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 Infra-
structure, and Financial Services, for a period to be subsequently deter-
mined 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. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘National Innovation Act of 2006’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title; table of contents 
Sec. 2. Findings and purposes 
Sec. 3. Definitions 
TITLE I—INNOVATION PROMOTION
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 tech-
nologies 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
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 
SEC. 2. FINDINGS AND PURPOSES. 
(a) FINDINGS.—Congress makes the following find-
ings: 
(1) The United States is the most innovative 
Nation in the world. Since our Nation’s founding, 
exploration, opportunity, and discovery have re-
mained essential to fulfilling our Nation’s strategic 
economic and political objectives. 
(2) In the 21st century, a well-educated and 
trained workforce, investment in research and devel-
opment, and a regulatory and physical infrastructure 
that supports innovators are essential to ensuring 
that the United States continues to lead the global 
economy on innovation. 
(3) America’s future economic and national se-
curity will largely depend on the creativity and com-
mitment of our Nation to unleash its innovation ca-
pacity. 
(4) The world has become dramatically more 
interconnected and competitive. Cutting edge re-
search, world-class education, and highly skilled 
labor pools are no longer within the sole purview of 
the United States.
(5) The United States investment in basic re-
search is currently insufficient to meet the chal-
lenges we face. 
(6) Federal support for basic research in the 
physical sciences has consistently lagged behind that 
given to the life sciences in recent years. 
(7) Traditional measurements of innovation ca-
pacity focused solely on inputs, such as research and 
development spending, number of patents and value 
of physical infrastructure. The traditional measure-
ments are necessary but are not sufficient metrics 
for innovation in the 21st century’s knowledge econ-
omy. 
(8) Current Federal budget constraints require 
prioritization of spending and new programs must 
be funded through existing funds or through identi-
fiable funding offsets whenever possible. 
(9) A national, private sector-led, and govern-
ment supported plan is required if the United States 
is to adequately respond to the challenges of in-
creased global competition and take advantage of the 
opportunities this changing global dynamic presents. 
(b) PURPOSES.—The purposes of this Act are to— 
(1) make innovation a fundamental economic 
priority for the United States;
(2) create the most fertile policy environment 
for innovation to occur; 
(3) develop greater numbers of American sci-
entists, mathematicians, and engineers; 
(4) enhance the quality of math and science 
education at all levels; 
(5) increase the Federal Government’s invest-
ment in basic research, especially in the physical 
sciences; 
(6) direct greater funding toward multidisci-
plinary and frontier research where tomorrow’s inno-
vations are most likely to occur; 
(7) secure a strong advanced manufacturing 
base in the United States to ensure that as innova-
tions occur, America is poised to reap the benefits 
via the creation of new jobs and investment; and 
(8) examine both the incentives for, and bar-
riers to, innovation to better understand what addi-
tional policy changes are warranted. 
SEC. 3. DEFINITIONS. 
In this Act: 
(1) CONGRESSIONAL DEFENSE COMMITTEES.— 
The term ‘‘congressional defense committees’’ has 
the meaning given that term in section 101(a)(16) 
of title 10, United States Code.
(2) DEFENSE
MANUFACTURING
BASE.—The 
term ‘‘defense manufacturing base’’ includes any 
supplier of the Department of Defense, including a 
supplier of raw materials. 
(3) EXECUTIVE AGENCY.—The term ‘‘Executive 
agency’’ has the meaning given that term in section 
105 of title 5, United States Code. 
(4) EXTENDED
PRODUCTION
ENTERPRISE.— 
The term ‘‘extended production enterprise’’ means a 
system in which key entities in the manufacturing 
chain, including entities engaged in product design 
and development, manufacturing, sourcing, distribu-
tion, and user entities, are linked together through 
information technology and other means to promote 
efficiency and productivity. 
(5) 
INNOVATION.—The 
term 
‘‘innovation’’ 
means the intersection of invention and insight lead-
ing to the creation of social and economic value, in-
cluding through efforts meeting fundamental tech-
nology challenges and involving multidisciplinary 
work and a high degree of novelty. 
(6) MANUFACTURING EXTENSION PARTNERSHIP 
PROGRAM.—The term ‘‘Manufacturing Extension 
Partnership Program’’ means the Manufacturing
Extension Partnership Program of the Department 
of Commerce. 
(7) 
MANUFACTURING
TECHNOLOGY
PRO-
GRAM.—The term ‘‘Manufacturing Technology Pro-
gram’’ means the Manufacturing Technology Pro-
gram under section 2521 of title 10, United States 
Code. 
