED RESEARCH.—Not later 

3 than 180 days after the date of the enactment of this Act, 

4 the Director of the National Science Foundation shall sub5 mit to Congress a comprehensive, multiyear plan that de6 scribes how the funds authorized in subsection (b) shall 

7 be used. Such plan shall be developed with a focus on uti8 lizing basic research in physical science and engineering 

9 to optimize the United States economy as a global compet10 itor and leader in productive innovation. 

11 (b) INCREASED FUNDING FOR NATIONAL SCIENCE

12 FOUNDATION.—There are authorized to be appropriated 

13 to the National Science Foundation for the purpose of 

14 doubling research funding the following amounts: 

15 (1) $6,440,000,000 for fiscal year 2007. 

16 (2) $7,280,000,000 for fiscal year 2008. 

17 (3) $8,120,000,000 for fiscal year 2009. 

18 (4) $8,960,000,000 for fiscal year 2010. 

19 (5) $9,800,000,000 for fiscal year 2011. 

20 (c) RECOMMENDATIONS FOR RESEARCH AND DEVEL21 OPMENT FUNDING.—Not later than 1 year after the date 

22 of the enactment of this Act, the Director of the Office 

23 of Science and Technology Policy shall evaluate and, as 

24 appropriate, submit to Congress recommendations for an 

25 increase in funding for research and development in phys26 ical sciences and engineering in consultation with agencies 
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1 and departments of the United States with significant re2 search and development budgets. 

3 SEC. 104. REGIONAL ECONOMIC DEVELOPMENT. 

4 (a) DEVELOPMENT OF FUNDING STRATEGY.— 

5 (1) IN GENERAL.—The Assistant Secretary for 

6 Economic Development of the Department of Com7 merce shall review Federal programs that support 

8 local economic development and prepare and imple9 ment a strategy to focus funding on initiatives that 

10 improve the ability of communities to participate 

11 successfully in the modern economy through innova12 tion. In preparing the strategy, priority should be 

13 given to projects that— 

14 (A) emphasize private sector cooperation 

15 with State and local governments and nonprofit 

16 organizations focused on regional economic de17 velopment as the means of achieving specific 

18 objectives related to the support and promotion 

19 of innovation; and 

20 (B) are the most successful in meeting the 

21 metrics established under subsection (b). 

22 (2) COORDINATION.—The Assistant Secretary 

23 shall coordinate the development and implementation 

24 of the strategy with the activities carried out by the 
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1 Under Secretary for Technology under subsection 

2 (d). 

3 (b) EVALUATION OF PROGRAMS.—The Assistant Sec4 retary for Economic Development of the Department of 

5 Commerce shall develop metrics to measure the success 

6 of Federal programs in supporting and promoting innova7 tion at the local community level while minimizing bu8 reaucracy and overhead expenses. 

9 (c) PROMOTION OF ECONOMIC DEVELOPMENT OP10 PORTUNITIES.—The Assistant Secretary for Economic 

11 Development of the Department of Commerce should work 

12 with organizations focused on economic development to 

13 highlight opportunities for such organizations to serve 

14 local communities through grants focused on economic de15 velopment and investment in companies pursuing innova16 tion. 

17 (d) REGIONAL INNOVATION HOT SPOTS.— 

18 (1) PROMOTION OFREGIONAL INNOVATION HOT

19 SPOTS.—The Under Secretary for Technology of the 

20 Department of Commerce shall coordinate activities 

21 focused on promoting innovation through the devel22 opment of regional innovation hot spots. 

23 (2) GUIDE TO DEVELOPING SUCCESSFUL RE24 GIONAL INNOVATION HOT SPOTS.— 
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1 (A) IN GENERAL.—Not later than 1 year 

2 after the date of enactment of this Act, the Sec3 retary of Commerce, in consultation with rep4 resentatives of regional innovation hot spots, 

5 shall publish a report, to be titled the ‘‘Guide 

6 to Developing Successful Regional Innovation 

7 Hot Spots’’, that examines successful regional 

8 innovation hot spots and includes recommenda9 tions for establishing and fostering regional in10 novation hot spots. 

11 (B) CONTENT.—The report required under 

12 subparagraph (A) shall— 

13 (i) include information on the evalua14 tion of human capital; 

15 (ii) include information on the role of 

16 sponsoring institutions, such as univer17 sities, nonprofit organizations, and labora18 tories, in establishing and fostering re19 gional innovation hot spots; 

20 (iii) include information on the role of 

21 State and local government leaders, leaders 

22 in the research and business communities, 

23 and community organizations in estab24 lishing and fostering regional innovation 

25 hot spots; 
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1 (iv) discuss the importance of collabo2 ration by public and private sector leaders; 

3 (v) identify sources of funding for 

4 these activities within Federal, State, and 

5 local governments and the private sector; 

6 and 

7 (vi) include recommendations for de8 veloping strategic plans to stimulate inno9 vation, including recommendations relating 

10 to knowledge transfer and commercializa11 tion, the support of regional entrepreneur12 ship and increased innovation within exist13 ing regional firms, and the linking of pri14 mary institutions engaged in the innova15 tion process. 

16 (3) REGIONAL INNOVATION HOT SPOT

17 METRICS.— 

18 (A) DEVELOPMENT OFMETRICS.—In con19 junction with publishing the report required 

20 under paragraph (2), the Secretary of Com21 merce shall develop the following sets of 

22 metrics: 

23 (i) Metrics to be considered for identi24 fying potential regional innovation hot 
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1 spots (in this subsection referred to as 

2 ‘‘identifying metrics’’). 

3 (ii) Metrics to be considered for evalu4 ating the impact and effectiveness of estab5 lished regional innovation hot spots (in this 

6 subsection referred to as ‘‘evaluation 

7 metrics’’). 

