[Senate Report 111-289]
[From the U.S. Government Publishing Office]
Calendar No. 560
111th Congress Report
2d Session SENATE 111-289
_______________________________________________________________________
EXPORT PROMOTION ACT OF 2010
__________
R E P O R T
OF THE
COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
on
S. 3084
September 13, 2010.--Ordered to be printed
______
U.S. GOVERNMENT PRINTING OFFICE
89-006 WASHINGTON : 2010
SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
one hundred eleventh congress
second session
JOHN D. ROCKEFELLER IV, West Virginia, Chairman
DANIEL K. INOUYE, Hawaii KAY BAILEY HUTCHISON, Texas
JOHN F. KERRY, Massachusetts OLYMPIA J. SNOWE, Maine
BYRON L. DORGAN, North Dakota JOHN ENSIGN, Nevada
BARBARA BOXER, California JIM DeMINT, South Carolina
BILL NELSON, Florida JOHN THUNE, South Dakota
MARIA CANTWELL, Washington ROGER F. WICKER, Mississippi
FRANK R. LAUTENBERG, New Jersey GEORGE S. LeMIEUX, Florida
MARK PRYOR, Arkansas JOHNNY ISAKSON, Georgia
CLAIRE McCASKILL, Missouri DAVID VITTER, Louisiana
AMY KLOBUCHAR, Minnesota SAM BROWNBACK, Kansas
TOM UDALL, New Mexico MIKE JOHANNS, Nebraska
MARK WARNER, Virginia
MARK BEGICH, Alaska
Ellen Doneski, Staff Director
James Reid, Deputy Staff Director
Bruce Andrews, General Counsel
Ann Begeman, Republican Staff Director
Brian Hendricks, Republican General Counsel
Todd Bertoson, Republican Senior Counsel
Calendar No. 560
111th Congress Report
SENATE
2d Session 111-289
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EXPORT PROMOTION ACT OF 2010
_______
September 13, 2010.--Ordered to be printed
_______
Mr. Rockefeller, from the Committee on Commerce, Science, and
Transportation, submitted the following
REPORT
[To accompany S. 3084]
The Committee on Commerce, Science, and Transportation, to
which was referred the bill (S. 3084) to increase the
competitiveness of United States businesses, particularly
small- and medium-sized manufacturing firms, in interstate and
global commerce, foster job creation in the United States, and
for other purposes, having considered the same, reports
favorably thereon with an amendment (in the nature of a
substitute) and recommends that the bill (as amended) do pass.
Purpose of the Bill
The purpose of S. 3084, as amended, is to assist U.S.
businesses that are interested in exporting their products but
do not otherwise have the resources or know-how to pursue
international opportunities on their own. The bill would,
first, increase the activities and personnel resources of the
Department of Commerce (Department) to enhance its ability to
carry out its mission to promote U.S. exports and allow the
Department to increase coordination with States working on
similar efforts. Second, the bill would increase funding for
export grants available to industry associations and other non-
profit institutions. Third, the bill would require the
Department to consider export potential as a factor when
reviewing applications for manufacturing grants and innovation
grants. Finally, the bill would require the Secretary of
Commerce to report to Congress within 90 days of the date of
enactment on the tariff and nontariff barriers to trade imposed
by Columbia, South Korea, and Panama.
Background and Needs
In 2008, the share of gross domestic product (GDP) resulting
from U.S. exports reached 12.7 percent--its highest level since
1916. In 2008, the country exported approximately $1.7 trillion
in goods and services and the Department estimates that these
exports supported 10.3 million jobs. Based on these figures, a
new job was created for every $165,000 increase in export
sales.
Despite America's strong export sector, the U.S. has not come
close to realizing its full export potential according to
international trade experts.\1\ Less than one percent of U.S.
businesses engage in exporting, and nearly 60 percent of these
companies only trade in one foreign country. Moreover, exports
account for a smaller proportion of American GDP than other
leading exporting nations.
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\1\See, for example, the testimony of Liz J. Reilly, U.S. Chamber
of Commerce, before the Senate Committee on Commerce, Science and
Transportation, October 6, 2009.
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DEPARTMENT OF COMMERCE'S INTERNATIONAL TRADE ADMINISTRATION
Export promotion in the U.S. involves an array of efforts by
businesses, trade associations, and Federal, State, and local
government offices. Within the Federal government, 20 different
agencies are responsible for trade promotion activities, which
are connected through a Trade Promotion Coordinating Committee
(TPCC) chaired by the Department. The main export promotion
efforts at the Department are conducted by the International
Trade Administration (ITA).
The ITA's trade promotion efforts are spearheaded by the
United States and Foreign Commercial Service (USFCS or
Commercial Service), a subdivision of ITA that has trade
specialists in 109 U.S. cities and in 77 countries. Trade
specialists in these offices assist U.S. exporters at every
step of the export process, including market research, overseas
advertising, and in locating foreign buyers, distributors, and
business partners. The three priorities of the Commercial
Service are: 1) increasing the number of U.S. companies that
export overseas; 2) helping smaller companies expand to new
export markets; and 3) assisting exporters to overcome hurdles
in foreign markets.
