[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 2109 Introduced in Senate (IS)]


109th CONGRESS
  1st Session
                                S. 2109

              To provide a national innovation initiative.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           December 15, 2005

   Mr. Ensign (for himself, Mr. Lieberman, Mr. Lugar, Mr. DeWine, Mr. 
Allen, Mr. Bingaman, Mr. Alexander, Mr. Chambliss, Mr. Bayh, Mr. Nelson 
 of Florida, Mr. Kohl, Mr. Cornyn, Mr. Isakson, Mr. Smith, Mr. Leahy, 
 and Mr. Nelson of Nebraska) introduced the following bill; which was 
          read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
              To provide a national innovation initiative.

    Be it enacted by the Senate and House of Representatives 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 2005''.
    (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 
                            technologies 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 findings:
            (1) The United States is the most innovative Nation in the 
        world. Since our Nation's founding, exploration, opportunity, 
        and discovery have remained 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 development, 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 security will 
        largely depend on the creativity and commitment of our Nation 
        to unleash its innovation capacity.
            (4) The world has become dramatically more interconnected 
        and competitive. Cutting edge research, 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 research is 
        currently insufficient to meet the challenges 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 capacity focused 
        solely on inputs, such as research and development spending, 
        number of patents and value of physical infrastructure. The 
        traditional measurements are necessary but are not sufficient 
        metrics for innovation in the 21st century's knowledge economy.
            (8) Current Federal budget constraints require 
        prioritization of spending and new programs must be funded 
        through existing funds or through identifiable funding offsets 
        whenever possible.
            (9) A national, private sector-led, and government 
        supported plan is required if the United States is to 
        adequately respond to the challenges of increased 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 scientists, 
        mathematicians, and engineers;
            (4) enhance the quality of math and science education at 
        all levels;
            (5) increase the Federal Government's investment in basic 
        research, especially in the physical sciences;
            (6) direct greater funding toward multidisciplinary and 
        frontier research where tomorrow's innovations are most likely 
        to occur;
            (7) secure a strong advanced manufacturing base in the 
        United States to ensure that as innovations occur, America is 
        poised to reap the benefits via the creation of new jobs and 
        investment; and
            (8) examine both the incentives for, and barriers to, 
        innovation to better understand what additional 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, distribution, 
        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 leading to the creation 
        of social and economic value, including through efforts meeting 
        fundamental technology 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 program.--The term 
        ``Manufacturing Technology Program'' means the Manufacturing 
        Technology Program under section 2521 of title 10, United 
        States Code.
            (8) Professional science masters program.--The term 
        ``professional science masters program'' means a graduate 
        degree program in science and mathematics that extends science 
        training to strategic planning and business management and 
        focuses on multidisciplinary specialties such as business and 
        information technology (IT), biology and IT (bioinformatics), 
        and computational chemistry.
            (9) Regional innovation hot spots defined.--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, management, and engineering (SSME) 
        programs, that exist or that are being developed to teach 
        individuals to apply technology, organizational process 
        management, and industry-specific knowledge to solve complex 
        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 organization performs 
                beneficially for others, generally as part of the 
                services sector of the economy; and
                    (B) integrates computer science, operations 
                research, industrial engineering, business strategy, 
                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, taxation, immigration, trade, and 
        education that are proposed in this and other Acts;
            (2) in consultation with the Director of the Office of 
        Management and Budget, developing a process for using metrics 
        to assess the impact of existing and proposed policies and 
        rules that affect innovation capabilities in the United States;
            (3) identifying opportunities and making recommendations 
        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 infrastructure improvements; and
            (5) submitting an annual report to the President and 
        Congress on such progress.
    (c) Membership and Coordination.--
            (1) Membership.--The Council shall be composed of the 
        Secretary or head of each of the following:
                    (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 Security.
                    (G) The Department of Labor.
                    (H) The Department of the Treasury.