(8) PROFESSIONAL
SCIENCE
MASTERS
PRO-
GRAM.—The term ‘‘professional science masters pro-
gram’’ means a graduate degree program in science 
and mathematics that extends science training to 
strategic planning and business management and fo-
cuses on multidisciplinary specialties such as busi-
ness and information technology (IT), biology and 
IT (bioinformatics), and computational chemistry. 
(9) REGIONAL
INNOVATION
HOT
SPOTS
DE-
FINED.—The term ‘‘regional innovation hot spots’’ 
means regions that are defined by a high degree of 
innovation and the availability of talent, investment, 
and infrastructure necessary to create and sustain 
such innovation. 
(10) SERVICE
SCIENCE.—The term ‘‘service 
science’’ means curriculums, research programs, and 
training regimens, including service sciences, man-
agement, and engineering (SSME) programs, that
exist or that are being developed to teach individuals 
to apply technology, organizational process manage-
ment, and industry-specific knowledge to solve com-
plex problems. 
(11) SMALL BUSINESS INNOVATION RESEARCH 
PROGRAM.—The term ‘‘Small Business Innovation 
Research Program’’ has the meaning given that 
term in section 2500(11) of title 10, United States 
Code. 
(12) SMALL BUSINESS TECHNOLOGY TRANSFER 
PROGRAM.—The term ‘‘Small Business Technology 
Transfer Program’’ has the meaning given that term 
in section 2500(12) of title 10, United States Code. 
(13) SSME.—The term ‘‘SSME’’ means the 
discipline known as service sciences, management, 
and engineering that— 
(A) applies scientific, engineering and 
management disciplines to tasks that one orga-
nization performs beneficially for others, gen-
erally as part of the services sector of the econ-
omy; and 
(B) integrates computer science, operations 
research, industrial engineering, business strat-
egy, management sciences, and social and legal 
sciences, in order to encourage innovation in
how organizations create value for customers 
and shareholders that could not be achieved 
through such disciplines working in isolation. 
TITLE I—INNOVATION 
PROMOTION 
SEC. 101. PRESIDENT’S COUNCIL ON INNOVATION. 
(a) IN GENERAL.—The President shall establish a 
President’s Council on Innovation (in this section referred 
to as the ‘‘Council’’). 
(b) DUTIES.—The Council’s duties shall include— 
(1) monitoring implementation of legislative 
proposals and initiatives for promoting innovation, 
including policies related to research funding, tax-
ation, immigration, trade, and education that are 
proposed in this and other Acts; 
(2) in consultation with the Director of the Of-
fice of Management and Budget, developing a proc-
ess for using metrics to assess the impact of existing 
and proposed policies and rules that affect innova-
tion capabilities in the United States; 
(3) identifying opportunities and making rec-
ommendations for the heads of executive agencies to 
improve innovation, monitoring, and reporting on 
the implementation of such recommendations;
(4) developing metrics for measuring the 
progress of the Federal Government with respect to 
improving 
conditions 
for 
innovation, 
including 
through talent development, investment, and infra-
structure improvements; and 
(5) submitting an annual report to the Presi-
dent and Congress on such progress. 
(c) MEMBERSHIP AND COORDINATION.— 
(1) MEMBERSHIP.—The Council shall be com-
posed of the Secretary or head of each of the fol-
lowing: 
(A) The Department of Commerce. 
(B) The Department of Defense. 
(C) The Department of Education. 
(D) The Department of Energy. 
(E) The Department of Health and 
Human Services. 
(F) The Department of Homeland Secu-
rity. 
(G) The Department of Labor. 
(H) The Department of the Treasury. 
(I) The National Aeronautics and Space 
Administration. 
(J) The Securities and Exchange Commis-
sion.
(K) The National Science Foundation. 
(L) The Office of the United States Trade 
Representative. 
(M) The Office of Management and Budg-
et. 
(N) The Office of Science and Technology 
Policy. 
(2) CHAIRPERSON.—The Secretary of Com-
merce shall serve as chairperson of the Council. 
(3) COORDINATION.—The chairperson of the 
Council shall ensure appropriate coordination be-
tween the Council and the National Economic Coun-
cil and the National Security Council. 
(d) DEVELOPMENT OF INNOVATION AGENDA.— 
(1) IN GENERAL.—The Council shall develop a 
comprehensive agenda for strengthening the innova-
tion capabilities of the Federal Government and 
State governments, academia, and the private sector 
in the United States. 
(2) CONSULTATION.—The comprehensive agen-
da required by paragraph (1) shall be developed in 
consultation with appropriate representatives of the 
private sector, scientific organizations, and academic 
organizations.
SEC. 102. INNOVATION ACCELERATION GRANTS. 
