Sec. 831. Defense industrial base advanced capabilities pilot program
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The Under Secretary of Defense for Acquisition and Sustainment shall carry out a pilot program through a public-private partnership to accelerate the scaling, production, and acquisition of advanced defense capabilities determined by the Under Secretary to be critical to the national security by creating incentives for investment in domestic small businesses or nontraditional businesses to create a robust and resilient defense industrial base. The goals of the public-private partnership pilot program are as follows:
To bolster the defense industrial base through acquisition and deployment of advanced capabilities necessary to field Department of Defense modernization programs and priorities. To strengthen domestic defense supply chain resilience and capacity by investing in innovative defense companies. To leverage private equity capital to accelerate domestic defense scaling, production, and manufacturing. In carrying out subsection (a), the Under Secretary shall enter into one or more 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).
The Under Secretary shall establish criteria for entering into one or more public-private partnerships and shall submit to the congressional defense committees such criteria, which shall not take effect for the purposes of entering into any agreement until 30 days after submission. 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, term, and governance framework for the partnership and its operations. Such operating agreements may not take effect until 30 days after they have been submitted to the congressional defense committees. Pursuant to public-private partnerships entered into under subsection (b), a person or persons with whom the Under Secretary has entered into a partnership may 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. The partnership shall require investment in not less than 10 businesses, with no business representing greater than 20 percent of total investment and no capability area exceeding 40 percent of total investment A person or persons described in paragraph
(1)shall have sole authority to operate, manage, and invest. Pursuant to the authority established under section __ 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). 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. The loan guarantee under paragraph
(1)shall be subject to the operating agreement entered into under subsection (b)(3). 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. The program established under subsection
(a)shall be carried out in two phases as follows: 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. 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— an overview of, and the activities undertaken, to execute the public-private partnership; a description of the advanced capabilities and defense industrial base areas under consideration for investment; an overview of the operating agreement described in subsection (b)(3); and implementation milestones and metrics. 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— an overview of program performance, and implementation and execution milestones and outcomes; an overview of progress in— achieving new products in production aligned with Department of Defense needs; scaling businesses aligned to targeted industrial base and capability areas; generating defense industrial base job growth; increasing supply chain resilience and capacity; and enhancing competition on advanced capability programs; an accounting of activities undertaken and outline of the opportunities and benefits of expanding the scope of the pilot program; and a recommendation by the Secretary regarding the feasibility and desirability of expanding the pilot program. 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). 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. 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. In this section: 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. The term domestic small businesses or nontraditional businesses means— a small business that is a domestic business; or a nontraditional business that is a domestic business. The term nontraditional business has the meaning given the term nontraditional defense contractor in section 3014 of title 10, United States Code. 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 ).
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Sec. 831
Defense industrial base advanced capabilities pilot program
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