II 114th CONGRESS 2d Session S. 2779 IN THE SENATE OF THE UNITED STATES April 12, 2016 Mr. Coons (for himself, Ms. Ayotte , and Mr. Peters ) introduced the following bill; which was read twice and referred to the Committee on Commerce, Science, and Transportation A BILL To reauthorize the Hollings Manufacturing Extension Partnership, and for other purposes.

1. Short title This Act may be cited as the Manufacturing Extension Partnership Improvement Act of 2016 . 2. Reauthorization of Hollings Manufacturing Extension Partnership (a) Authorization of appropriations There is authorized to be appropriated to the Secretary of Commerce to carry out the Hollings Manufacturing Extension Partnership under sections 25 and 26 of the National Institute of Standards and Technology Act (15 U.S.C. 278k and 278l) $260,000,000 for each of fiscal years 2017 through 2020. (b) Improvements Section 25 of the National Institute of Standards and Technology Act ( 15 U.S.C. 278k ) is amended to read as follows: 25. Hollings Manufacturing Extension Partnership (a) Establishment and purpose (1) Establishment (A) In general The Secretary, through the Director and, if appropriate, through other officials, shall establish a program for the provision of assistance for the creation and support of manufacturing extension centers for the transfer of manufacturing technology and best business practices. (B) Designation of program The program established under subparagraph (A) shall be known as the Hollings Manufacturing Extension Partnership (in this section referred to as the Program ). (C) Designation of centers The centers provided for under subparagraph (A) shall be known as the Hollings Manufacturing Extension Centers (in this Act referred to as the Centers ). (2) Affiliations Each Center created under the Program shall be affiliated with a United States-based nonprofit institution, consortium thereof, institution of higher education, or State or local government that applies for and is awarded financial support under subsection (c)(1)(A). (3) Objective The objective of the Program shall be to enhance competitiveness, productivity, and technological performance in United States manufacturing through— (A) the transfer of manufacturing technology and techniques developed at the Institute to Centers and, through them, to manufacturing companies throughout the United States; (B) the participation of individuals from industry, institutions of higher education, State governments, other Federal agencies, and, when appropriate, the Institute in cooperative technology transfer activities; (C) efforts to make new manufacturing technology and processes usable by United States-based small and medium-sized companies; (D) the active dissemination of scientific, engineering, technical, and management information about manufacturing to industrial firms, including small and medium-sized manufacturing companies; (E) the utilization, when appropriate, of the expertise and capability that exists in Federal agencies, other than the Institute, and Federally sponsored laboratories; (F) the provision to community colleges and area career and technical education schools of information about the job skills needed in small and medium-sized manufacturing businesses in the regions they serve; and (G) promoting and expanding certification systems offered through industry, associations, and local colleges, when appropriate. (b) Activities The activities of a Center shall include the following: (1) The establishment of automated manufacturing systems and other advanced production technologies, based on Institute-supported research, for the purpose of demonstrations and technology transfer. (2) The active transfer and dissemination of research findings and Center expertise to a wide range of companies and enterprises, particularly small and medium-sized manufacturers. (3) The facilitation of collaborations and partnerships between small and medium-sized manufacturing companies and community colleges and area career and technical education schools to help such colleges and schools better understand the specific needs of manufacturers and to help manufacturers better understand the skill sets that students learn in the programs offered by such colleges and schools. (c) Financial assistance (1) Authorization (A) In general Except as provided in subparagraph (B) and as otherwise provided in this subsection, the Secretary may provide financial assistance through a cooperative agreement to any Center created under the Program. (B) Cost sharing The Secretary may not provide to a Center, under subparagraph (A), more than 50 percent of the capital and annual operating and maintenance funds required to create and maintain such Center. (C) Rule of construction For purposes of subparagraph (B), no amount received by a Center under a provision of law other than subparagraph (A) may be considered as an amount provided under subparagraph (A). (2) Application (A) In general A nonprofit institution, or consortium