(a) GRANT PROGRAM.—The President shall establish 
a grant program, to be known as the ‘‘Innovation Accel-
eration Grants Program’’, to support and promote innova-
tion in the United States. Priority in the awarding of 
grants shall be given to projects that meet fundamental 
technology challenges and that involve multidisciplinary 
work and a high degree of novelty. 
(b) AWARDING OF GRANTS THROUGH DEPARTMENTS 
AND AGENCIES.— 
(1) FUNDING GOALS.—The President shall en-
sure that it is the goal of each Executive agency that 
finances research in science, mathematics, engineer-
ing, and technology to allocate at least 3 percent of 
the agency’s total annual research and development 
budget to funding grants under the Innovation Ac-
celeration Grants Program. 
(2) ADMINISTRATION.— 
(A) IN GENERAL.—Each head of an Exec-
utive agency awarding grants under paragraph 
(1) shall submit a plan for implementing the 
grant program within such Executive agency to 
the Director of the Office of Science and Tech-
nology Policy and the Director of the Office of 
Management and Budget. The implementation 
plan shall be submitted not later than 90 days
after the date of enactment of this Act. The im-
plementation plan may incorporate existing ini-
tiatives of the Executive agencies that promote 
research in innovation as described in sub-
section (a). 
(B) REQUIRED
METRICS.—The head of 
each Executive agency submitting an implemen-
tation plan pursuant to this section shall in-
clude metrics upon which grant funding deci-
sions will be made and metrics for assessing the 
success of the grants awarded. 
(C) GRANT DURATION AND RENEWALS.— 
(i) IN GENERAL.—Any grants issued 
by an Executive agency under this section 
shall be for a period not to exceed 3 years. 
(ii) EVALUATION.—Not later than 90 
days prior to the expiration of a grant 
issued under this section, the Executive 
agency that approved the grant shall com-
plete an evaluation of the effectiveness of 
the grant based on the metrics established 
pursuant to subparagraph (B). In its eval-
uation, the Executive agency shall consider 
the extent to which the program funded by
the grant met the goals of quality improve-
ment and job creation. 
(iii) PUBLICATION OF REVIEW.—The 
Executive agency shall publish and make 
available to the public the review of each 
grant approved pursuant to this section. 
(iv) FAILURE
TO
MEET
METRICS.— 
Any grant that the Executive agency 
awarding the grant determines has failed 
to satisfy any of the metrics developed pur-
suant to subparagraph (B), shall not be el-
igible for a renewal. 
(v) RENEWAL.—A grant issued under 
this section that satisfies all of the metrics 
developed pursuant to subparagraph (B), 
may be renewed once for a period not to 
exceed 3 years. Additional renewals may be 
considered only if the head of the Execu-
tive agency makes a specific finding that 
the program being funded involves a sig-
nificant technology advance that requires a 
longer timeframe to complete critical re-
search, and the research satisfies all the 
metrics developed pursuant to subpara-
graph (B).
SEC. 103. A NATIONAL COMMITMENT TO BASIC RESEARCH. 
(a) PLAN FOR INCREASED RESEARCH.—Not later 
than 180 days after the date of the enactment of this Act, 
the Director of the National Science Foundation shall sub-
mit to Congress a comprehensive, multiyear plan that de-
scribes how the funds authorized in subsection (b) shall 
be used. Such plan shall be developed with a focus on uti-
lizing basic research in physical science and engineering 
to optimize the United States economy as a global compet-
itor and leader in productive innovation. 
(b) INCREASED FUNDING FOR NATIONAL SCIENCE 
FOUNDATION.—There are authorized to be appropriated 
to the National Science Foundation for the purpose of 
doubling research funding the following amounts: 
(1) $6,440,000,000 for fiscal year 2007. 
(2) $7,280,000,000 for fiscal year 2008. 
(3) $8,120,000,000 for fiscal year 2009. 
(4) $8,960,000,000 for fiscal year 2010. 
(5) $9,800,000,000 for fiscal year 2011. 
(c) RECOMMENDATIONS FOR RESEARCH AND DEVEL-
OPMENT FUNDING.—Not later than 1 year after the date 
of the enactment of this Act, the Director of the Office 
of Science and Technology Policy shall evaluate and, as 
appropriate, submit to Congress recommendations for an 
increase in funding for research and development in phys-
ical sciences and engineering in consultation with agencies
and departments of the United States with significant re-
search and development budgets. 
SEC. 104. REGIONAL ECONOMIC DEVELOPMENT. 
