A bill to establish a defense industrial base advanced capabilities pilot program.

Subjects: Armed Forces and National Security


<html><body><pre>[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 1463 Introduced in Senate (IS)]

&lt;DOC&gt;






118th CONGRESS
  1st Session
                                S. 1463

  To establish a defense industrial base advanced capabilities pilot 
                                program.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 4, 2023

  Ms. Rosen (for herself and Mrs. Blackburn) introduced the following 
   bill; which was read twice and referred to the Committee on Armed 
                                Services

_______________________________________________________________________

                                 A BILL


 
  To establish a defense industrial base advanced capabilities pilot 
                                program.

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

SECTION 1. DEFENSE INDUSTRIAL BASE ADVANCED CAPABILITIES PILOT PROGRAM.

    (a) Establishment.--
            (1) In general.--The Under Secretary of Defense for 
        Acquisition and Sustainment shall carry out a public-private 
        partnership pilot program to accelerate the scaling, 
        production, and acquisition of advanced capabilities for 
        national security by creating incentives for investment in 
        domestic small businesses or nontraditional businesses to 
        create a robust and resilient defense industrial base.
            (2) Goals.--The goals of the public-private partnership 
        pilot program are as follows:
                    (A) To bolster the defense industrial base through 
                acquisition and deployment of advanced capabilities 
                necessary to field Department of Defense modernization 
                programs and priorities.
                    (B) To strengthen domestic defense supply chain 
                resilience and capacity by investing in innovative 
                defense companies.
                    (C) To leverage private equity capital to 
                accelerate domestic defense scaling, production, and 
                manufacturing.
    (b) Public-Private Partnerships.--
            (1) In general.--In carrying out subsection (a), the Under 
        Secretary shall enter into public-private partnerships, 
        consistent with the phased implementation provided for in 
        subsection (e), with for-profit persons using the criteria set 
        forth in paragraph (2).
            (2) Criteria.--The criteria referred to in paragraph (1) 
        shall include the following:
                    (A) The person shall be independent.
                    (B) The person shall be free from foreign 
                oversight, control, influence, or beneficial ownership.
                    (C) The person shall have commercial private equity 
                fund experience in the defense and commercial sectors.
                    (D) The person shall be eligible for access to 
                classified information (as defined in the procedures 
                established pursuant to section 801(a) of the National 
                Security Act of 1947 (50 U.S.C. 3161(a))).
            (3) Operating agreement.--The Under Secretary and a person 
        or persons with whom the Under Secretary enters a partnership 
        under paragraph (1) shall enter into an operating agreement 
        that sets forth the roles, responsibilities, authorities, 
        reporting requirements, and governance framework for the 
        partnership and its operations.
    (c) Investment of Equity.--
            (1) In general.--Pursuant to public-private partnerships 
        entered into under subsection (b), a person or persons with 
        whom the Under Secretary has entered into a partnership shall 
        invest equity in domestic small businesses or nontraditional 
        businesses consistent with subsection (a), with investments 
        selected based on technical merit, economic value, and the 
        Department's modernization priorities.
            (2) Authorities.--A person or persons described in 
        paragraph (1) shall have sole authority to operate, manage, and 
        invest.
    (d) Loan Guarantee.--
            (1) In general.--The Under Secretary shall provide an up to 
        80 percent loan guarantee, pursuant to the public-private 
        partnerships entered into under subsection (b), with investment 
        of equity that qualifies under subsection (c) and consistent 
        with the goals set forth under subsection (a)(2).
            (2) Pilot program authority.--The temporary loan guarantee 
        authority described under paragraph (1) is exclusively for the 
        public-private partnerships authorized under this section and 
        may not be utilized for other programs or purposes.
            (3) Subject to operating agreement.--The loan guarantee 
        under paragraph (1) shall be subject to the operating agreement 
        entered into under subsection (b)(3).
            (4) Use of funds.--Obligations incurred by the Under 
        Secretary under this paragraph shall be subject to the 
        availability of funds provided in advance specifically for the 
        purpose of such loan guarantees.
    (e) Phased Implementation Schedule and Required Reports and 
Briefings.--The program established under subsection (a) shall be 
carried out in two phases as follows:
            (1) Phase 1.--
                    (A) In general.--Phase 1 shall consist of an 
                initial pilot program with one public-private 
                partnership, consistent with subsection (b), to assess 
                the feasibility and advisability of expanding the scope 