thereof, an institution of higher education, or a State or local government seeking financial assistance for a Center under paragraph (1)(A) shall submit to the Secretary an application therefor at such time, in such manner, and containing such information as the Secretary may require. (B) Cost sharing (i) In general In order to receive assistance under paragraph (1)(A), an applicant for financial assistance under subparagraph (A) of this paragraph shall provide adequate assurances that the applicant and the applicant's partnering organizations will obtain funding for 50 percent or more of the capital and annual operating and maintenance funds required to create and maintain the Center from sources other than assistance under paragraph (1)(A). (ii) Agreements with other entities In meeting the 50 percent requirement in clause (i), a Center may enter into agreements with other entities, such as private industry, institutions of higher education, and State governments, to accomplish programmatic objectives and access new and existing resources that will further the impact of the Federal investment made on behalf of small and medium-sized manufacturing companies. (iii) Accounting of contributions from third parties All contributions described in clause (ii) from an entity to a Center pursuant to an agreement described in such clause that is determined by the Center as programmatically reasonable and allocable under Program procedures shall be considered as a portion of the Center's contribution for purposes of clause (i). (C) Legal rights Each person who submits an application under subparagraph (A) with respect to a Center shall include in the application a proposal for the allocation of the legal rights associated with any invention which may result from the activities of the Center. (3) Merit review of applications (A) In general The Secretary shall subject to merit review each application received under paragraph (2)(A). (B) Considerations In making a decision whether to approve an application received under paragraph (2)(A) and provide financial support under paragraph (1), the Secretary shall consider, at a minimum, the following: (i) The merits of the application, particularly those portions of the application regarding technology transfer, training and education, and adaptation of manufacturing technologies to the needs of particular industrial sectors. (ii) The quality of service to be provided. (iii) Geographical diversity and extent of service area. (iv) The percentage of funding from other sources. (4) Evaluations (A) Third and eighth year evaluations by panel (i) In general The Secretary shall ensure that each Center that receives financial assistance under paragraph (1) is evaluated during its third and eighth years of operation by an evaluation panel appointed by the Secretary. (ii) Composition The Secretary shall ensure that each evaluation panel appointed under subparagraph (A) is composed of— (I) private experts, none of whom are connected with the Center evaluated by the panel; and (II) Federal officials. (iii) Chair For each evaluation panel appointed under subparagraph (A), the Secretary shall appoint a chairperson who is an official of the Institute. (B) Fifth year evaluation by Secretary In the fifth year of operation of a Center receiving financial support under paragraph (1), the Secretary shall conduct a review of the Center. (C) Performance measurement In evaluating a Center pursuant to subparagraph (A) or (B), an evaluation panel or the Secretary, as the case may be, shall measure the performance of the Center against— (i) the objectives specified in subsection (a)(3); or (ii) such other objectives as the Secretary considers appropriate. (D) Positive evaluations If an evaluation of a Center under subparagraph (A) is positive, the Secretary may continue under paragraph (1) to provide financial assistance to the Center— (i) in the case of an evaluation occurring in the third year of a Center, through the fifth year of the Center; (ii) in the case of a review by the Secretary occurring in the fifth year of a Center, through the eighth year of the Center; and (iii) in the case of an evaluation occurring in the eighth year of a Center, through the tenth year of the Center. (E) Other than positive evaluations (i) Probation A Center that receives an evaluation under subparagraph (A) or (B) that is other than positive shall be considered to be on probation during the period beginning on the date on which the Center receives notice under subclause (I) of clause (ii) and ending on the date that reevaluation of the Center has been completed under subclause (III) of such clause. (ii) Notice and reevaluation If a panel or the Secretary gives a Center an evaluation under subparagraph (A) or (B), as the case may be, an evaluation that is other than positive, the panel or the Secretary, as the case may be, shall— (I) notify the Center of the reason for the other than positive evaluation, including any deficiencies in the performance