(a) DEVELOPMENT OF FUNDING STRATEGY.— 
(1) IN GENERAL.—The Assistant Secretary for 
Economic Development of the Department of Com-
merce shall review Federal programs that support 
local economic development and prepare and imple-
ment a strategy to focus funding on initiatives that 
improve the ability of communities to participate 
successfully in the modern economy through innova-
tion. In preparing the strategy, priority should be 
given to projects that— 
(A) emphasize private sector cooperation 
with State and local governments and nonprofit 
organizations focused on regional economic de-
velopment as the means of achieving specific 
objectives related to the support and promotion 
of innovation; and 
(B) are the most successful in meeting the 
metrics established under subsection (b). 
(2) COORDINATION.—The Assistant Secretary 
shall coordinate the development and implementation 
of the strategy with the activities carried out by the
Under Secretary for Technology under subsection 
(d). 
(b) EVALUATION OF PROGRAMS.—The Assistant Sec-
retary for Economic Development of the Department of 
Commerce shall develop metrics to measure the success 
of Federal programs in supporting and promoting innova-
tion at the local community level while minimizing bu-
reaucracy and overhead expenses. 
(c) PROMOTION OF ECONOMIC DEVELOPMENT OP-
PORTUNITIES.—The Assistant Secretary for Economic 
Development of the Department of Commerce should work 
with organizations focused on economic development to 
highlight opportunities for such organizations to serve 
local communities through grants focused on economic de-
velopment and investment in companies pursuing innova-
tion. 
(d) REGIONAL INNOVATION HOT SPOTS.— 
(1) PROMOTION OF REGIONAL INNOVATION HOT 
SPOTS.—The Under Secretary for Technology of the 
Department of Commerce shall coordinate activities 
focused on promoting innovation through the devel-
opment of regional innovation hot spots. 
(2) GUIDE TO DEVELOPING SUCCESSFUL RE-
GIONAL INNOVATION HOT SPOTS.—
(A) IN GENERAL.—Not later than 1 year 
after the date of enactment of this Act, the Sec-
retary of Commerce, in consultation with rep-
resentatives of regional innovation hot spots, 
shall publish a report, to be titled the ‘‘Guide 
to Developing Successful Regional Innovation 
Hot Spots’’, that examines successful regional 
innovation hot spots and includes recommenda-
tions for establishing and fostering regional in-
novation hot spots. 
(B) CONTENT.—The report required under 
subparagraph (A) shall— 
(i) include information on the evalua-
tion of human capital; 
(ii) include information on the role of 
sponsoring institutions, such as univer-
sities, nonprofit organizations, and labora-
tories, in establishing and fostering re-
gional innovation hot spots; 
(iii) include information on the role of 
State and local government leaders, leaders 
in the research and business communities, 
and community organizations in estab-
lishing and fostering regional innovation 
hot spots;
(iv) discuss the importance of collabo-
ration by public and private sector leaders; 
(v) identify sources of funding for 
these activities within Federal, State, and 
local governments and the private sector; 
and 
(vi) include recommendations for de-
veloping strategic plans to stimulate inno-
vation, including recommendations relating 
to knowledge transfer and commercializa-
tion, the support of regional entrepreneur-
ship and increased innovation within exist-
ing regional firms, and the linking of pri-
mary institutions engaged in the innova-
tion process. 
(3) 
REGIONAL
INNOVATION
HOT
SPOT 
METRICS.— 
(A) DEVELOPMENT OF METRICS.—In con-
junction with publishing the report required 
under paragraph (2), the Secretary of Com-
merce shall develop the following sets of 
metrics: 
(i) Metrics to be considered for identi-
fying potential regional innovation hot
spots (in this subsection referred to as 
‘‘identifying metrics’’). 
(ii) Metrics to be considered for evalu-
ating the impact and effectiveness of estab-
lished regional innovation hot spots (in this 
subsection referred to as ‘‘evaluation 
metrics’’). 
(B) USE OF METRICS.—The Under Sec-
retary of Commerce for Technology shall use 
the identifying metrics to conduct biannual as-
sessments of potential regional clusters and 
shall use the evaluation metrics to assess the 
impact and effectiveness of established regional 
innovation hot spots in improving the regional 
economy and regional job market. The Under 
Secretary shall also assess the cost effectiveness 
of operating within each regional hot spot. The 
Under Secretary shall report the biannual as-
sessments to Congress. 
SEC. 105. DEVELOPMENT OF ADVANCED MANUFACTURING 
SYSTEMS. 