                    (I) The National Aeronautics and Space 
                Administration.
                    (J) The Securities and Exchange Commission.
                    (K) The National Science Foundation.
                    (L) The Office of the United States Trade 
                Representative.
                    (M) The Office of Management and Budget.
                    (N) The Office of Science and Technology Policy.
            (2) Chairperson.--The Secretary of Commerce shall serve as 
        chairperson of the Council.
            (3) Coordination.--The chairperson of the Council shall 
        ensure appropriate coordination between the Council and the 
        National Economic Council and the National Security Council.
    (d) Development of Innovation Agenda.--
            (1) In general.--The Council shall develop a comprehensive 
        agenda for strengthening the innovation capabilities of the 
        Federal Government and State governments, academia, and the 
        private sector in the United States.
            (2) Consultation.--The comprehensive agenda 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 Acceleration Grants Program'', to 
support and promote innovation 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 ensure that it is 
        the goal of each Executive agency that finances research in 
        science, mathematics, engineering, and technology to allocate 
        at least 3 percent of the agency's total annual research and 
        development budget to funding grants under the Innovation 
        Acceleration Grants Program.
            (2) Administration.--
                    (A) In general.--Each head of an Executive 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 Technology 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 implementation 
                plan may incorporate existing initiatives of the 
                Executive agencies that promote research in innovation 
                as described in subsection (a).
                    (B) Required metrics.--The head of each Executive 
                agency submitting an implementation plan pursuant to 
                this section shall include metrics upon which grant 
                funding decisions 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 complete an evaluation 
                        of the effectiveness of the grant based on the 
                        metrics established pursuant to subparagraph 
                        (B). In its evaluation, the Executive agency 
                        shall consider the extent to which the program 
                        funded by the grant met the goals of quality 
                        improvement 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 pursuant to subparagraph (B), 
                        shall not be eligible 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 Executive agency makes 
                        a specific finding that the program being 
                        funded involves a significant technology 
                        advance that requires a longer timeframe to 
                        complete critical research, and the research 
                        satisfies all the metrics developed pursuant to 
                        subparagraph (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 submit to Congress a comprehensive, multiyear plan 
that describes how the funds authorized in subsection (b) shall be 
used. Such plan shall be developed with a focus on utilizing basic 
research in physical science and engineering to optimize the United 
States economy as a global competitor 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 Development 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 physical sciences and 
engineering in consultation with agencies and departments of the United 
States with significant research 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 Commerce shall review Federal 
        programs that support local economic development and prepare 
        and implement a strategy to focus funding on initiatives that 
        improve the ability of communities to participate successfully 
        in the modern economy through innovation. 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 development 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 Secretary for Economic 
Development of the Department of Commerce shall develop metrics to 
measure the success of Federal programs in supporting and promoting 
innovation at the local community level while minimizing bureaucracy 
and overhead expenses.
    (c) Promotion of Economic Development Opportunities.--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 development and investment in companies 
pursuing innovation.
    (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 development of regional innovation hot spots.
            (2) Guide to developing successful regional innovation hot 
        spots.--
                    (A) In general.--Not later than 1 year after the 
                date of enactment of this Act, the Secretary of 
                Commerce, in consultation with representatives 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 
                recommendations for establishing and fostering regional 
                innovation hot spots.
                    (B) Content.--The report required under 
                subparagraph (A) shall--
                            (i) include information on the evaluation 
                        of human capital;
                            (ii) include information on the role of 
                        sponsoring institutions, such as universities, 
                        nonprofit organizations, and laboratories, in 
                        establishing and fostering regional 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 establishing and 
                        fostering regional innovation hot spots;