8 (B) USE OFMETRICS.—The Under Sec9 retary of Commerce for Technology shall use 

10 the identifying metrics to conduct biannual as11 sessments of potential regional clusters and 

12 shall use the evaluation metrics to assess the 

13 impact and effectiveness of established regional 

14 innovation hot spots in improving the regional 

15 economy and regional job market. The Under 

16 Secretary shall also assess the cost effectiveness 

17 of operating within each regional hot spot. The 

18 Under Secretary shall report the biannual as19 sessments to Congress. 

20 SEC. 105. DEVELOPMENT OF ADVANCED MANUFACTURING 

21 SYSTEMS. 

22 (a) RESEARCH AND DEVELOPMENT.—The Director 

23 of the National Institute of Standards and Technology 

24 shall support research and development in collaboration 

25 with entities and organizations from the industrial sector 
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1 to supplement and support work in the private sector on 

2 advanced manufacturing systems designed to increase pro3 ductivity and efficiency and to create competitive advan4 tages for United States businesses. These research and de5 velopment activities should focus on the following activi6 ties: 

7 (1) Supporting industry efforts to develop inno8 vative, state-of-the-art manufacturing processes, ad9 vanced technologies through interoperable standards, 

10 and related concepts, including— 

11 (A) advanced distributed and desktop man12 ufacturing linked to and made compatible with 

13 the extended production enterprise system de14 scribed in paragraph (2); 

15 (B) non-contact quality inspection proc16 esses linked to and made compatible with the 

17 extended production enterprise system; 

18 (C) small lot manufacturing processes that 

19 are— 

20 (i) as cost-effective as mass produc21 tion processes; and 

22 (ii) linked to and compatible with the 

23 extended production enterprise system; and 

24 (D) the use of state-of-the-art materials 

25 and processes at the nanotechnological level. 
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1 (2) Supporting industry efforts to develop an 

2 extended production enterprise system that inte3 grates key entities, including entities engaged in 

4 product design and development, manufacturing, 

5 sourcing, distribution, and user entities, including 

6 through the development of— 

7 (A) interoperable software and standards 

8 designed to maximize the compatibility of the 

9 design, modeling, and manufacturing stages of 

10 the manufacturing process; and 

11 (B) supply chain software. 

12 (b) COORDINATION OF ACTIVITIES.—The Director of 

13 the National Institute of Standards and Technology shall 

14 coordinate activities under subsection (a) with activities 

15 under— 

16 (1) the Small Business Innovation Research 

17 Program; 

18 (2) the Small Business Technology Transfer 

19 Program; and 

20 (3) the Manufacturing Technology Program of 

21 the Department of Defense. 

22 (c) TESTING.—The Director of the National Institute 

23 of Standards and Technology shall support the work of 

24 entities and organizations from the industrial sector in de25 veloping prototypes and testing areas for testing and refin-
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1 ing, in actual production conditions, the processes, tech2 nologies, and extended production enterprise system de3 scribed in subsection (a)(2) in order to maximize produc4 tivity gains and cost efficiencies. 

5 (d) DEVELOPMENT OF STANDARDS.—The Director 

6 of the National Institute of Standards and Technology, 

7 in coordination with entities and organizations from the 

8 industrial sector and the Manufacturing Technology Pro9 gram, shall support standards to be used as manufac10 turing performance criteria to accelerate the adoption of 

11 improvements and innovative processes and protocols de12 veloped under subsection (a). 

13 (e) PILOT TEST BEDS OF EXCELLENCE.— 

14 (1) ESTABLISHMENT.—The Director of the Na15 tional Institute of Standards and Technology shall, 

16 in collaboration with entities and organizations from 

17 the industrial sector, support not more than 3 pilot 

18 test beds of excellence in manufacturing fields im19 portant to advanced technologies developed under 

20 subsection (a), such as nanotechnology, to be used 

21 by the public and private sector. The test beds of ex22 cellence shall focus on production development, par23 ticularly the invention, prototyping, and engineering 

24 development stages of the manufacturing process. 
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1 (2) COMPETITION.—The Secretary of Com2 merce shall conduct a competition to select the pilot 

3 test beds of excellence based on criteria and metrics 

4 established by the Secretary prior to the competi5 tion. 

6 (3) FUNDING.—The Secretary of Commerce 

7 may provide the pilot test beds of excellence selected 

8 pursuant to the competition set forth in paragraph 

9 (2) with an appropriate level of funding if and only 

10 if the following conditions are satisfied: 

(A) No more than 1 11 ⁄3 of the funding of 

12 each test bed of excellence is provided by the 

13 Federal Government. 

(B) At least 1 14 ⁄3 of the cost of each test bed 

15 of excellence is provided by participants from 

16 the private sector. 

(C) At least 1 17 ⁄3 of the cost of each test bed 

18 of excellence is provided by State or local gov19 ernments. 

20 (4) REVIEW OFFUNDED TEST BEDS.—Within 3 

21 years of the start of Federal funding for any test 

22 bed of excellence pursuant to this section, the Sec23 retary of Commerce shall use the metrics established 

24 pursuant to paragraph (2) and any additional review 

25 metrics that the Secretary determines appropriate to 
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1 assess the performance of the federally funded test 

2 beds of excellence. Any test bed of excellence that 

3 fails to satisfy any of the performance metrics will 

4 be ineligible for additional Federal funding. 

5 (5) SUNSET PROVISION.—Federal funding of 

6 any test bed of excellence shall cease 5 years after 

7 the date of enactment of this Act. 

8 (f) MANUFACTURING EXTENSION PARTNERSHIP

9 FOCUS ON INNOVATION.—The Director of the National 

10 Institute of Standards and Technology shall ensure that 

11 the Manufacturing Extension Partnership program devel12 ops a focus on innovation, including through technology 

13 diffusion, supply and distribution chain integration, and 

14 the dissemination of the processes, technologies, and ex15 tended production enterprise systems developed under this 

16 section. 

17 (g) AUTHORIZATION OF APPROPRIATIONS.—There 

18 are authorized to be appropriated to the Department of 

19 Commerce for the purpose of carrying out activities under 

20 this section the following amounts: 

21 (1) $20,000,000 for fiscal year 2007. 

22 (2) $40,000,000 for fiscal year 2008. 

23 (3) $60,000,000 for fiscal year 2009. 

24 (4) $80,000,000 for fiscal year 2010. 

25 (5) $100,000,000 for fiscal year 2011. 
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1 SEC. 106. STUDY ON SERVICE SCIENCE. 

2 (a) SENSE OF CONGRESS.—It is the sense of Con3 gress that, in order to strengthen the competitiveness of 

4 United States enterprises and institutions and to prepare 

5 the people of the United States for high-wage, high-skill 

6 employment, the Federal Government should better under7 stand and respond strategically to the emerging vocation 

8 and learning discipline known as service science. 

