H. R. 1735—167 
the contractor or subcontractor demonstrates that the item 
was developed exclusively at private expense.’’. 
(b) GOVERNMENT-INDUSTRY ADVISORY PANEL.— 
(1) ESTABLISHMENT.—Not later than 90 days after the date 
of the enactment of this Act, the Secretary of Defense, acting 
through the Under Secretary of Defense for Acquisition, Tech-
nology, and Logistics, shall establish a Government-industry 
advisory panel for the purpose of reviewing sections 2320 and 
2321 of title 10, United States Code, regarding rights in tech-
nical data and the validation of proprietary data restrictions 
and the regulations implementing such sections, for the purpose 
of ensuring that such statutory and regulatory requirements 
are best structured to serve the interests of the taxpayers 
and the national defense. 
(2) MEMBERSHIP.—The panel shall be chaired by an indi-
vidual selected by the Under Secretary, and the Under Sec-
retary shall ensure that— 
(A) the government members of the advisory panel 
are knowledgeable about technical data issues and appro-
priately represent the three military departments, as well 
as the legal, acquisition, logistics, and research and 
development communities in the Department of Defense; 
and 
(B) the private sector members of the advisory panel 
include independent experts and individuals appropriately 
representative of the diversity of interested parties, 
including large and small businesses, traditional and non- 
traditional government contractors, prime contractors and 
subcontractors, suppliers of hardware and software, and 
institutions of higher education. 
(3) SCOPE OF REVIEW.—In conducting the review required 
by paragraph (1), the advisory panel shall give appropriate 
consideration to the following factors: 
(A) Ensuring that the Department of Defense does 
not pay more than once for the same work. 
(B) Ensuring that Department of Defense contractors 
are appropriately rewarded for their innovation and inven-
tion. 
(C) 
Providing 
for 
cost-effective 
reprocurement, 
sustainment, modification, and upgrades to Department 
of Defense systems. 
(D) Encouraging the private sector to invest in new 
products, technologies, and processes relevant to the mis-
sions of the Department of Defense. 
(E) Ensuring that the Department of Defense has 
appropriate access to innovative products, technologies, and 
processes developed by the private sector for commercial 
use. 
(4) FINAL REPORT.—Not later than September 30, 2016, 
the advisory panel shall submit its final report and rec-
ommendations to the Secretary of Defense. Not later than 60 
days after receiving the report, the Secretary shall submit 
a copy of the report, together with any comments or rec-
ommendations, to the congressional defense committees.
H. R. 1735—168 
SEC. 814. PROCUREMENT OF SUPPLIES FOR EXPERIMENTAL PUR-
POSES. 
(a) ADDITIONAL PROCUREMENT AUTHORITY.—Subsection (a) of 
section 2373 of title 10, United States Code, is amended by inserting 
‘‘transportation, energy, medical, space-flight,’’ before ‘‘and aero-
nautical supplies’’. 
(b) APPLICABILITY OF CHAPTER 137 OF TITLE 10, UNITED STATES 
CODE.—Subsection (b) of such section is amended by striking ‘‘only 
when such purchases are made in quantity’’ and inserting ‘‘only 
when such purchases are made in quantities greater than necessary 
for experimentation, technical evaluation, assessment of operational 
utility, or safety or to provide a residual operational capability’’. 
SEC. 815. AMENDMENTS TO OTHER TRANSACTION AUTHORITY. 
(a) AUTHORITY OF THE DEPARTMENT OF DEFENSE TO CARRY 
OUT CERTAIN PROTOTYPE PROJECTS.— 
(1) IN GENERAL.—Chapter 139 of title 10, United States 
Code, is amended by inserting after section 2371a the following 
new section: 
‘‘§ 2371b. Authority of the Department of Defense to carry 
out certain prototype projects 
‘‘(a) AUTHORITY.—(1) Subject to paragraph (2), the Director 
of the Defense Advanced Research Projects Agency, the Secretary 
of a military department, or any other official designated by the 
Secretary of Defense may, under the authority of section 2371 
of this title, carry out prototype projects that are directly relevant 
to enhancing the mission effectiveness of military personnel and 
the supporting platforms, systems, components, or materials pro-
posed to be acquired or developed by the Department of Defense, 
or to improvement of platforms, systems, components, or materials 
in use by the armed forces. 
‘‘(2) The authority of this section— 
‘‘(A) may be exercised for a prototype project that is 
expected to cost the Department of Defense in excess of 
$50,000,000 but not in excess of $250,000,000 (including all 
options) only upon a written determination by the senior 
procurement executive for the agency as designated for the 
purpose of section 1702(c) of title 41, or, for the Defense 
Advanced Research Projects Agency or the Missile Defense 
Agency, the director of the agency that— 
‘‘(i) the requirements of subsection (d) will be met; 
and 
‘‘(ii) the use of the authority of this section is essential 
to promoting the success of the prototype project; and 
‘‘(B) may be exercised for a prototype project that is 
expected to cost the Department of Defense in excess of 
$250,000,000 (including all options) only if— 
‘‘(i) the Under Secretary of Defense for Acquisition, 
Technology, and Logistics determines in writing that— 
‘‘(I) the requirements of subsection (d) will be met; 
and 
‘‘(II) the use of the authority of this section is 
essential to meet critical national security objectives; 
and
H. R. 1735—169 
‘‘(ii) the congressional defense committees are notified 
in writing at least 30 days before such authority is exer-
cised. 