                            (iv) discuss the importance of 
                        collaboration 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 developing 
                        strategic plans to stimulate innovation, 
                        including recommendations relating to knowledge 
                        transfer and commercialization, the support of 
                        regional entrepreneurship and increased 
                        innovation within existing regional firms, and 
                        the linking of primary institutions engaged in 
                        the innovation process.
            (3) Regional innovation hot spot metrics.--
                    (A) Development of metrics.--In conjunction with 
                publishing the report required under paragraph (2), the 
                Secretary of Commerce shall develop the following sets 
                of metrics:
                            (i) Metrics to be considered for 
                        identifying potential regional innovation hot 
                        spots (in this subsection referred to as 
                        ``identifying metrics'').
                            (ii) Metrics to be considered for 
                        evaluating the impact and effectiveness of 
                        established regional innovation hot spots (in 
                        this subsection referred to as ``evaluation 
                        metrics'').
                    (B) Use of metrics.--The Under Secretary of 
                Commerce for Technology shall use the identifying 
                metrics to conduct biannual assessments 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 assessments 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 productivity and 
efficiency and to create competitive advantages for United States 
businesses. These research and development activities should focus on 
the following activities:
            (1) Supporting industry efforts to develop innovative, 
        state-of-the-art manufacturing processes, advanced technologies 
        through interoperable standards, and related concepts, 
        including--
                    (A) advanced distributed and desktop manufacturing 
                linked to and made compatible with the extended 
                production enterprise system described in paragraph 
                (2);
                    (B) non-contact quality inspection processes linked 
                to and made compatible with the extended production 
                enterprise system;
                    (C) small lot manufacturing processes that are--
                            (i) as cost-effective as mass production 
                        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 integrates 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 developing prototypes and testing areas 
for testing and refining, in actual production conditions, the 
processes, technologies, and extended production enterprise system 
described in subsection (a)(2) in order to maximize productivity 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 Program, shall support standards to be used as manufacturing 
performance criteria to accelerate the adoption of improvements and 
innovative processes and protocols developed under subsection (a).
    (e) Pilot Test Beds of Excellence.--
            (1) Establishment.--The Director of the National 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 important to advanced technologies developed under 
        subsection (a), such as nanotechnology, to be used by the 
        public and private sector. The test beds of excellence shall 
        focus on production development, particularly the invention, 
        prototyping, and engineering development stages of the 
        manufacturing process.
            (2) Competition.--The Secretary of Commerce shall conduct a 
        competition to select the pilot test beds of excellence based 
        on criteria and metrics established by the Secretary prior to 
        the competition.
            (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 governments.
            (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 Secretary 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 develops a 
focus on innovation, including through technology diffusion, supply and 
distribution chain integration, and the dissemination of the processes, 
technologies, and extended 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 Congress 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 
understand 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 Program.--
            (1) In general.--During the 5-year period beginning 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 
        fellowships 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 authorized 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 appropriated, there are 
        authorized to be appropriated $34,000,000 for each of the 
        fiscal years 2007 through 2011 to provide an additional 250 
        fellowships under the Graduate Research Fellowship Program 
        during each such fiscal year.
    (b) Integrative Graduate Education and Research Traineeship 
Program.--
            (1) In general.--During the 5-year period beginning on the 
        date of the enactment of this Act, the Director of the National 
        Science Foundation shall expand the Integrative Graduate 
        Education and Research Traineeship program of the Foundation so 
        that an additional 1,250 United States citizens are awarded 
        grants under such program during such period.
            (2) Authorization of appropriations.--In addition to any 
        other amounts authorized to be appropriated, 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 
        Education and Research Traineeship program during each such 
        fiscal year