Export assistance often takes the following forms:
Matchmaking and Counseling. The Commercial
Service's trade specialists often recommend that U.S.
companies develop a partnership with an overseas agent
or distributor and facilitate the creation of such
relationships. For example, trade specialists will
contact a group of pre-screened overseas businesses and
then narrow that list based on the specific needs of
the U.S. company. This work is done before a company
makes a trip overseas, saving it time and money.
Trade Missions. In 2008, the Commercial Service
supported trade missions to 27 overseas markets, with
420 U.S. companies participating. Such missions
introduce U.S. exporters to potential foreign buyers,
locate agents and distributors, identify joint venture
partners, and facilitate introductions with foreign
government officials.
Commercial Diplomacy and Advocacy. In certain
cases, the U.S. government will weigh in on behalf of a
U.S. company with a foreign government to assist in
resolving a trade issue. These services can be
particularly useful for firms exporting to emerging
markets.
In 2008, the Commercial Service assisted 426 U.S. companies
that had previously never exported goods, and assisted in more
than 3,000 transactions for firms that were exporting products
to new markets. More than 80 percent of the 12,000 export
transactions facilitated by the Department in 2008 were
reported by small- and medium-sized businesses. The Department
reports that these efforts support more than $67 billion in
exports. Despite this success, the Commercial Service has lost
approximately 200 employees since 2004 due to attrition and
budgetary constraints. S. 3084 would direct the Department to
replace those lost workers over the next five years, subject to
appropriations.
THE DEPARTMENT OF COMMERCE'S EXPORTECH PROGRAM
Developed in 2006 as a pilot program by the Manufacturing
Extension Partnership (MEP) and various other Federal and State
agencies, ExporTech assists U.S. companies in developing a
customized export plan. The companies meet for three one-day
sessions over a three-month period, and, in between sessions,
participants work with ExporTech counselors on developing their
export plans. Throughout the program, experts are brought in to
provide information and guidance to enable companies to
accelerate their export plans and speed their products to
market. In the final work session, a panel of experienced
business professionals reviews each participating company's
export growth plan and provides feedback. One of the keys to
ExporTech's success is that it customizes each program to the
participant's export needs. Each workshop includes a maximum of
eight participating companies, allowing it to provide
sufficient time and attention to each company's specific
challenges.
Since 2006, ExporTech has conducted 23 workshops with 180
companies. The average return on investment for these companies
is approximately 100:1. S. 3084 would provide $11 million to
allow ExporTech to expand its service offerings nationwide.
THE DEPARMENT OF COMMERCE'S MARKET DEVELOPMENT COOPERATOR PROGRAM
(MDCP)
Under MDCP, the ITA awards grants to support projects that
enhance the competitiveness of U.S. manufacturing and service
industries. MDCP grants establish partnerships between the
Department and non-profit industry groups to fund long-term
export promotion activities. Past award recipients have
included trade associations, State departments of trade,
regional associations of trade and economic development,
chambers of commerce, and non-profit industry organizations.
These groups are particularly effective in reaching small- and
medium-sized U.S. businesses that the Department would likely
not otherwise encounter. To qualify for a grant, an applicant
must pledge to pay a minimum of two-thirds of the project cost
and to sustain the project after the MDCP award period ends.
The ITA has awarded MDCP grants since 1993. On average the
program has generated $134 of exports for every Federal dollar
invested. Since 1997, the MDCP has helped U.S. industry
generate over $2.9 billion in exports. S. 3084 would authorize
$15 million for new MDCP export promotion grants.
Summary of Provisions
S. 3084, as reported, would direct the Department, subject to
appropriations, to increase by approximately 200 the number of
its employees whose primary responsibilities involve export
promotion. The bill would further authorize $25 million over
five years to the Department to be spent on improving export
promotion for rural businesses. Additionally, the bill contains
a Sense of the Senate section urging the Department to work
closely with the States and enter into agreements with State
trade agencies on export promotion to extend the reach of the
Department's export promotion efforts. The bill would also
require the Secretary to report to Congress on the tariff and
nontariff trade barriers imposed by Columbia, South Korea, and
Panama within 90 days of the date of enactment.
In order to increase exports in the short term, the bill
would authorize $30 million to be used by the Department to
expand efforts by current U.S. exporters and $11 million to be
used by the MEP to expand the ExporTech program. The bill would
also authorize $15 million to be used by the MDCP for export
promotion grants. In total, the bill would authorize $81
million to the Department to improve its export promotion
programs and direct it to increase staff levels by 200
personnel over five years.
Finally, the bill would allow for additional criteria to be
used in determining MEP and the Technology Innovation Program
(TIP) awards. Such expanded criteria would include whether an
application has significant potential for enhancing the
competitiveness of small- and medium-sized U.S. manufacturers
in the global marketplace.
