This bill requires the Office of the Under Secretary of Defense for Acquisition and Sustainment within the Department of Defense to implement a five-year pilot program to create a robust and resilient defense industrial base. The program must be implemented through public-private partnerships to accelerate the scaling, production, and acquisition of advanced capabilities for national security by creating incentives (e.g., loan guarantees) for investment in domestic small business or nontraditional businesses.
[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3147 Introduced in House (IH)]
<DOC>
118th CONGRESS
1st Session
H. R. 3147
To establish a defense industrial base advanced capabilities pilot
program.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 9, 2023
Ms. Houlahan (for herself, Mr. Fallon, and Mr. Wittman) introduced the
following bill; which was 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).
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Armed Services.
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