‘‘(3) The authority of a senior procurement executive or director 
of the Defense Advanced Research Projects Agency or Missile 
Defense Agency under paragraph (2)(A), and the authority of the 
Under Secretary of Defense for Acquisition, Technology, and Logis-
tics under paragraph (2)(B), may not be delegated. 
‘‘(b) EXERCISE OF AUTHORITY.— 
‘‘(1) Subsections (e)(1)(B) and (e)(2) of such section 2371 
shall not apply to projects carried out under subsection (a). 
‘‘(2) To the maximum extent practicable, competitive proce-
dures shall be used when entering into agreements to carry 
out projects under subsection (a). 
‘‘(c) COMPTROLLER GENERAL ACCESS TO INFORMATION.—(1) Each 
agreement entered into by an official referred to in subsection 
(a) to carry out a project under that subsection that provides for 
payments in a total amount in excess of $5,000,000 shall include 
a clause that provides for the Comptroller General, in the discretion 
of the Comptroller General, to examine the records of any party 
to the agreement or any entity that participates in the performance 
of the agreement. 
‘‘(2) The requirement in paragraph (1) shall not apply with 
respect to a party or entity, or a subordinate element of a party 
or entity, that has not entered into any other agreement that 
provides for audit access by a Government entity in the year prior 
to the date of the agreement. 
‘‘(3)(A) The right provided to the Comptroller General in a 
clause of an agreement under paragraph (1) is limited as provided 
in subparagraph (B) in the case of a party to the agreement, 
an entity that participates in the performance of the agreement, 
or a subordinate element of that party or entity if the only agree-
ments or other transactions that the party, entity, or subordinate 
element entered into with Government entities in the year prior 
to the date of that agreement are cooperative agreements or trans-
actions that were entered into under this section or section 2371 
of this title. 
‘‘(B) The only records of a party, other entity, or subordinate 
element referred to in subparagraph (A) that the Comptroller Gen-
eral may examine in the exercise of the right referred to in that 
subparagraph are records of the same type as the records that 
the Government has had the right to examine under the audit 
access clauses of the previous agreements or transactions referred 
to in such subparagraph that were entered into by that particular 
party, entity, or subordinate element. 
‘‘(4) The head of the contracting activity that is carrying out 
the agreement may waive the applicability of the requirement in 
paragraph (1) to the agreement if the head of the contracting 
activity determines that it would not be in the public interest 
to apply the requirement to the agreement. The waiver shall be 
effective with respect to the agreement only if the head of the 
contracting activity transmits a notification of the waiver to Con-
gress and the Comptroller General before entering into the agree-
ment. The notification shall include the rationale for the determina-
tion. 
‘‘(5) The Comptroller General may not examine records pursu-
ant to a clause included in an agreement under paragraph (1)
H. R. 1735—170 
more than three years after the final payment is made by the 
United States under the agreement. 
‘‘(d) APPROPRIATE USE OF AUTHORITY.—(1) The Secretary of 
Defense shall ensure that no official of an agency enters into a 
transaction (other than a contract, grant, or cooperative agreement) 
for a prototype project under the authority of this section unless 
one of the following conditions is met: 
‘‘(A) There is at least one nontraditional defense contractor 
participating to a significant extent in the prototype project. 
‘‘(B) All significant participants in the transaction other 
than the Federal Government are small businesses or nontradi-
tional defense contractors. 
‘‘(C) At least one third of the total cost of the prototype 
project is to be paid out of funds provided by parties to the 
transaction other than the Federal Government. 
‘‘(D) The senior procurement executive for the agency deter-
mines in writing that exceptional circumstances justify the 
use of a transaction that provides for innovative business 
arrangements or structures that would not be feasible or appro-
priate under a contract, or would provide an opportunity to 
expand the defense supply base in a manner that would not 
be practical or feasible under a contract. 
‘‘(2)(A) Except as provided in subparagraph (B), the amounts 
counted for the purposes of this subsection as being provided, or 
to be provided, by a party to a transaction with respect to a 
prototype project that is entered into under this section other than 
the Federal Government do not include costs that were incurred 
before the date on which the transaction becomes effective. 
‘‘(B) Costs that were incurred for a prototype project by a 
party after the beginning of negotiations resulting in a transaction 
(other than a contract, grant, or cooperative agreement) with respect 
to the project before the date on which the transaction becomes 
effective may be counted for purposes of this subsection as being 
provided, or to be provided, by the party to the transaction if 
and to the extent that the official responsible for entering into 
the transaction determines in writing that— 
‘‘(i) the party incurred the costs in anticipation of entering 
into the transaction; and 
‘‘(ii) it was appropriate for the party to incur the costs 
before the transaction became effective in order to ensure the 
successful implementation of the transaction. 
‘‘(e) DEFINITIONS.—In this section: 
‘‘(1) The term ‘nontraditional defense contractor’ has the 
meaning given the term under section 2302(9) of this title. 
‘‘(2) The term ‘small business’ means a small business 
concern as defined under section 3 of the Small Business Act 
(15 U.S.C. 632). 
‘‘(f) FOLLOW-ON PRODUCTION CONTRACTS OR TRANSACTIONS.— 
(1) A transaction entered into under this section for a prototype 
project may provide for the award of a follow-on production contract 
or transaction to the participants in the transaction. 
‘‘(2) A follow-on production contract or transaction provided 
for in a transaction under paragraph (1) may be awarded to the 
participants in the transaction without the use of competitive proce-
dures, notwithstanding the requirements of section 2304 of this 
title, if—