(a) RESEARCH AND DEVELOPMENT.—The Director 
of the National Institute of Standards and Technology 
shall support research and development in collaboration 
with entities and organizations from the industrial sector
to supplement and support work in the private sector on 
advanced manufacturing systems designed to increase pro-
ductivity and efficiency and to create competitive advan-
tages for United States businesses. These research and de-
velopment activities should focus on the following activi-
ties: 
(1) Supporting industry efforts to develop inno-
vative, state-of-the-art manufacturing processes, ad-
vanced technologies through interoperable standards, 
and related concepts, including— 
(A) advanced distributed and desktop man-
ufacturing linked to and made compatible with 
the extended production enterprise system de-
scribed in paragraph (2); 
(B) non-contact quality inspection proc-
esses linked to and made compatible with the 
extended production enterprise system; 
(C) small lot manufacturing processes that 
are— 
(i) as cost-effective as mass produc-
tion processes; and 
(ii) linked to and compatible with the 
extended production enterprise system; and 
(D) the use of state-of-the-art materials 
and processes at the nanotechnological level.
(2) Supporting industry efforts to develop an 
extended production enterprise system that inte-
grates key entities, including entities engaged in 
product design and development, manufacturing, 
sourcing, distribution, and user entities, including 
through the development of— 
(A) interoperable software and standards 
designed to maximize the compatibility of the 
design, modeling, and manufacturing stages of 
the manufacturing process; and 
(B) supply chain software. 
(b) COORDINATION OF ACTIVITIES.—The Director of 
the National Institute of Standards and Technology shall 
coordinate activities under subsection (a) with activities 
under— 
(1) the Small Business Innovation Research 
Program; 
(2) the Small Business Technology Transfer 
Program; and 
(3) the Manufacturing Technology Program of 
the Department of Defense. 
(c) TESTING.—The Director of the National Institute 
of Standards and Technology shall support the work of 
entities and organizations from the industrial sector in de-
veloping prototypes and testing areas for testing and refin-
ing, in actual production conditions, the processes, tech-
nologies, and extended production enterprise system de-
scribed in subsection (a)(2) in order to maximize produc-
tivity gains and cost efficiencies. 
(d) DEVELOPMENT OF STANDARDS.—The Director 
of the National Institute of Standards and Technology, 
in coordination with entities and organizations from the 
industrial sector and the Manufacturing Technology Pro-
gram, shall support standards to be used as manufac-
turing performance criteria to accelerate the adoption of 
improvements and innovative processes and protocols de-
veloped under subsection (a). 
(e) PILOT TEST BEDS OF EXCELLENCE.— 
(1) ESTABLISHMENT.—The Director of the Na-
tional Institute of Standards and Technology shall, 
in collaboration with entities and organizations from 
the industrial sector, support not more than 3 pilot 
test beds of excellence in manufacturing fields im-
portant to advanced technologies developed under 
subsection (a), such as nanotechnology, to be used 
by the public and private sector. The test beds of ex-
cellence shall focus on production development, par-
ticularly the invention, prototyping, and engineering 
development stages of the manufacturing process.
(2) COMPETITION.—The Secretary of Com-
merce shall conduct a competition to select the pilot 
test beds of excellence based on criteria and metrics 
established by the Secretary prior to the competi-
tion. 
(3) FUNDING.—The Secretary of Commerce 
may provide the pilot test beds of excellence selected 
pursuant to the competition set forth in paragraph 
(2) with an appropriate level of funding if and only 
if the following conditions are satisfied: 
(A) No more than 1⁄3 of the funding of 
each test bed of excellence is provided by the 
Federal Government. 
(B) At least 1⁄3 of the cost of each test bed 
of excellence is provided by participants from 
the private sector. 
(C) At least 1⁄3 of the cost of each test bed 
of excellence is provided by State or local gov-
ernments. 
(4) REVIEW OF FUNDED TEST BEDS.—Within 3 
years of the start of Federal funding for any test 
bed of excellence pursuant to this section, the Sec-
retary of Commerce shall use the metrics established 
pursuant to paragraph (2) and any additional review 
metrics that the Secretary determines appropriate to
assess the performance of the federally funded test 
beds of excellence. Any test bed of excellence that 
fails to satisfy any of the performance metrics will 
be ineligible for additional Federal funding. 
(5) SUNSET
PROVISION.—Federal funding of 
any test bed of excellence shall cease 5 years after 
the date of enactment of this Act. 
(f) MANUFACTURING
EXTENSION
PARTNERSHIP 
FOCUS ON INNOVATION.—The Director of the National 
Institute of Standards and Technology shall ensure that 
the Manufacturing Extension Partnership program devel-
ops a focus on innovation, including through technology 
diffusion, supply and distribution chain integration, and 
the dissemination of the processes, technologies, and ex-
tended production enterprise systems developed under this 
section. 
(g) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated to the Department of 
Commerce for the purpose of carrying out activities under 
this section the following amounts: 
(1) $20,000,000 for fiscal year 2007. 