9 (b) STUDY.—Not later than 270 days after the date 

10 of the enactment of this Act, the Director of the National 

11 Science Foundation shall conduct a study and report to 

12 Congress regarding how the Federal Government should 

13 support, through research, education, and training, the 

14 new discipline of service science. 

15 (c) OUTSIDE RESOURCES.—In conducting the study 

16 under subsection (b), the Director of the National Science 

17 Foundation shall consult with leaders from 2- and 4-year 

18 institutions of higher education, as defined in section 101 

19 of the Higher Education Act of 1965 (20 U.S.C. 1001), 

20 leaders from corporations, and other relevant parties. 
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1 TITLE II—MODERNIZATION OF 

2 SCIENCE, EDUCATION, AND 

3 HEALTHCARE PROGRAMS 

4 Subtitle A—Science and Education 

5 SEC. 201. GRADUATE FELLOWSHIPS AND GRADUATE 

6 TRAINEESHIPS. 

7 (a) GRADUATE RESEARCH FELLOWSHIP PRO8 GRAM.— 

9 (1) IN GENERAL.—During the 5-year period be10 ginning on the date of the enactment of this Act, the 

11 Director of the National Science Foundation shall 

12 expand the Graduate Research Fellowship Program 

13 of the Foundation so that an additional 1250 fellow14 ships are awarded to United States citizens under 

15 such Program during such period. 

16 (2) EXTENSION OFFELLOWSHIP PERIOD.—The 

17 Director of the National Science Foundation is au18 thorized to award fellowships under the Graduate 

19 Research Fellowship Program for a period of 5 

20 years, subject to funds being made available for such 

21 purpose. 

22 (3) AUTHORIZATION OFAPPROPRIATIONS.—In 

23 addition to any other amounts authorized to be ap24 propriated, there are authorized to be appropriated 

25 $34,000,000 for each of the fiscal years 2007 
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1 through 2011 to provide an additional 250 fellow2 ships under the Graduate Research Fellowship Pro3 gram during each such fiscal year. 

4 (b) INTEGRATIVE GRADUATE EDUCATION AND RE5 SEARCH TRAINEESHIP PROGRAM.— 

6 (1) IN GENERAL.—During the 5-year period be7 ginning on the date of the enactment of this Act, the 

8 Director of the National Science Foundation shall 

9 expand the Integrative Graduate Education and Re10 search Traineeship program of the Foundation so 

11 that an additional 1,250 United States citizens are 

12 awarded grants under such program during such pe13 riod. 

14 (2) AUTHORIZATION OFAPPROPRIATIONS.—In 

15 addition to any other amounts authorized to be ap16 propriated, there are authorized to be appropriated 

17 $57,000,000 for each of the fiscal years 2007 

18 through 2011 to provide grants to an additional 250 

19 individuals under the Integrative Graduate Edu20 cation and Research Traineeship program during 

21 each such fiscal year 

22 SEC. 202. PROFESSIONAL SCIENCE MASTER’S DEGREE PRO23 GRAMS. 

24 (a) DEFINITION OF INSTITUTION OF HIGHER EDU25 CATION.—In this section, the term ‘‘institution of higher 
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1 education’’ has the meaning given the term in section 

2 101(a) of the Higher Education Act of 1965 (20 U.S.C. 

3 1001(a)). 

4 (b) CLEARINGHOUSE.— 

5 (1) DEVELOPMENT.—From amounts appro6 priated under subsection (d), the Director of the Na7 tional Science Foundation shall establish a clearing8 house, in collaboration with 4-year institutions of 

9 higher learning, industries, and Federal agencies 

10 that employ science-trained personnel, to share pro11 gram elements used in successful professional 

12 science master’s degree programs. 

13 (2) AVAILABILITY.—The Director of the Na14 tional Science Foundation shall make the clearing15 house of program elements developed under para16 graph (1) available to institutions of higher edu17 cation that are developing professional science mas18 ter’s degree programs. 

19 (c) PILOT PROGRAMS.— 

20 (1) PROGRAM AUTHORIZED.—From amounts 

21 appropriated under subsection (d), the Director of 

22 the National Science Foundation shall award grants 

23 for pilot programs to 4-year institutions of higher 

24 education to facilitate the institutions’ creation or 
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1 improvement of professional science master’s degree 

2 programs. 

3 (2) APPLICATION.—A 4-year institution of 

4 higher education desiring a grant under this section 

5 shall submit an application at such time, in such 

6 manner, and accompanied by such information as 

7 the Director of the National Science Foundation 

8 may require. The application shall include— 

9 (A) a description of the professional 

10 science master’s degree program that the insti11 tution of higher education will implement; 

12 (B) the amount of funding from non-Fed13 eral sources, including from private industries, 

14 that the institution of higher education shall 

15 use to support the professional master’s degree 

16 program; and 

17 (C) an assurance that the institution of 

18 higher education shall encourage students in 

19 the professional science master’s degree pro20 gram to apply for all forms of Federal assist21 ance available to such students, including appli22 cable graduate fellowships and student financial 

23 assistance under title IV of the Higher Edu24 cation Act of 1965 (20 U.S.C. 1070 et seq.). 
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1 (3) PREFERENCE FOR ALTERNATIVE FUNDING

2 SOURCES.—The Director of the National Science 

3 Foundation shall give preference in making awards 

4 to 4-year institutions of higher education seeking 

5 Federal funding to support pilot professional science 

6 master’s degree programs, to those applicants that 

secure more than 2 7 ⁄3 of the funding for such profes8 sional science master’s degree programs from 

9 sources other than the Federal Government. 

10 (4) NUMBER OFGRANTS; TIME PERIOD OF

11 GRANTS.— 

12 (A) NUMBER OFGRANTS.—Subject to the 

13 availability of appropriated funds, the Director 

14 of the National Science Foundation shall award 

15 grants under paragraph (1) to a maximum of 

16 200 4-year institutions of higher education. 

17 (B) TIME PERIOD OFGRANTS.—Grants 

18 awarded under this section shall be for one 3- 

19 year term. Grants may be renewed only once 

20 for a maximum of 2 additional years. 