of the Center that the panel or the Secretary, as the case may be, has identified; (II) assist the Center in rectifying the deficiencies by providing the Center, not less frequently than once every 3 months, an analysis of the Center, if the panel or the Secretary, as the case may be, considers doing so appropriate; and (III) reevaluate the Center not later than 1 year after the date on which notice is submitted under subclause (I). (iii) Continued support during period of probation The Secretary may provide continued funding under paragraph (1) for a Center during a Center's period of probation under this subparagraph. (iv) Remedy (I) In general If a Center receives an evaluation under subclause (III) of clause (ii) that is other than positive because the Center has not rectified the deficiencies identified by the panel or the Secretary, as the case may be, in the notice submitted under subclause (I) of such clause or shown a significant improvement in its performance, the Secretary shall conduct a new competition to select an operator for the Center. (II) Treatment of Centers subject to new competition Upon the selection of an operator for a Center under subclause (I), the Center shall be considered a new Center for purposes of this paragraph and paragraph (5). (5) Reapplication competition for financial support after 10 years (A) In general If an operator of a Center has received financial support under paragraph (1) for a period of 10 consecutive years, the Secretary shall conduct a new competition to select an operator for the Center consistent with the plan required under paragraph (6)(A)(ii). (B) Incumbent operators An operator of a Center that has received financial support under paragraph (1) for a period of 10 consecutive years that the Secretary determines is in good standing shall be eligible to compete in the competition for the Center conducted under subparagraph (A). (C) Treatment of Centers subject to reapplication competition Upon the selection of an operator for a Center under subparagraph (A), the Center shall be considered a new Center for purposes of this paragraph and paragraph (4). (6) Reports (A) Status report and plan Not later than 180 days after the date of the enactment of the Manufacturing Extension Partnership Improvement Act of 2016 , the Secretary shall submit to the Committee on Commerce, Science, and Transportation of the Senate and the Committee on Science, Space, and Technology of the House of Representatives— (i) a report on how the Institute has conducted evaluations, competitions, and reapplication competitions under this subsection; and (ii) a plan as to how the Institute will conduct such evaluations, competitions, and reapplication competitions. (B) Independent assessment of reapplication competition process (i) In general The Secretary shall contract with an independent organization to perform an assessment of the implementation of the competition and reapplication competition processes under this subsection not later than 3 years after the date of the submittal of the report under subparagraph (A). (ii) Consultation with MEP Advisory Board The organization conducting the assessment under clause (i) may consult with the MEP Advisory Board. (C) Comparison of Centers (i) In general Not later than 2 years after the date of the enactment of the Manufacturing Extension Partnership Improvement Act of 2016 , the Secretary shall submit to the Committee on Commerce, Science, and Transportation of the Senate and the Committee on Science, Space, and Technology of the House of Representatives a report providing information on the first and second years of operations of Centers that were subject to a competition conducted pursuant to paragraph (4)(E)(iv)(I) as compared to longstanding Centers. (ii) Contents The report required by clause (i) shall include detail on the engagement in services provided by Centers and the characteristics of services provided, including volume and type of services, so that the Committees can evaluate whether the cost-sharing ratio has an effect on the services provided by Centers. (d) Operational requirements (1) Patent rights The provisions of chapter 18 of title 35, United States Code, shall apply, to the extent not inconsistent with this section, to the promotion of technology from research by Centers under this section except for contracts for such specific technology extension or transfer services as may be specified by statute or by the Director. (2) Protection of confidential information of Center clients The following information, if obtained by the Federal Government in connection with an activity of a Center or the Program, shall be exempt from public disclosure under section 552 of title 5, United States Code: (A) Information on the business operation of any participant in the Program or of a client of a Center. (B) Trade secrets of any client of a Center. (3) Oversight boards (A) In general As a condition on receipt of financial assistance under paragraph (1), a Center