(2) $40,000,000 for fiscal year 2008. 
(3) $60,000,000 for fiscal year 2009. 
(4) $80,000,000 for fiscal year 2010. 
(5) $100,000,000 for fiscal year 2011.
SEC. 106. STUDY ON SERVICE SCIENCE. 
(a) SENSE OF CONGRESS.—It is the sense of Con-
gress that, in order to strengthen the competitiveness of 
United States enterprises and institutions and to prepare 
the people of the United States for high-wage, high-skill 
employment, the Federal Government should better under-
stand and respond strategically to the emerging vocation 
and learning discipline known as service science. 
(b) STUDY.—Not later than 270 days after the date 
of the enactment of this Act, the Director of the National 
Science Foundation shall conduct a study and report to 
Congress regarding how the Federal Government should 
support, through research, education, and training, the 
new discipline of service science. 
(c) OUTSIDE RESOURCES.—In conducting the study 
under subsection (b), the Director of the National Science 
Foundation shall consult with leaders from 2- and 4-year 
institutions of higher education, as defined in section 101 
of the Higher Education Act of 1965 (20 U.S.C. 1001), 
leaders from corporations, and other relevant parties.
TITLE II—MODERNIZATION OF 
SCIENCE, 
EDUCATION, 
AND 
HEALTHCARE PROGRAMS 
Subtitle A—Science and Education 
SEC. 
201. 
GRADUATE 
FELLOWSHIPS 
AND 
GRADUATE 
TRAINEESHIPS. 
(a) GRADUATE
RESEARCH
FELLOWSHIP
PRO-
GRAM.— 
(1) IN GENERAL.—During the 5-year period be-
ginning on the date of the enactment of this Act, the 
Director of the National Science Foundation shall 
expand the Graduate Research Fellowship Program 
of the Foundation so that an additional 1250 fellow-
ships are awarded to United States citizens under 
such Program during such period. 
(2) EXTENSION OF FELLOWSHIP PERIOD.—The 
Director of the National Science Foundation is au-
thorized to award fellowships under the Graduate 
Research Fellowship Program for a period of 5 
years, subject to funds being made available for such 
purpose. 
(3) AUTHORIZATION OF APPROPRIATIONS.—In 
addition to any other amounts authorized to be ap-
propriated, there are authorized to be appropriated 
$34,000,000 for each of the fiscal years 2007
through 2011 to provide an additional 250 fellow-
ships under the Graduate Research Fellowship Pro-
gram during each such fiscal year. 
(b) INTEGRATIVE GRADUATE EDUCATION AND RE-
SEARCH TRAINEESHIP PROGRAM.— 
(1) IN GENERAL.—During the 5-year period be-
ginning on the date of the enactment of this Act, the 
Director of the National Science Foundation shall 
expand the Integrative Graduate Education and Re-
search Traineeship program of the Foundation so 
that an additional 1,250 United States citizens are 
awarded grants under such program during such pe-
riod. 
(2) AUTHORIZATION OF APPROPRIATIONS.—In 
addition to any other amounts authorized to be ap-
propriated, there are authorized to be appropriated 
$57,000,000 for each of the fiscal years 2007 
through 2011 to provide grants to an additional 250 
individuals under the Integrative Graduate Edu-
cation and Research Traineeship program during 
each such fiscal year 
SEC. 202. PROFESSIONAL SCIENCE MASTER’S DEGREE PRO-
GRAMS. 
(a) DEFINITION OF INSTITUTION OF HIGHER EDU-
CATION.—In this section, the term ‘‘institution of higher
education’’ has the meaning given the term in section 
101(a) of the Higher Education Act of 1965 (20 U.S.C. 
1001(a)). 
(b) CLEARINGHOUSE.— 
(1) DEVELOPMENT.—From amounts appro-
priated under subsection (d), the Director of the Na-
tional Science Foundation shall establish a clearing-
house, in collaboration with 4-year institutions of 
higher learning, industries, and Federal agencies 
that employ science-trained personnel, to share pro-
gram elements used in successful professional 
science master’s degree programs. 
(2) AVAILABILITY.—The Director of the Na-
tional Science Foundation shall make the clearing-
house of program elements developed under para-
graph (1) available to institutions of higher edu-
cation that are developing professional science mas-
ter’s degree programs. 
(c) PILOT PROGRAMS.— 
(1) PROGRAM
AUTHORIZED.—From amounts 
appropriated under subsection (d), the Director of 
the National Science Foundation shall award grants 
for pilot programs to 4-year institutions of higher 
education to facilitate the institutions’ creation or
improvement of professional science master’s degree 
programs. 