                of the program. The Under Secretary shall begin 
                implementation of phase 1 not later than 180 days after 
                the date of the enactment of this Act.
                    (B) Implementation schedule and framework.--Not 
                later than 90 days after the date of the enactment of 
                this Act, the Secretary shall submit an implementation 
                plan to the congressional defense committees on the 
                design of phase 1. The plan shall include--
                            (i) an overview of, and the activities 
                        undertaken, to execute the public-private 
                        partnership;
                            (ii) a description of the advanced 
                        capabilities and defense industrial base areas 
                        under consideration for investment; and
                            (iii) implementation milestones and 
                        metrics.
                    (C) Report and briefing required.--Not later than 
                27 months after the date of the enactment of this Act, 
                the Secretary shall provide to the congressional 
                defense committees a report and briefing on the 
                implementation of this section and the feasibility and 
                advisability of expanding the scope of the pilot 
                program. The report and briefing shall include, at 
                minimum--
                            (i) an overview of program performance, and 
                        implementation and execution milestones and 
                        outcomes;
                            (ii) an overview of progress in--
                                    (I) achieving new products in 
                                production aligned with Department of 
                                Defense needs;
                                    (II) scaling businesses aligned to 
                                targeted industrial base and capability 
                                areas;
                                    (III) generating defense industrial 
                                base job growth;
                                    (IV) increasing supply chain 
                                resilience and capacity; and
                                    (V) enhancing competition on 
                                advanced capability programs; and
                            (iii) an accounting of activities 
                        undertaken and outline of the opportunities and 
                        benefits of expanding the scope of the pilot 
                        program.
            (2) Phase 2.--
                    (A) In general.--Not later than 30 months after the 
                date of the enactment of this Act, the Secretary may 
                expand the scope of the phase 1 pilot program with the 
                ability to increase to not more than three public-
                private partnerships, consistent with subsection (b).
                    (B) Report and briefing required.--Not later than 
                five years after the date of the enactment of this Act, 
                the Secretary shall provide to the congressional 
                defense committees a report and briefing on the 
                outcomes of the pilot program under subsection (a), 
                including the elements described in paragraph (1)(C), 
                and the feasibility and advisability of making the 
                program permanent.
    (f) Termination.--The authority to enter into an agreement to carry 
out the pilot program under subsection (a) shall terminate on the date 
that is five years after the date of the enactment of this Act.
    (g) Definitions.--In this section:
            (1) Congressional defense committees.--The term 
        ``congressional defense committees'' has the meaning given the 
        term in section 101(a)(16) of title 10, United States Code.
            (2) Domestic business.--The term ``domestic business'' has 
        the meaning given the term ``U.S. business'' in section 800.252 
        of title 31, Code of Federal Regulations, or successor 
        regulation.
            (3) Domestic small businesses or nontraditional 
        businesses.--The term ``domestic small businesses or 
        nontraditional businesses'' means--
                    (A) a small business that is a domestic business; 
                or
                    (B) a nontraditional business that is a domestic 
                business.
            (4) Free from foreign oversight, control, influence, or 
        beneficial ownership.--The term ``free from foreign oversight, 
        control, influence, or beneficial ownership'', with respect to 
        a person, means a person who has not raised and managed capital 
        from a person or entity that is not trusted and who is 
        otherwise free from foreign oversight, control, influence, or 
        beneficial ownership.
            (5) Independent.--The term ``independent'', with respect to 
        a person, means a person who lacks a conflict of interest 
        accomplished by not having entity or manager affiliation or 
        ownership with an existing fund.
            (6) Nontraditional business.--The term ``nontraditional 
        business'' has the meaning given the term ``nontraditional 
        defense contractor'' in section 3014 of title 10, United States 
        Code.
            (7) Small business.--The term ``small business'' has the 
        meaning given the term ``small business concern'' in section 3 
        of the Small Business Act (15 U.S.C. 632).
                                 &lt;all&gt;
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