shall establish a board to oversee the operations of the Center. (B) Membership (i) In general Each board established under subparagraph (A) shall be composed of members as follows: (I) The membership of each board shall be representative of stakeholders in the region in which the Center is located. (II) A majority of the members of the board shall be selected from among individuals who own or are employed by small or medium-sized manufacturing companies. (ii) Limitation A member of a board established under subparagraph (A) may not serve on more than one board established under such subparagraph. (C) Bylaws (i) In general Each board established under subparagraph (A) shall adopt and submit to the Director bylaws to govern the operation of the board. (ii) Conflicts of interest Bylaws adopted under clause (i) shall include policies to minimize conflicts of interest, including such policies relating to disclosure of relationships and recusal as may be necessary to minimize conflicts of interest. (e) Acceptance of funds In addition to such sums as may be appropriated to the Secretary and Director to operate the Program, the Secretary and Director may also accept funds from other Federal departments and agencies and from the private sector under section 2(c)(7), to be available to the extent provided by appropriations Acts, for the purpose of strengthening United States manufacturing. (f) MEP Advisory Board (1) Establishment There is established within the Institute a Manufacturing Extension Partnership Advisory Board (in this subsection referred to as the MEP Advisory Board ). (2) Membership (A) Composition (i) In general The MEP Advisory Board shall consist of not fewer than 10 members appointed by the Director and broadly representative of stakeholders. (ii) Requirements Of the members appointed under clause (i)— (I) at least 2 members shall be employed by or on an advisory board for a Center; (II) at least 1 member shall represent a community college; and (III) at least 5 other members shall be from United States small businesses in the manufacturing sector. (iii) No Federal employees No member of the MEP Advisory Board shall be an employee of the Federal Government. (B) Term Except as provided in subparagraph (C) or (D), the term of office of each member of the MEP Advisory Board shall be 3 years. (C) Vacancies Any member appointed to fill a vacancy occurring prior to the expiration of the term for which his predecessor was appointed shall be appointed for the remainder of such term. (D) Serving consecutive terms Any person who has completed 2 consecutive full terms of service on the MEP Advisory Board shall thereafter be ineligible for appointment during the 1-year period following the expiration of the second such term. (3) Meetings The MEP Advisory Board shall meet not less than twice each year and shall provide to the Director— (A) advice on Hollings Manufacturing Extension Partnership programs, plans, and policies; (B) assessments of the soundness of Hollings Manufacturing Extension Partnership plans and strategies; and (C) assessments of current performance against Hollings Manufacturing Extension Partnership program plans. (4) Federal Advisory Committee Act applicability (A) In general In discharging its duties under this subsection, the MEP Advisory Board shall function solely in an advisory capacity, in accordance with the Federal Advisory Committee Act. (B) Exception Section 14 of the Federal Advisory Committee Act shall not apply to the MEP Advisory Board. (5) Annual report (A) In general Not less frequently than once each year, the MEP Advisory Board shall transmit a report to the Secretary for transmittal to Congress within 30 days after the submission to Congress of the President’s annual budget request in each year. (B) Contents Such report shall address the status of the Program and comment on the relevant sections of the programmatic planning document and updates thereto transmitted to Congress by the Director under subsections (c) and (d) of section 23. (g) Competitive awards program (1) Establishment The Director shall establish within the Hollings Manufacturing Extension Partnership and section 26 a program of competitive awards among participants described in paragraph (2) for the purposes described in paragraph (3). (2) Participants Participants receiving awards under this subsection shall be the Centers, or a consortium of such Centers. (3) Purpose, themes, and reimbursement (A) Purpose The purpose of the program established under paragraph (1) is to add capabilities to the Hollings Manufacturing Extension Partnership, including the development of projects to solve new or emerging manufacturing problems as determined by the Director, in consultation with the Director of the Hollings Manufacturing Extension Partnership, the MEP Advisory Board, other Federal agencies, and small and medium-sized manufacturers. (B) Themes The Director may identify one or more themes for a competition carried out under this subsection, which