(2) APPLICATION.—A 4-year institution of 
higher education desiring a grant under this section 
shall submit an application at such time, in such 
manner, and accompanied by such information as 
the Director of the National Science Foundation 
may require. The application shall include— 
(A) a description of the professional 
science master’s degree program that the insti-
tution of higher education will implement; 
(B) the amount of funding from non-Fed-
eral sources, including from private industries, 
that the institution of higher education shall 
use to support the professional master’s degree 
program; and 
(C) an assurance that the institution of 
higher education shall encourage students in 
the professional science master’s degree pro-
gram to apply for all forms of Federal assist-
ance available to such students, including appli-
cable graduate fellowships and student financial 
assistance under title IV of the Higher Edu-
cation Act of 1965 (20 U.S.C. 1070 et seq.).
(3) PREFERENCE FOR ALTERNATIVE FUNDING 
SOURCES.—The Director of the National Science 
Foundation shall give preference in making awards 
to 4-year institutions of higher education seeking 
Federal funding to support pilot professional science 
master’s degree programs, to those applicants that 
secure more than 2⁄3 of the funding for such profes-
sional science master’s degree programs from 
sources other than the Federal Government. 
(4) NUMBER
OF
GRANTS; TIME
PERIOD
OF 
GRANTS.— 
(A) NUMBER OF GRANTS.—Subject to the 
availability of appropriated funds, the Director 
of the National Science Foundation shall award 
grants under paragraph (1) to a maximum of 
200 4-year institutions of higher education. 
(B) TIME
PERIOD
OF
GRANTS.—Grants 
awarded under this section shall be for one 3- 
year term. Grants may be renewed only once 
for a maximum of 2 additional years. 
(5) EVALUATION AND REPORTS.— 
(A) DEVELOPMENT
OF
PERFORMANCE 
BENCHMARKS.—Prior to the start of the grant 
program, the National Science Foundation, in 
collaboration with 4-year institutions of higher
education, shall develop performance bench-
marks to evaluate the pilot programs assisted 
by grants under this section. 
(B) EVALUATION.—For each year of the 
grant period, the Director of the National 
Science Foundation, in consultation with 4-year 
institutions of higher education, industry, and 
Federal agencies that employ science-trained 
personnel, shall complete an evaluation of each 
pilot program assisted by grants under this sec-
tion. Any pilot program that fails to satisfy the 
performance benchmarks developed under sub-
paragraph (A) shall not be eligible for further 
funding. 
(C) REPORT.—Not later than 180 days 
after the completion of an evaluation described 
in subparagraph (A), the Director of the Na-
tional Science Foundation, in consultation with 
industries and Federal agencies that employ 
science-trained personnel, shall submit a report 
to Congress that includes— 
(i) the results of the evaluation de-
scribed in subparagraph (A); and 
(ii) recommendations for administra-
tive and legislative action that could opti-
mize the effectiveness of the pilot pro-
grams, as the Director determines to be 
appropriate. 
(d) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated to carry out this section 
$20,000,000 for fiscal year 2007 and such sums as may 
be necessary for each succeeding fiscal year. 
SEC. 203. INCREASED SUPPORT FOR SCIENCE EDUCATION 
THROUGH THE NATIONAL SCIENCE FOUNDA-
TION. 
There are authorized to be appropriated to carry out 
the science, mathematics, engineering, and technology tal-
ent expansion program under section 8(7) of the National 
Science Foundation Authorization Act of 2002 (Public 
Law 107–368, 116 Stat. 3042) the following amounts: 
(1) For fiscal year 2007, $35,000,000. 
(2) For fiscal year 2008, $50,000,000. 
(3) For fiscal year 2009, $100,000,000. 
(4) For fiscal year 2010, $150,000,000. 
SEC. 204. INNOVATION-BASED EXPERIENTIAL LEARNING. 
(a) PILOT PROGRAM.— 
(1) PROGRAM AUTHORIZED.—The Director of 
the National Science Foundation shall award grants 
to local educational agencies to enable the local edu-
cational agencies to implement innovation-based ex-
periential learning in a total of 500 secondary 
schools and 500 elementary or middle schools in the 
United States. 
(2) APPLICATION.—A local educational agency 
desiring a grant under this section shall submit an 
application at such time, in such manner, and ac-
companied by such information as the Director of 
the National Science Foundation may require. 
(b) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated to carry out this section 
$10,000,000 for fiscal year 2007 and $20,000,000 for 
each of the fiscal years 2008 and 2009. 
Subtitle B—21st Century 
Healthcare System 
SEC. 211. SENSE OF CONGRESS REGARDING 21ST CENTURY 
HEALTHCARE SYSTEM. 