21 (5) EVALUATION AND REPORTS.— 

22 (A) DEVELOPMENT OFPERFORMANCE

23 BENCHMARKS.—Prior to the start of the grant 

24 program, the National Science Foundation, in 

25 collaboration with 4-year institutions of higher 
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1 education, shall develop performance bench2 marks to evaluate the pilot programs assisted 

3 by grants under this section. 

4 (B) EVALUATION.—For each year of the 

5 grant period, the Director of the National 

6 Science Foundation, in consultation with 4-year 

7 institutions of higher education, industry, and 

8 Federal agencies that employ science-trained 

9 personnel, shall complete an evaluation of each 

10 pilot program assisted by grants under this sec11 tion. Any pilot program that fails to satisfy the 

12 performance benchmarks developed under sub13 paragraph (A) shall not be eligible for further 

14 funding. 

15 (C) REPORT.—Not later than 180 days 

16 after the completion of an evaluation described 

17 in subparagraph (A), the Director of the Na18 tional Science Foundation, in consultation with 

19 industries and Federal agencies that employ 

20 science-trained personnel, shall submit a report 

21 to Congress that includes— 

22 (i) the results of the evaluation de23 scribed in subparagraph (A); and 

24 (ii) recommendations for administra25 tive and legislative action that could opti-
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1 mize the effectiveness of the pilot pro2 grams, as the Director determines to be 

3 appropriate. 

4 (d) AUTHORIZATION OF APPROPRIATIONS.—There 

5 are authorized to be appropriated to carry out this section 

6 $20,000,000 for fiscal year 2007 and such sums as may 

7 be necessary for each succeeding fiscal year. 

8 SEC. 203. INCREASED SUPPORT FOR SCIENCE EDUCATION 

9 THROUGH THE NATIONAL SCIENCE FOUNDA10 TION. 

11 There are authorized to be appropriated to carry out 

12 the science, mathematics, engineering, and technology tal13 ent expansion program under section 8(7) of the National 

14 Science Foundation Authorization Act of 2002 (Public 

15 Law 107–368, 116 Stat. 3042) the following amounts: 

16 (1) For fiscal year 2007, $35,000,000. 

17 (2) For fiscal year 2008, $50,000,000. 

18 (3) For fiscal year 2009, $100,000,000. 

19 (4) For fiscal year 2010, $150,000,000. 

20 SEC. 204. INNOVATION-BASED EXPERIENTIAL LEARNING. 

21 (a) PILOT PROGRAM.— 

22 (1) PROGRAM AUTHORIZED.—The Director of 

23 the National Science Foundation shall award grants 

24 to local educational agencies to enable the local edu25 cational agencies to implement innovation-based ex-
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1 periential learning in a total of 500 secondary 

2 schools and 500 elementary or middle schools in the 

3 United States. 

4 (2) APPLICATION.—A local educational agency 

5 desiring a grant under this section shall submit an 

6 application at such time, in such manner, and ac7 companied by such information as the Director of 

8 the National Science Foundation may require. 

9 (b) AUTHORIZATION OF APPROPRIATIONS.—There 

10 are authorized to be appropriated to carry out this section 

11 $10,000,000 for fiscal year 2007 and $20,000,000 for 

12 each of the fiscal years 2008 and 2009. 

13 Subtitle B—21st Century 

14 Healthcare System 

15 SEC. 211. SENSE OF CONGRESS REGARDING 21ST CENTURY 

16 HEALTHCARE SYSTEM. 

17 (a) SENSE OF CONGRESS.—It is the sense of Con18 gress that, in order to improve the United States 

19 healthcare system for the 21st century, the Federal Gov20 ernment should encourage the widespread adoption of 

21 interoperable health information technology by— 

22 (1) facilitating the creation of standards for 

23 interoperable electronic reporting of healthcare data; 

24 and 
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1 (2) after such standards have been created, 

2 each Federal agency or department that collects 

3 data for the purposes described in subsection (b) 

4 should collect such data in a manner that is con5 sistent with such standards. 

6 (b) PURPOSES DESCRIBED.—The purposes described 

7 in this subsection include quality reporting, surveillance, 

8 epidemiology, adverse event reporting, research, or for 

9 other purposes determined appropriate by the Secretary 

10 of Health and Human Services. 

11 TITLE III—INCENTIVES FOR 

12 ENCOURAGING INNOVATION 

13 Subtitle A—Research Credits 

14 SEC. 301. PERMANENT EXTENSION OF RESEARCH CREDIT. 

15 (a) IN GENERAL.—Section 41 of the Internal Rev16 enue Code of 1986 (relating to credit for increasing re17 search activities) is amended by striking subsection (h). 

18 (b) CONFORMING AMENDMENT.—Section 45C(b)(1) 

19 of the Internal Revenue Code of 1986 is amended by strik20 ing subparagraph (D). 

21 (c) EFFECTIVE DATE.—The amendments made by 

22 this section shall apply to amounts paid or incurred after 

23 the date of the enactment of this Act. 
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1 SEC. 302. INCREASE IN RATES OF ALTERNATIVE INCRE2 MENTAL CREDIT. 

3 (a) IN GENERAL.—Subparagraph (A) of section 

4 41(c)(4) of the Internal Revenue Code of 1986 (relating 

5 to election of alternative incremental credit) is amended— 

6 (1) by striking ‘‘2.65 percent’’ and inserting ‘‘3 

7 percent’’; 

8 (2) by striking ‘‘3.2 percent’’ and inserting ‘‘4 

9 percent’’; and 

10 (3) by striking ‘‘3.75 percent’’ and inserting ‘‘5 

11 percent’’. 

12 (b) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to taxable years ending after the 

14 date of the enactment of this Act. 

15 SEC. 303. ALTERNATIVE SIMPLIFIED CREDIT FOR QUALI16 FIED RESEARCH EXPENSES. 

17 (a) IN GENERAL.—Subsection (c) of section 41 of the 

18 Internal Revenue Code of 1986 (relating to base amount) 

19 is amended by redesignating paragraphs (5) and (6) as 

20 paragraphs (6) and (7), respectively, and by inserting 

21 after paragraph (4) the following new paragraph: 

22 ‘‘(5) ELECTION OFALTERNATIVE SIMPLIFIED

23 CREDIT.— 

24 ‘‘(A) IN GENERAL.—At the election of the 

25 taxpayer, the credit determined under sub26 section (a)(1) shall be equal to 12 percent of so 
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1 much of the qualified research expenses for the 

2 taxable year as exceeds 50 percent of the aver3 age qualified research expenses for the 3 tax4 able years preceding the taxable year for which 

5 the credit is being determined. 