may vary from year to year, as the Director considers appropriate after assessing the needs of manufacturers and the success of previous competitions. (C) Reimbursement Centers may be reimbursed for costs incurred by the Centers under this subsection. (4) Applications Applications for awards under this subsection shall be submitted in such manner, at such time, and containing such information as the Director shall require in consultation with the MEP Advisory Board. (5) Selection (A) Peer review and competitively awarded The Director shall ensure that awards under this subsection are peer reviewed and competitively awarded. (B) Geographic diversity The Director shall endeavor to have broad geographic diversity among selected proposals. (C) Criteria The Director shall select applications to receive awards that the Director determines will— (i) improve the competitiveness of industries in the region in which the Center or Centers are located; (ii) create jobs or train newly hired employees; (iii) promote the transfer and commercialization of research and technology from institutions of higher education, national laboratories or other Federally-funded research programs, and nonprofit research institutes; (iv) recruit a diverse manufacturing workforce, including through outreach to women and minorities; or (v) achieve such other result as the Director considers will advance the objective set forth in subsection (a)(3). (6) Program contribution Recipients of awards under this subsection shall not be required to provide a matching contribution. (7) Global marketplace projects In making an award under this subsection, the Director, in consultation with the MEP Advisory Board and the Secretary, may take into consideration whether an application has significant potential for enhancing the competitiveness of small and medium-sized United States manufacturers in the global marketplace. (8) Workforce development projects In making an award under this subsection, the Director, in consultation with the MEP Advisory Board and the Secretary, may take into consideration whether a project supports the development and implementation of apprenticeship programs, internship programs, student-based learning programs, or industry-recognized certification programs to help serve the workforce needs of consortia of manufacturing companies. (9) Industry consideration (A) Construction industry modernization In making an award under this subsection, the Director, in consultation with the MEP Advisory Board and the Secretary, may take into consideration whether a project supports the modernization of the construction industry. (B) Health care industry In making an award under this subsection, the Director, in consultation with the MEP Advisory Board and the Secretary, may take into consideration whether a project supports the modernization of the health care industry. (C) Biotechnology and biomanufacturing In making an award under this subsection, the Director, in consultation with the MEP Advisory Board and the Secretary, may take into consideration whether a project supports the biotechnology and biomanufacturing industry. (10) Duration The duration of an award under this subsection shall be for not more than 3 years. (h) Evaluation of obstacles unique to small manufacturers As part of the Hollings Manufacturing Extension Partnership, the Director shall— (1) evaluate obstacles that are unique to small manufacturers that prevent such manufacturers from effectively competing in the global market; (2) implement a comprehensive plan to train the Centers to address such obstacles; and (3) facilitate improved communication between the Centers to assist such manufacturers in implementing appropriate, targeted solutions to such obstacles. (i) Development of open access resources As part of the Hollings Manufacturing Extension Partnership, the Director shall develop open access resources that address best practices related to inventory sourcing, supply chain management, manufacturing techniques, available Federal resources, and other topics to further the competitiveness and profitability of small manufacturers. (j) Innovation Services Initiative As part of the Hollings Manufacturing Extension Partnership, the Director shall establish an innovation services initiative to assist small and medium-sized manufacturers in improving profitability through the reduction of energy use, greenhouse gas emissions, and environmental waste. (k) Definitions In this section: (1) Area career and technical education school The term area career and technical education school has the meaning given such term in section 3 of the Carl D. Perkins Career and Technical Education Improvement Act of 2006 ( 20 U.S.C. 2302 ). (2) Community college The term community college means an institution of higher education (as defined under section 101(a) of the Higher Education Act of 1965 ( 20 U.S.C. 1001(a) )) at which the highest degree that is predominately awarded to students is an associate’s degree. .