(a) SENSE OF CONGRESS.—It is the sense of Con-
gress that, in order to improve the United States 
healthcare system for the 21st century, the Federal Gov-
ernment should encourage the widespread adoption of 
interoperable health information technology by— 
(1) facilitating the creation of standards for 
interoperable electronic reporting of healthcare data; 
and
(2) after such standards have been created, 
each Federal agency or department that collects 
data for the purposes described in subsection (b) 
should collect such data in a manner that is con-
sistent with such standards. 
(b) PURPOSES DESCRIBED.—The purposes described 
in this subsection include quality reporting, surveillance, 
epidemiology, adverse event reporting, research, or for 
other purposes determined appropriate by the Secretary 
of Health and Human Services. 
TITLE III—INCENTIVES FOR 
ENCOURAGING INNOVATION 
Subtitle A—Research Credits 
SEC. 301. PERMANENT EXTENSION OF RESEARCH CREDIT. 
(a) IN GENERAL.—Section 41 of the Internal Rev-
enue Code of 1986 (relating to credit for increasing re-
search activities) is amended by striking subsection (h). 
(b) CONFORMING AMENDMENT.—Section 45C(b)(1) 
of the Internal Revenue Code of 1986 is amended by strik-
ing subparagraph (D). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred after 
the date of the enactment of this Act.
SEC. 302. INCREASE IN RATES OF ALTERNATIVE INCRE-
MENTAL CREDIT. 
(a) IN GENERAL.—Subparagraph (A) of section 
41(c)(4) of the Internal Revenue Code of 1986 (relating 
to election of alternative incremental credit) is amended— 
(1) by striking ‘‘2.65 percent’’ and inserting ‘‘3 
percent’’; 
(2) by striking ‘‘3.2 percent’’ and inserting ‘‘4 
percent’’; and 
(3) by striking ‘‘3.75 percent’’ and inserting ‘‘5 
percent’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act. 
SEC. 303. ALTERNATIVE SIMPLIFIED CREDIT FOR QUALI-
FIED RESEARCH EXPENSES. 
(a) IN GENERAL.—Subsection (c) of section 41 of the 
Internal Revenue Code of 1986 (relating to base amount) 
is amended by redesignating paragraphs (5) and (6) as 
paragraphs (6) and (7), respectively, and by inserting 
after paragraph (4) the following new paragraph: 
‘‘(5) ELECTION OF ALTERNATIVE SIMPLIFIED 
CREDIT.— 
‘‘(A) IN GENERAL.—At the election of the 
taxpayer, the credit determined under sub-
section (a)(1) shall be equal to 12 percent of so
much of the qualified research expenses for the 
taxable year as exceeds 50 percent of the aver-
age qualified research expenses for the 3 tax-
able years preceding the taxable year for which 
the credit is being determined. 
‘‘(B) SPECIAL
RULE
IN
CASE
OF
NO 
QUALIFIED RESEARCH EXPENSES IN ANY OF 3 
PRECEDING TAXABLE YEARS.— 
‘‘(i) TAXPAYERS TO WHICH SUBPARA-
GRAPH
APPLIES.—The credit under this 
paragraph shall be determined under this 
subparagraph if the taxpayer has no quali-
fied research expenses in any 1 of the 3 
taxable years preceding the taxable year 
for which the credit is being determined. 
‘‘(ii) CREDIT RATE.—The credit de-
termined under this subparagraph shall be 
equal to 6 percent of the qualified research 
expenses for the taxable year. 
‘‘(C) ELECTION.—An election under this 
paragraph shall apply to the taxable year for 
which made and all succeeding taxable years 
unless revoked with the consent of the Sec-
retary. An election under this paragraph may
not be made for any taxable year to which an 
election under paragraph (4) applies.’’. 
(b) COORDINATION WITH ELECTION
OF ALTER-
NATIVE INCREMENTAL CREDIT.— 
(1) IN GENERAL.—Section 41(c)(4)(B) of the 
Internal Revenue Code of 1986 (relating to election) 
is amended by adding at the end the following: ‘‘An 
election under this paragraph may not be made for 
any taxable year to which an election under para-
graph (5) applies.’’. 
(2) TRANSITION RULE.—In the case of an elec-
tion under section 41(c)(4) of the Internal Revenue 
Code of 1986 which applies to the taxable year 
which includes the date of the enactment of this Act, 
such election shall be treated as revoked with the 
consent of the Secretary of the Treasury if the tax-
payer makes an election under section 41(c)(5) of 
such Code (as added by subsection (a)) for such 
year. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act.