SEC. 202. PROFESSIONAL SCIENCE MASTER'S DEGREE PROGRAMS.

    (a) Definition of Institution of Higher Education.--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 appropriated under 
        subsection (d), the Director of the National Science Foundation 
        shall establish a clearinghouse, in collaboration with 4-year 
        institutions of higher learning, industries, and Federal 
        agencies that employ science-trained personnel, to share 
        program elements used in successful professional science 
        master's degree programs.
            (2) Availability.--The Director of the National Science 
        Foundation shall make the clearinghouse of program elements 
        developed under paragraph (1) available to institutions of 
        higher education that are developing professional science 
        master'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 institution of higher 
                education will implement;
                    (B) the amount of funding from non-Federal 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 program to apply for all forms 
                of Federal assistance available to such students, 
                including applicable graduate fellowships and student 
                financial assistance under title IV of the Higher 
                Education 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 professional 
        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 
                benchmarks 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 
                section. Any pilot program that fails to satisfy the 
                performance benchmarks developed under subparagraph (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 National 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 described 
                        in subparagraph (A); and
                            (ii) recommendations for administrative and 
                        legislative action that could optimize the 
                        effectiveness of the pilot programs, 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 FOUNDATION.

    There are authorized to be appropriated to carry out the science, 
mathematics, engineering, and technology talent 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 educational agencies to implement 
        innovation-based experiential 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 accompanied 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 Congress that, in order 
to improve the United States healthcare system for the 21st century, 
the Federal Government 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 consistent 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 Revenue Code of 1986 
(relating to credit for increasing research activities) is amended by 
striking subsection (h).
    (b) Conforming Amendment.--Section 45C(b)(1) of the Internal 
Revenue Code of 1986 is amended by striking 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 INCREMENTAL 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 QUALIFIED 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 subsection (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 average qualified research expenses for 
                the 3 taxable 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 subparagraph 
                        applies.--The credit under this paragraph shall 
                        be determined under this subparagraph if the 
                        taxpayer has no qualified 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 determined 
                        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 Secretary. 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 Alternative 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 paragraph (5) applies.''.
            (2) Transition rule.--In the case of an election 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 taxpayer 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.

                    Subtitle B--Health and Education

SEC. 311. STUDY AND REPORT ON CATASTROPHIC HEALTHCARE.

    (a) Study.--The Secretary of Health and Human Services and the 
Secretary of Labor (in this subsection referred to as the 
``Secretaries'') jointly shall conduct a study to explore methods for 
managing costs associated with catastrophic healthcare events and costs 
associated with chronic disease. The Secretaries shall work with 
healthcare providers, pharmaceutical manufacturers, large and small 
employers, health plans, and other interested private and public sector 
entities to develop a consensus regarding potential innovative 
approaches for reducing the financial risks presented by such health 
problems and improving such outcomes. The study shall consider, among 
other factors, the role that best practices, health information 
technology, evidence-based medicine, quality incentives, and 
comparative clinical effectiveness research can play in improving 
quality, value, and efficiency throughout the United States healthcare 
system.
    (b) Report.--Not later than 1 year after the date of enactment of 
this Act, the Secretaries shall submit a report to Congress on the 
results of the study conducted under subsection (a), together with such 
recommendations for administrative and legislative action as the 
Secretaries determine to be appropriate.

SEC. 312. LIFELONG LEARNING ACCOUNTS.

    (a) Study.--The Secretary of the Treasury, in collaboration with 
the Secretary of Labor and the Secretary of Education, shall conduct a 
study with recommendations for establishing lifelong learning accounts 
which would be exempt from taxation under the Internal Revenue Code of 
1986 and from which funds could only be used for educational or 
training purposes. Such study shall consider whether individuals should 
be allowed to transfer to such an account, without incurring tax 
liability or penalties, funds which are--
            (1) held in accounts established under a plan described in 
        section 401(k), 403(b), or 457 of the Internal Revenue Code of 
        1986; and
            (2) held in a qualified tuition program under section 529 
        of such Code.
    (b) Report.--Not later than 1 year after the date of the enactment 
of this Act, the Secretary of the Treasury shall submit to Congress a 
report on the study conducted under subsection (a).

                  Subtitle C--Savings and Investments

SEC. 321. REGULATIONS RELATING TO PRIVATE FOUNDATION SUPPORT OF 
              INNOVATIONS IN ECONOMIC DEVELOPMENT.

    The Secretary of the Treasury or the Secretary's delegate shall as 
soon as practicable issue regulations under subchapter A of chapter 42 
of the Internal Revenue Code of 1986 (relating to excise taxes on 
private foundations) which--
            (1) clearly identify when distributions by private 
        foundations for purposes of stimulating economic development 
        will be treated as made for an exempt purpose described in 
        section 170(c)(2)(B) of such Code; and
            (2) clarify the circumstances under which private 
        foundations may make program-related investments described in 
        section 4944(c) of such Code in start-up ventures.

SEC. 322. ADVISORY GROUP REGARDING VALUATION OF INTANGIBLES.