6 ‘‘(B) SPECIAL RULE IN CASE OFNO

7 QUALIFIED RESEARCH EXPENSES IN ANY OF 3

8 PRECEDING TAXABLE YEARS.— 

9 ‘‘(i) TAXPAYERS TO WHICH SUBPARA10 GRAPH APPLIES.—The credit under this 

11 paragraph shall be determined under this 

12 subparagraph if the taxpayer has no quali13 fied research expenses in any 1 of the 3 

14 taxable years preceding the taxable year 

15 for which the credit is being determined. 

16 ‘‘(ii) CREDIT RATE.—The credit de17 termined under this subparagraph shall be 

18 equal to 6 percent of the qualified research 

19 expenses for the taxable year. 

20 ‘‘(C) ELECTION.—An election under this 

21 paragraph shall apply to the taxable year for 

22 which made and all succeeding taxable years 

23 unless revoked with the consent of the Sec24 retary. An election under this paragraph may 
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1 not be made for any taxable year to which an 

2 election under paragraph (4) applies.’’. 

3 (b) COORDINATION WITH ELECTION OF ALTER4 NATIVE INCREMENTAL CREDIT.— 

5 (1) IN GENERAL.—Section 41(c)(4)(B) of the 

6 Internal Revenue Code of 1986 (relating to election) 

7 is amended by adding at the end the following: ‘‘An 

8 election under this paragraph may not be made for 

9 any taxable year to which an election under para10 graph (5) applies.’’. 

11 (2) TRANSITION RULE.—In the case of an elec12 tion under section 41(c)(4) of the Internal Revenue 

13 Code of 1986 which applies to the taxable year 

14 which includes the date of the enactment of this Act, 

15 such election shall be treated as revoked with the 

16 consent of the Secretary of the Treasury if the tax17 payer makes an election under section 41(c)(5) of 

18 such Code (as added by subsection (a)) for such 

19 year. 

20 (c) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply to taxable years ending after the 

22 date of the enactment of this Act. 
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1 Subtitle B—Health and Education 

2 SEC. 311. STUDY AND REPORT ON CATASTROPHIC 

3 HEALTHCARE. 

4 (a) STUDY.—The Secretary of Health and Human 

5 Services and the Secretary of Labor (in this subsection 

6 referred to as the ‘‘Secretaries’’) jointly shall conduct a 

7 study to explore methods for managing costs associated 

8 with catastrophic healthcare events and costs associated 

9 with chronic disease. The Secretaries shall work with 

10 healthcare providers, pharmaceutical manufacturers, large 

11 and small employers, health plans, and other interested 

12 private and public sector entities to develop a consensus 

13 regarding potential innovative approaches for reducing the 

14 financial risks presented by such health problems and im15 proving such outcomes. The study shall consider, among 

16 other factors, the role that best practices, health informa17 tion technology, evidence-based medicine, quality incen18 tives, and comparative clinical effectiveness research can 

19 play in improving quality, value, and efficiency throughout 

20 the United States healthcare system. 

21 (b) REPORT.—Not later than 1 year after the date 

22 of enactment of this Act, the Secretaries shall submit a 

23 report to Congress on the results of the study conducted 

24 under subsection (a), together with such recommendations 
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1 for administrative and legislative action as the Secretaries 

2 determine to be appropriate. 

3 SEC. 312. LIFELONG LEARNING ACCOUNTS. 

4 (a) STUDY.—The Secretary of the Treasury, in col5 laboration with the Secretary of Labor and the Secretary 

6 of Education, shall conduct a study with recommendations 

7 for establishing lifelong learning accounts which would be 

8 exempt from taxation under the Internal Revenue Code 

9 of 1986 and from which funds could only be used for edu10 cational or training purposes. Such study shall consider 

11 whether individuals should be allowed to transfer to such 

12 an account, without incurring tax liability or penalties, 

13 funds which are— 

14 (1) held in accounts established under a plan 

15 described in section 401(k), 403(b), or 457 of the 

16 Internal Revenue Code of 1986; and 

17 (2) held in a qualified tuition program under 

18 section 529 of such Code. 

19 (b) REPORT.—Not later than 1 year after the date 

20 of the enactment of this Act, the Secretary of the Treasury 

21 shall submit to Congress a report on the study conducted 

22 under subsection (a). 
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1 Subtitle C—Savings and 

2 Investments 

3 SEC. 321. REGULATIONS RELATING TO PRIVATE FOUNDA4 TION SUPPORT OF INNOVATIONS IN ECO5 NOMIC DEVELOPMENT. 

6 The Secretary of the Treasury or the Secretary’s del7 egate shall as soon as practicable issue regulations under 

8 subchapter A of chapter 42 of the Internal Revenue Code 

9 of 1986 (relating to excise taxes on private foundations) 

10 which— 

11 (1) clearly identify when distributions by pri12 vate foundations for purposes of stimulating eco13 nomic development will be treated as made for an 

14 exempt purpose described in section 170(c)(2)(B) of 

15 such Code; and 

16 (2) clarify the circumstances under which pri17 vate foundations may make program-related invest18 ments described in section 4944(c) of such Code in 

19 start-up ventures. 

20 SEC. 322. ADVISORY GROUP REGARDING VALUATION OF IN21 TANGIBLES. 

22 (a) ESTABLISHMENT.—The Secretary of the Treas23 ury shall establish an advisory group consisting of rep24 resentatives of the public and private investment sector. 

25 The advisory group shall include representatives from the 
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•HR 4654 IH 

1 Department of Commerce, the Securities and Exchange 

2 Commission, the Commodity Futures Trading Commis3 sion, the Board of Governors of the Federal Reserve Sys4 tem, the New York Stock Exchange, the National Associa5 tion of Securities Dealers Automatic Quotation System, 

6 and significant industry sectors. 