    (a) Establishment.--The Secretary of the Treasury shall establish 
an advisory group consisting of representatives of the public and 
private investment sector. The advisory group shall include 
representatives from the Department of Commerce, the Securities and 
Exchange Commission, the Commodity Futures Trading Commission, the 
Board of Governors of the Federal Reserve System, the New York Stock 
Exchange, the National Association of Securities Dealers Automatic 
Quotation System, and significant industry sectors.
    (b) Duties.--The advisory group established under subsection (a) 
shall--
            (1) examine and make recommendations of best practices for 
        valuation of intangibles in order to--
                    (A) provide investors with an improved method for 
                assessing the impact intangibles have on the accuracy 
                of a company's financial picture; and
                    (B) support industry trade associations in efforts 
                to adopt guidelines for intangibles appropriate to 
                particular industry sections; and
            (2) submit to the Secretary of the Treasury a 
        recommendation regarding whether a litigation safe harbor 
        should be established for those companies that make good faith 
        estimates regarding the value of intangibles under the best 
        practice standards developed under paragraph (1).
    (c) Research Network.--The Secretary of Commerce shall establish a 
research network of industry and academic expertise to study metrics 
and solutions for intangible disclosure, and provide such research 
results to the advisory group.
    (d) Accounting Standards.--The Secretary of the Treasury and the 
advisory group shall encourage the Financial Accounting Standards Board 
to reinstate its project on disclosure of information about intangible 
assets not recognized in financial statements and to move expeditiously 
toward issuance of a statement of financial accounting standards 
concerning valuation and disclosure of key intangible assets.
    (e) Report.--Not later than 2 years after the date of the enactment 
of this Act, the advisory group shall submit to the Secretary of the 
Treasury the results of the examination under subsection (b)(1) and the 
recommendation under subsection (b)(2).

                TITLE IV--DEPARTMENT OF DEFENSE MATTERS

               Subtitle A--Defense Research and Education

SEC. 401. REVITALIZATION OF FRONTIER AND MULTIDISCIPLINARY RESEARCH.

    It shall be the goal of the Department of Defense to allocate at 
least 3 percent of the total Department of Defense budget to science 
and technology. Of this amount, it shall be the goal of the Department 
of Defense to allocate at least 20 percent to basic research.

SEC. 402. ENHANCEMENT OF EDUCATION.

    (a) Science, Mathematics, and Research for Transformation (SMART) 
Scholarships.--
            (1) Extension of program.--Section 1105(a)(2) of the Ronald 
        W. Reagan National Defense Authorization Act for Fiscal Year 
        2005 (Public Law 108-375; 118 Stat. 2074; 10 U.S.C. 2192 note) 
        is amended by striking ``for three years beginning on the date 
        of the enactment of this Act'' and inserting ``through 
        September 30, 2011''.
            (2) Expansion of program.--The Secretary of Defense shall, 
        utilizing amounts authorized to be appropriated by paragraph 
        (3), increase the number of participants in the Science, 
        Mathematics, and Research for Transformation (SMART) Defense 
        Scholarship Pilot Program under section 1105 of the Ronald W. 
        Reagan National Defense Authorization Act for Fiscal Year 2005 
        in each of fiscal years 2007 through 2011--
                    (A) by an additional 160 participants pursuing 
                doctoral degrees in each such fiscal year; and
                    (B) by an additional 60 participants pursuing 
                masters degrees in each such fiscal year.
            (3) Authorization of appropriations.--There is hereby 
        authorized to be appropriated to the Department of Defense for 
        each of fiscal years 2007 through 2011 the amount of 
        $41,300,000 for purposes of carrying out this subsection, of 
        which--