7 (b) DUTIES.—The advisory group established under 

8 subsection (a) shall— 

9 (1) examine and make recommendations of best 

10 practices for valuation of intangibles in order to— 

11 (A) provide investors with an improved 

12 method for assessing the impact intangibles 

13 have on the accuracy of a company’s financial 

14 picture; and 

15 (B) support industry trade associations in 

16 efforts to adopt guidelines for intangibles ap17 propriate to particular industry sections; and 

18 (2) submit to the Secretary of the Treasury a 

19 recommendation regarding whether a litigation safe 

20 harbor should be established for those companies 

21 that make good faith estimates regarding the value 

22 of intangibles under the best practice standards de23 veloped under paragraph (1). 

24 (c) RESEARCH NETWORK.—The Secretary of Com25 merce shall establish a research network of industry and 
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•HR 4654 IH 

1 academic expertise to study metrics and solutions for in2 tangible disclosure, and provide such research results to 

3 the advisory group. 

4 (d) ACCOUNTING STANDARDS.—The Secretary of the 

5 Treasury and the advisory group shall encourage the Fi6 nancial Accounting Standards Board to reinstate its 

7 project on disclosure of information about intangible as8 sets not recognized in financial statements and to move 

9 expeditiously toward issuance of a statement of financial 

10 accounting standards concerning valuation and disclosure 

11 of key intangible assets. 

12 (e) REPORT.—Not later than 2 years after the date 

13 of the enactment of this Act, the advisory group shall sub14 mit to the Secretary of the Treasury the results of the 

15 examination under subsection (b)(1) and the recommenda16 tion under subsection (b)(2). 

17 TITLE IV—DEPARTMENT OF 

18 DEFENSE MATTERS 

19 Subtitle A—Defense Research and 

20 Education 

21 SEC. 401. REVITALIZATION OF FRONTIER AND MULTIDISCI22 PLINARY RESEARCH. 

23 It shall be the goal of the Department of Defense to 

24 allocate at least 3 percent of the total Department of De25 fense budget to science and technology. Of this amount, 
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1 it shall be the goal of the Department of Defense to allo2 cate at least 20 percent to basic research. 

3 SEC. 402. ENHANCEMENT OF EDUCATION. 

4 (a) SCIENCE, MATHEMATICS, AND RESEARCH FOR

5 TRANSFORMATION (SMART) SCHOLARSHIPS.— 

6 (1) EXTENSION OFPROGRAM.—Section 

7 1105(a)(2) of the Ronald W. Reagan National De8 fense Authorization Act for Fiscal Year 2005 (Pub9 lic Law 108–375; 118 Stat. 2074; 10 U.S.C. 2192 

10 note) is amended by striking ‘‘for three years begin11 ning on the date of the enactment of this Act’’ and 

12 inserting ‘‘through September 30, 2011’’. 

13 (2) EXPANSION OFPROGRAM.—The Secretary 

14 of Defense shall, utilizing amounts authorized to be 

15 appropriated by paragraph (3), increase the number 

16 of participants in the Science, Mathematics, and Re17 search for Transformation (SMART) Defense Schol18 arship Pilot Program under section 1105 of the 

19 Ronald W. Reagan National Defense Authorization 

20 Act for Fiscal Year 2005 in each of fiscal years 

21 2007 through 2011— 

22 (A) by an additional 160 participants pur23 suing doctoral degrees in each such fiscal year; 

24 and 
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1 (B) by an additional 60 participants pur2 suing masters degrees in each such fiscal year. 

3 (3) AUTHORIZATION OFAPPROPRIATIONS.— 

4 There is hereby authorized to be appropriated to the 

5 Department of Defense for each of fiscal years 2007 

6 through 2011 the amount of $41,300,000 for pur7 poses of carrying out this subsection, of which— 

8 (A) $36,000,000 shall be available in each 

9 such fiscal year for additional participants in 

10 the Science, Mathematics, and Research for 

11 Transformation (SMART) Defense Scholarship 

12 Pilot Program who are pursuing doctoral de13 grees under paragraph (2)(A); and 

14 (B) $5,300,000 shall be available in each 

15 such fiscal year for additional participants in 

16 the Science, Mathematics, and Research for 

17 Transformation (SMART) Defense Scholarship 

18 Pilot Program who are pursuing masters de19 grees under paragraph (2)(B). 

20 (b) NATIONAL DEFENSE SCIENCE AND ENGINEER21 ING GRADUATE FELLOWSHIPS.— 

22 (1) EXPANSION OFPROGRAM.—The Secretary 

23 of Defense shall, utilizing amounts authorized to be 

24 appropriated by paragraph (2), increase the number 

25 of participants in the National Defense Science and 
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1 Engineering Graduate (NDSEG) fellowship program 

2 in each of fiscal years 2007 through 2011 by an ad3 ditional 200 participants in each such fiscal year. 

4 (2) AUTHORIZATION OFAPPROPRIATIONS.— 

5 There is hereby authorized to be appropriated to the 

6 Department of Defense for each of fiscal years 2007 

7 through 2011 the amount of $45,000,000 for pur8 poses of carrying out this subsection. 

9 (c) INSTITUTION-BASED TRAINEESHIPS.— 

10 (1) PROGRAM REQUIRED.—The Secretary of 

11 Defense shall, utilizing amounts authorized to be ap12 propriated by paragraph (4), carry out a program to 

13 award, on a competitive basis, traineeships to under14 graduate and graduate students at institutions of 

15 higher education in order to permit such students to 

16 pursue studies in areas of importance to the Depart17 ment of Defense in mathematics, science, or engi18 neering in settings or programs that provide such 

19 students exposure to multidisciplinary studies, inno20 vation-oriented studies, and academic, private-sector, 

21 or government laboratories and research. It shall be 

22 the goal of the traineeship program for a trainee to 

23 work for the Department of Defense for 10 years 

24 after completing his or her degree. 
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1 (2) PARTICIPANTS.—In each of fiscal years 

2 2007 through 2011, the number of participants in 

3 the program required by paragraph (1) shall be as 

4 follows: 

5 (A) Not more than 30 participants pur6 suing doctoral degrees. 

7 (B) Not more than 30 participants pur8 suing masters degrees. 

9 (C) Not more than 20 participants pur10 suing undergraduate degrees. 

11 (3) ANNUAL REPORTS.—Not later than Novem12 ber 30 each year, the Secretary of Defense shall sub13 mit to the Committees on Armed Services of the 

14 Senate and the House of Representatives a report on 

15 the carrying out of the program required by para16 graph (1) during the preceding fiscal year. The re17 port shall describe the participants, and the studies 

18 pursued by such participants, in the program during 

19 the fiscal year covered by the report, and shall in20 clude an assessment of the benefits of the program 

21 to the Department of Defense. 

22 (4) AUTHORIZATION OFAPPROPRIATIONS.— 

23 There is hereby authorized to be appropriated to the 

24 Department of Defense for each of fiscal years 2007 

25 through 2011 the amount of $11,100,000 for pur-
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1 poses of carrying out the program required by this 

2 subsection, of which— 

3 (A) $7,000,000 shall be available in each 

4 such fiscal year for participants in the program 

5 who are pursuing doctoral degrees under para6 graph (2)(A); 

7 (B) $2,600,000 shall be available in each 

8 such fiscal year for participants in the program 

9 who are pursuing masters degrees under para10 graph (2)(B); and 

11 (C) $1,500,000 shall be available in each 

12 such fiscal year for participants in the program 

13 who are pursuing undergraduate degrees under 

14 paragraph (2)(C). 

15 Subtitle B—Defense Advanced 

16 Manufacturing 

17 SEC. 411. MANUFACTURING RESEARCH AND DEVELOP18 MENT. 

19 (a) IDENTIFICATION OF ENHANCED PROCESSES AND

20 TECHNOLOGIES.—The Under Secretary of Defense for 

21 Acquisition, Technology, and Logistics, acting through the 

22 Director of Defense Research and Engineering, shall iden23 tify advanced manufacturing processes and technologies 

24 whose utilization will achieve significant productivity and 

25 efficiency gains in the defense manufacturing base. 
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1 (b) RESEARCH AND DEVELOPMENT.—The Under 

2 Secretary shall undertake research and development on 

3 processes and technologies identified under subsection (a) 

4 that addresses, in particular— 

5 (1) innovative manufacturing processes and ad6 vanced technologies; and 

7 (2) the creation of extended production enter8 prises using information technology and new busi9 ness models. 

10 (c) DEFENSE PRIORITIES.—In undertaking research 

11 and development under subsection (b), the Under Sec12 retary shall consider defense priorities established in the 

13 most current Joint Warfighting Science and Technology 

14 Plan. 

15 SEC. 412. TRANSITION OF TRANSFORMATIONAL MANUFAC16 TURING PROCESSES AND TECHNOLOGIES TO 

17 THE DEFENSE MANUFACTURING BASE. 

18 (a) ACCELERATION OF TRANSITION FROM SCIENCE

19 AND TECHNOLOGY.— 

20 (1) IN GENERAL.—The Under Secretary of De21 fense for Acquisition, Technology, and Logistics 

22 shall undertake appropriate actions to accelerate the 

23 transition of transformational manufacturing tech24 nologies and processes (including processes and tech25 nologies identified under section 411) from the re-
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1 search stage to utilization by manufacturers in the 

2 defense manufacturing base. 

3 (2) EXECUTION.—The actions undertaken 

4 under paragraph (1) shall include a memorandum of 

5 understanding among the Director of Defense Re6 search and Engineering, other appropriate elements 

7 of the Department of Defense, and the Joint De8 fense Manufacturing Technology Panel to accelerate 

9 the transition of technologies and processes as de10 scribed in that paragraph. 

11 (b) PROTOTYPES AND TEST BEDS.— 

12 (1) IN GENERAL.—The Under Secretary shall, 

13 utilizing the Manufacturing Technology Program, 

14 undertake the development of prototypes and test 

15 beds to promote the purposes of this section. 

16 (2) COORDINATION OFACTIVITIES.—The Under 

17 Secretary shall coordinate activities under this sub18 section with activities under the Small Business In19 novation Research Program and the Small Business 

20 Technology Transfer Program. 

21 (c) DEVELOPMENT OF IMPROVEMENT PROCESS.— 

22 The Under Secretary shall, in consultation with persons 

23 and organizations in the defense manufacturing base, de24 velop and implement a program to continuously identify 

25 and utilize improvements and innovative processes in ap-
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1 propriate defense acquisition programs and by manufac2 turers in the defense manufacturing base. 

3 (d) DIFFUSION OF ENHANCEMENTS INTO DEFENSE

4 MANUFACTURING BASE.—The Under Secretary shall en5 sure the utilization in industry of enhancements in produc6 tivity and efficiency identified by reason of activities under 

7 this subtitle through the following: 

8 (1) Research and development activities under 

9 the Manufacturing Technology Program, including 

10 the establishment of public-private partnerships. 

11 (2) Outreach through the Manufacturing Ex12 tension Partnership Program under memoranda of 

13 agreement, cooperative programs, and other appro14 priate arrangements. 

15 (3) Coordination with activities under such 

16 other current programs for the dissemination of 

17 manufacturing technology as the Under Secretary 

18 considers appropriate. 

19 (4) Identification of incentives for contractors 

20 in the defense manufacturing base to incorporate 

21 and utilize manufacturing enhancements in manu22 facturing activities. 

23 SEC. 413. MANUFACTURING TECHNOLOGY STRATEGIES. 

24 (a) IN GENERAL.—The Under Secretary of Defense 

25 for Acquisition, Technology, and Logistics may— 
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1 (1) identify an area of technology where the de2 velopment of industry-prepared roadmaps for new 

3 manufacturing and technology processes applicable 

4 to defense manufacturing requirements would be 

5 beneficial to the Department of Defense; and 

6 (2) establish a task force, and act in coopera7 tion with the private sector, to map the strategy for 

8 the development of manufacturing processes and 

9 technologies needed to support technology develop10 ment in the area identified under paragraph (1). 

11 (b) COMMENCEMENT OF ROADMAPPING.—The Under 

12 Secretary shall commence any roadmapping identified 

13 pursuant to subsection (a)(1) not later than January 

14 2007. 

15 SEC. 414. PLANNING FOR ADOPTION OF STRATEGIC INNO16 VATION. 

17 (a) IN GENERAL.—The Secretary of Defense, acting 

18 through the Under Secretary of Defense for Acquisition, 

19 Technology, and Logistics, shall ensure that each contract 

20 of a value of $50,000,000 or more under a technology or 

21 logistics program of the Department of Defense includes 

22 requirements for planning by the contractor under such 

23 contract for the adoption of innovative technologies under 

24 such contract. 
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1 (b) PARTICULAR REQUIREMENTS.—The require2 ments included in a contract under subsection (a) shall 

3 include— 

4 (1) requirements for plans for the identifica5 tion, monitoring, and transition to the utilization 

6 under such contract of applicable emerging tech7 nologies from the private sector; 

8 (2) requirements for plans for the identifica9 tion, monitoring, and development under such con10 tract of emerging research initiatives in academia; 

11 and 

12 (3) a requirement to submit to the Under Sec13 retary on an annual basis a report on the implemen14 tation of the planning carried out pursuant to the 

15 requirements included in such contract. 