                    (A) $36,000,000 shall be available in each such 
                fiscal year for additional participants in the Science, 
                Mathematics, and Research for Transformation (SMART) 
                Defense Scholarship Pilot Program who are pursuing 
                doctoral degrees under paragraph (2)(A); and
                    (A) $5,300,000 shall be available in each such 
                fiscal year for additional participants in the Science, 
                Mathematics, and Research for Transformation (SMART) 
                Defense Scholarship Pilot Program who are pursuing 
                masters degrees under paragraph (2)(B).
    (b) National Defense Science and Engineering Graduate 
Fellowships.--
            (1) Expansion of program.--The Secretary of Defense shall, 
        utilizing amounts authorized to be appropriated by paragraph 
        (2), increase the number of participants in the National 
        Defense Science and Engineering Graduate (NDSEG) fellowship 
        program in each of fiscal years 2007 through 2011 by an 
        additional 200 participants in each such fiscal year.
            (2) Authorization of appropriations.--There is hereby 
        authorized to be appropriated to the Department of Defense for 
        each of fiscal years 2007 through 2011 the amount of 
        $45,000,000 for purposes of carrying out this subsection.
    (c) Institution-Based Traineeships.--
            (1) Program required.--The Secretary of Defense shall, 
        utilizing amounts authorized to be appropriated by paragraph 
        (4), carry out a program to award, on a competitive basis, 
        traineeships to undergraduate and graduate students at 
        institutions of higher education in order to permit such 
        students to pursue studies in areas of importance to the 
        Department of Defense in mathematics, science, or engineering 
        in settings or programs that provide such students exposure to 
        multidisciplinary studies, innovation-oriented studies, and 
        academic, private-sector, or government laboratories and 
        research. It shall be the goal of the traineeship program for a 
        trainee to work for the Department of Defense for 10 years 
        after completing his or her degree.
            (2) Participants.--In each of fiscal years 2007 through 
        2011, the number of participants in the program required by 
        paragraph (1) shall be as follows:
                    (A) Not more than 30 participants pursuing doctoral 
                degrees.
                    (B) Not more than 30 participants pursuing masters 
                degrees.
                    (C) Not more than 20 participants pursuing 
                undergraduate degrees.
            (3) Annual reports.--Not later than November 30 each year, 
        the Secretary of Defense shall submit to the Committees on 
        Armed Services of the Senate and the House of Representatives a 
        report on the carrying out of the program required by paragraph 
        (1) during the preceding fiscal year. The report shall describe 
        the participants, and the studies pursued by such participants, 
        in the program during the fiscal year covered by the report, 
        and shall include an assessment of the benefits of the program 
        to the Department of Defense.
            (4) Authorization of appropriations.--There is hereby 
        authorized to be appropriated to the Department of Defense for 
        each of fiscal years 2007 through 2011 the amount of 
        $11,100,000 for purposes of carrying out the program required 
        by this subsection, of which--
                    (A) $7,000,000 shall be available in each such 
                fiscal year for participants in the program who are 
                pursuing doctoral degrees under paragraph (2)(A);
                    (B) $2,600,000 shall be available in each such 
                fiscal year for participants in the program who are 
                pursuing masters degrees under paragraph (2)(B); and
                    (C) $1,500,000 shall be available in each such 
                fiscal year for participants in the program who are 
                pursuing undergraduate degrees under paragraph (2)(C).

               Subtitle B--Defense Advanced Manufacturing

SEC. 411. MANUFACTURING RESEARCH AND DEVELOPMENT.

    (a) Identification of Enhanced Processes and Technologies.--The 
Under Secretary of Defense for Acquisition, Technology, and Logistics, 
acting through the Director of Defense Research and Engineering, shall 
identify advanced manufacturing processes and technologies whose 
utilization will achieve significant productivity and efficiency gains 
in the defense manufacturing base.
    (b) Research and Development.--The Under Secretary shall undertake 
research and development on processes and technologies identified under 
subsection (a) that addresses, in particular--
            (1) innovative manufacturing processes and advanced 
        technologies; and
            (2) the creation of extended production enterprises using 
        information technology and new business models.
    (c) Defense Priorities.--In undertaking research and development 
under subsection (b), the Under Secretary shall consider defense 
priorities established in the most current Joint Warfighting Science 
and Technology Plan.

SEC. 412. TRANSITION OF TRANSFORMATIONAL MANUFACTURING PROCESSES AND 
              TECHNOLOGIES TO THE DEFENSE MANUFACTURING BASE.

    (a) Acceleration of Transition from Science and Technology.--
            (1) In general.--The Under Secretary of Defense for 
        Acquisition, Technology, and Logistics shall undertake 
        appropriate actions to accelerate the transition of 
        transformational manufacturing technologies and processes 
        (including processes and technologies identified under section 
        411) from the research stage to utilization by manufacturers in 
        the defense manufacturing base.
            (2) Execution.--The actions undertaken under paragraph (1) 
        shall include a memorandum of understanding among the Director 
        of Defense Research and Engineering, other appropriate elements 
        of the Department of Defense, and the Joint Defense 
        Manufacturing Technology Panel to accelerate the transition of 
        technologies and processes as described in that paragraph.
    (b) Prototypes and Test Beds.--
            (1) In general.--The Under Secretary shall, utilizing the 
        Manufacturing Technology Program, undertake the development of 
        prototypes and test beds to promote the purposes of this 
        section.
            (2) Coordination of activities.--The Under Secretary shall 
        coordinate activities under this subsection with activities 
        under the Small Business Innovation Research Program and the 
        Small Business Technology Transfer Program.
    (c) Development of Improvement Process.--The Under Secretary shall, 
in consultation with persons and organizations in the defense 
manufacturing base, develop and implement a program to continuously 
identify and utilize improvements and innovative processes in 
appropriate defense acquisition programs and by manufacturers in the 
defense manufacturing base.
    (d) Diffusion of Enhancements Into Defense Manufacturing Base.--The 
Under Secretary shall ensure the utilization in industry of 
enhancements in productivity and efficiency identified by reason of 
activities under this subtitle through the following:
            (1) Research and development activities under the 
        Manufacturing Technology Program, including the establishment 
        of public-private partnerships.
            (2) Outreach through the Manufacturing Extension 
        Partnership Program under memoranda of agreement, cooperative 
        programs, and other appropriate arrangements.
            (3) Coordination with activities under such other current 
        programs for the dissemination of manufacturing technology as 
        the Under Secretary considers appropriate.
            (4) Identification of incentives for contractors in the 
        defense manufacturing base to incorporate and utilize 
        manufacturing enhancements in manufacturing activities.

SEC. 413. MANUFACTURING TECHNOLOGY STRATEGIES.

    (a) In General.--The Under Secretary of Defense for Acquisition, 
Technology, and Logistics may--
            (1) identify an area of technology where the development of 
        industry-prepared roadmaps for new manufacturing and technology 
        processes applicable to defense manufacturing requirements 
        would be beneficial to the Department of Defense; and
            (2) establish a task force, and act in cooperation with the 
        private sector, to map the strategy for the development of 
        manufacturing processes and technologies needed to support 
        technology development in the area identified under paragraph 
        (1).
    (b) Commencement of Roadmapping.--The Under Secretary shall 
commence any roadmapping identified pursuant to subsection (a)(1) not 
later than January 2007.

SEC. 414. PLANNING FOR ADOPTION OF STRATEGIC INNOVATION.

    (a) In General.--The Secretary of Defense, acting through the Under 
Secretary of Defense for Acquisition, Technology, and Logistics, shall 
ensure that each contract of a value of $50,000,000 or more under a 
technology or logistics program of the Department of Defense includes 
requirements for planning by the contractor under such contract for the 
adoption of innovative technologies under such contract.
    (b) Particular Requirements.--The requirements included in a 
contract under subsection (a) shall include--
            (1) requirements for plans for the identification, 
        monitoring, and transition to the utilization under such 
        contract of applicable emerging technologies from the private 
        sector;
            (2) requirements for plans for the identification, 
        monitoring, and development under such contract of emerging 
        research initiatives in academia; and
            (3) a requirement to submit to the Under Secretary on an 
        annual basis a report on the implementation of the planning 
        carried out pursuant to the requirements included in such 
        contract.

SEC. 415. REPORT.

    (a) In General.--Not later than December 31, 2008, the Under 
Secretary of Defense for Acquisition, Technology, and Logistics shall 
submit to the congressional defense committees a report on the actions 
undertaken by the Under Secretary under this subtitle during fiscal 
year 2007.
    (b) Elements.--The report under subsection (a) shall include--
            (1) a comprehensive description of the actions undertaken 
        under this subtitle during fiscal year 2007;
            (2) an assessment of effectiveness of such actions in 
        enhancing research and development on manufacturing 
        technologies and processes, and the implementation of such 
        technologies and processes within the defense manufacturing 
        base; and
            (3) such recommendations as the Under Secretary considers 
        appropriate for additional actions to be undertaken in order to 
        increase the effectiveness of the actions undertaken under this 
        subtitle in enhancing manufacturing activities within the 
        defense manufacturing base.

SEC. 416. AUTHORIZATION OF APPROPRIATIONS.