16 SEC. 415. REPORT. 

17 (a) IN GENERAL.—Not later than December 31, 

18 2008, the Under Secretary of Defense for Acquisition, 

19 Technology, and Logistics shall submit to the congres20 sional defense committees a report on the actions under21 taken by the Under Secretary under this subtitle during 

22 fiscal year 2007. 

23 (b) ELEMENTS.—The report under subsection (a) 

24 shall include— 
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1 (1) a comprehensive description of the actions 

2 undertaken under this subtitle during fiscal year 

3 2007; 

4 (2) an assessment of effectiveness of such ac5 tions in enhancing research and development on 

6 manufacturing technologies and processes, and the 

7 implementation of such technologies and processes 

8 within the defense manufacturing base; and 

9 (3) such recommendations as the Under Sec10 retary considers appropriate for additional actions to 

11 be undertaken in order to increase the effectiveness 

12 of the actions undertaken under this subtitle in en13 hancing manufacturing activities within the defense 

14 manufacturing base. 

15 SEC. 416. AUTHORIZATION OF APPROPRIATIONS. 

16 Funds are hereby authorized to be appropriated for 

17 the Department of Defense for purposes of carrying out 

18 this subtitle for fiscal years as follows: 

19 (1) For fiscal year 2007, $20,000,000. 

20 (2) For fiscal year 2008, $40,000,000. 

21 (3) For fiscal year 2009, $60,000,000. 

22 (4) For fiscal year 2010, $80,000,000. 

23 (5) For fiscal year 2011, $100,000,000. 
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1 TITLE V—JUDICIARY AND 

2 OTHER MATTERS 

3 SEC. 501. SENSE OF CONGRESS ON RETAINING HIGH TECH 

4 TALENT IN THE UNITED STATES. 

5 It is the sense of Congress that comprehensive immi6 gration reform should ensure that the United States re7 tains foreign-born high-tech talent educated in the United 

8 States and remains the leader in innovation and techno9 logical development in an emerging global marketplace. 

10 Such comprehensive reform should ensure— 

11 (1) that the United States continues to retain 

12 foreign nationals who have received master’s or 

13 higher degrees in the sciences, technology, engineer14 ing or mathematics from United States institutions 

15 of higher education under either— 

16 (A) the H–1B visa program; or 

17 (B) as employment-based immigrants; 

18 (2) that the United States must take a forward 

19 looking approach with respect to any limitations on 

20 the H–1B visa program; and 

21 (3) that immigration reform should also include 

22 systematic improvements to the Government’s tech23 nology infrastructure in order to eliminate delays in 

24 processing immigration proceedings, including em25 ployment-based visa applications. 
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1 SEC. 502. STUDY ON BARRIERS TO INNOVATION. 

2 (a) IN GENERAL.—The National Academy of 

3 Sciences shall conduct and complete a study to identify, 

4 and to review methods to mitigate, new forms of risk for 

5 businesses beyond conventional operational and financial 

6 risk that affect the ability to innovate, including studying 

7 and reviewing— 

8 (1) incentive and compensation structures that 

9 could effectively encourage long-term value creation 

10 and innovation; 

11 (2) methods of voluntary and supplemental dis12 closure by industry of intellectual capital, innovation 

13 performance, and indicators of future valuation; 

14 (3) means by which government could work 

15 with industry to enhance the legal and regulatory 

16 framework to encourage the disclosures described in 

17 paragraph (2); 

18 (4) practices that may be significant deterrents 

19 to United States businesses engaging in innovation 

20 risk-taking compared to foreign competitors, includ21 ing tort litigation, the nature and extent of any re22 sulting defensive management practices, and rec23 ommendations on practices to restore innovation 

24 risk-taking and to overcome defensive practices; 

25 (5) means by which industry, trade associa26 tions, and universities could collaborate to support 
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1 research on management practices and methodolo2 gies for assessing the value and risks of longer term 

3 innovation strategies; and 

4 (6) means to encourage new, open, and collabo5 rative dialogue between industry associations, regu6 latory authorities, management, shareholders, and 

7 other concerned interests to encourage appropriate 

8 approaches to innovation risk-taking. 

9 (b) REPORT REQUIRED.—The National Academy of 

10 Sciences shall, not later than 1 year after the date of en11 actment of this Act, submit to Congress a report on the 

12 study conducted under subsection (a). 

13 (c) AUTHORIZATIONS OF APPROPRIATIONS.—There 

14 are authorized to be appropriated to the National Acad15 emy of Sciences $1,000,000 for fiscal year 2007 for the 

16 purpose of carrying out the study required under this sec17 tion. 

18 SEC. 503. SENSE OF CONGRESS ON PATENT REFORM. 

19 It is the sense of Congress that— 

20 (1) to bolster the United States economy and 

21 strengthen innovators in the United States, the pat22 ent system should be reformed to enhance the qual23 ity of patents, to leverage patent databases as inno24 vation tools, and to create best practices for global 

25 collaborative standard setting; and 
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1 (2) to achieve the objectives described in para2 graph (1), the Federal Government should— 

3 (A) fully fund the Patent and Trademark 

4 Office and enable the Office to direct its fees to 

5 fund process improvements; 

6 (B) improve compliance with existing pat7 enting requirements and create incentives for 

8 improved search and disclosure of prior art; 

9 (C) create new standards for searchability 

10 of patent applications and new patents; 

11 (D) establish a fair and balanced post12 grant patent review procedure for future pat13 ents and patent applications; 

14 (E) invest in retroactively creating search15 able keywords for a subset of the most highly 

16 cited historical patents; 

17 (F) secure reciprocal access to foreign pat18 ent databases; and 

19 (G) set best practices and processes for 

20 standards bodies to align incentives for collabo21 rative standard setting, and to encourage broad 

22 participation. 

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