    Funds are hereby authorized to be appropriated for the Department 
of Defense for purposes of carrying out this subtitle for fiscal years 
as follows:
            (1) For fiscal year 2007, $20,000,000.
            (2) For fiscal year 2008, $40,000,000.
            (3) For fiscal year 2009, $60,000,000.
            (4) For fiscal year 2010, $80,000,000.
            (5) For fiscal year 2011, $100,000,000.

                  TITLE V--JUDICIARY AND OTHER MATTERS

SEC. 501. SENSE OF CONGRESS ON RETAINING HIGH TECH TALENT IN THE UNITED 
              STATES.

    It is the sense of Congress that comprehensive immigration reform 
should ensure that the United States retains foreign-born high-tech 
talent educated in the United States and remains the leader in 
innovation and technological development in an emerging global 
marketplace. Such comprehensive reform should ensure--
            (1) that the United States continues to retain foreign 
        nationals who have received master's or higher degrees in the 
        sciences, technology, engineering or mathematics from United 
        States institutions of higher education under either--
                    (A) the H-1B visa program; or
                    (B) as employment-based immigrants;
            (2) that the United States must take a forward looking 
        approach with respect to any limitations on the H-1B visa 
        program; and
            (3) that immigration reform should also include systematic 
        improvements to the Government's technology infrastructure in 
        order to eliminate delays in processing immigration 
        proceedings, including employment-based visa applications.

SEC. 502. STUDY ON BARRIERS TO INNOVATION.

    (a) In General.--The National Academy of Sciences shall conduct and 
complete a study to identify, and to review methods to mitigate, new 
forms of risk for businesses beyond conventional operational and 
financial risk that affect the ability to innovate, including studying 
and reviewing--
            (1) incentive and compensation structures that could 
        effectively encourage long-term value creation and innovation;
            (2) methods of voluntary and supplemental disclosure by 
        industry of intellectual capital, innovation performance, and 
        indicators of future valuation;
            (3) means by which government could work with industry to 
        enhance the legal and regulatory framework to encourage the 
        disclosures described in paragraph (2);
            (4) practices that may be significant deterrents to United 
        States businesses engaging in innovation risk-taking compared 
        to foreign competitors, including tort litigation, the nature 
        and extent of any resulting defensive management practices, and 
        recommendations on practices to restore innovation risk-taking 
        and to overcome defensive practices;
            (5) means by which industry, trade associations, and 
        universities could collaborate to support research on 
        management practices and methodologies for assessing the value 
        and risks of longer term innovation strategies; and
            (6) means to encourage new, open, and collaborative 
        dialogue between industry associations, regulatory authorities, 
        management, shareholders, and other concerned interests to 
        encourage appropriate approaches to innovation risk-taking.
    (b) Report Required.--The National Academy of Sciences shall, not 
later than 1 year after the date of enactment of this Act, submit to 
Congress a report on the study conducted under subsection (a).
    (c) Authorizations of Appropriations.--There are authorized to be 
appropriated to the National Academy of Sciences $1,000,000 for fiscal 
year 2007 for the purpose of carrying out the study required under this 
section.

SEC. 503. SENSE OF CONGRESS ON PATENT REFORM.

    It is the sense of Congress that--
            (1) to bolster the United States economy and strengthen 
        innovators in the United States, the patent system should be 
        reformed to enhance the quality of patents, to leverage patent 
        databases as innovation tools, and to create best practices for 
        global collaborative standard setting; and
            (2) to achieve the objectives described in paragraph (1), 
        the Federal Government should--
                    (A) fully fund the Patent and Trademark Office and 
                enable the Office to direct its fees to fund process 
                improvements;
                    (B) improve compliance with existing patenting 
                requirements and create incentives for improved search 
                and disclosure of prior art;
                    (C) create new standards for searchability of 
                patent applications and new patents;
                    (D) establish a fair and balanced post-grant patent 
                review procedure for future patents and patent 
                applications;
                    (E) invest in retroactively creating searchable 
                keywords for a subset of the most highly cited 
                historical patents;
                    (F) secure reciprocal access to foreign patent 
                databases; and
                    (G) set best practices and processes for standards 
                bodies to align incentives for collaborative standard 
                setting, and to encourage broad participation.
                                 <all>