Legislative History
On October 6, 2009, Senator Klobuchar held a hearing in the
Subcommittee on Competitiveness, Innovation, and Export
Promotion that examined the Federal government's role in
promoting exports. On March 5, 2010, Senator Klobuchar
introduced S. 3084 with Senator LeMieux. The bill was referred
to the Committee on Commerce, Science, and Transportation. On
June 9, 2010, the Committee met in open executive session and,
by a voice vote, ordered a substitute amendment to S. 3084
reported with an amendment by Senator Johanns.
The substitute amendment sponsored by Senators Klobuchar,
LeMieux and Kerry added four provisions to the introduced bill.
It authorized an additional $56 million to be used within 18
months by the Department for export promotion efforts. Of the
total funding, $30 million is expected to be used to target and
assist known U.S. exporters that have an immediate capacity to
grow their international sales; $11 million is to be used to
expand the ExporTech program; and $15 million is to be provided
to the MDCP. The substitute amendment also incorporated a Sense
of the Senate that the Department should work closely with the
States to extend the reach of its export promotion efforts.
In addition to the changes made to S. 3084 by the substitute,
the Committee adopted an amendment by Senator Johanns that
would require the Secretary of Commerce, within 90 days of the
date of enactment, to report to Congress on the tariff and
nontariff trade barriers imposed by Columbia, South Korea, and
Panama on U.S. exports.
Estimated Costs
In accordance with paragraph 11(a) of rule XXVI of the
Standing Rules of the Senate and section 403 of the
Congressional Budget Act of 1974, the Committee provides the
following cost estimate, prepared by the Congressional Budget
Office:
June 28, 2010.
Hon. John D. Rockefeller IV,
Chairman, Committee on Commerce, Science, and Transportation,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 3084, the Export
Promotion Act of 2010.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Susan Willie.
Sincerely,
Douglas W. Elmendorf.
Enclosure.
S. 3084--Export Promotion Act of 2010
Summary: S. 3084 would authorize the International Trade
Administration (ITA) to increase the number of employees that
promote the participation of United States companies in
international markets. The bill also would authorize
appropriations for various programs in the Department of
Commerce that improve the competiveness of domestic companies
in foreign markets.
Based on information from the ITA, CBO estimates that
implementing S. 3084 would cost $248 million over the 2011-2015
period, assuming the appropriation of the necessary amounts.
Enacting S. 3084 would not affect direct spending or revenues;
therefore, pay-as-you-go procedures would not apply.
S. 3084 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would not affect the budgets of state, local, or tribal
governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 3084 is shown in the following table.
The costs of this legislation fall within budget function 370
(commerce and housing credit).
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By fiscal year in millions of dollars--
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2011 2012 2013 2014 2015 2011-2015
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CHANGES IN SPENDING SUBJECT TO APPROPRIATIONGlobal Business Development:
Estimated Authorization Level............................ 12 24 36 48 59 179
Estimated Outlays........................................ 10 22 34 45 57 168
Rural Export Initiative:
Authorization Level...................................... 5 5 5 5 5 25
Estimated Outlays........................................ 4 5 5 5 5 24
Global Business Development:
Authorization Level...................................... 30 0 0 0 0 30
Estimated Outlays........................................ 26 4 0 0 0 30
ExporTech Program:
Authorization Level...................................... 11 0 0 0 0 11
Estimated Outlays........................................ 9 2 0 0 0 11
Market Development Cooperator:
Authorization Level...................................... 15 0 0 0 0 15
Estimated Outlays........................................ 13 2 0 0 0 15 Total Changes:...........................................
Estimated Authorization Level........................ 73 29 41 53 64 260
Estimated Outlays.................................... 62 35 39 50 62 248
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Basis of estimate: For this estimate, CBO assumes that the
bill will be enacted before the end of fiscal year 2010, that
the necessary amounts will be appropriated for each year, and
that spending will follow historical patterns for similar
programs. CBO estimates that implementing S. 3084 would cost
$248 million over the 2011-2015 period, assuming appropriation
of the necessary amounts.
Global Business Development
S. 3084 would require the ITA to increase the number of
employees whose primary responsibilities involve promoting the
participation of U.S. firms in foreign markets. Within five
years of enactment, the agency would be required to increase
the number of staff performing those activities to the same
number that performed this work in fiscal year 2004. Based on
information from the ITA, CBO expects that the agency would
need to hire about 210 additional employees over five years to
reach that staffing level. We estimate that implementing those
requirements would cost $168 million over the 2011-2015 period.
Other Export Initiatives
The bill would authorize the appropriation of $81 million
for a number of programs designed to improve the
competitiveness of U.S. businesses in international markets.
CBO estimates that implementing those provisions would cost $80
million over the 2011-2015 period. Those costs would include:
$24 million for a program to improve the
access of rural businesses to the global marketplace;
$30 million to promote the expansion of small-
and medium-sized businesses in foreign markets;
$11 million to expand ExporTech, a program
jointly sponsored by the ITA, the National Institute of
Standards and Technology, and educational, state, and
private institutions that provides technical assistance
to small- and medium-sized businesses that want to
expand into international markets; and
$15 million to establish partnerships between
public institutions and private enterprises through the
ITA's Market Development Cooperator Program (MDCP). The
MDCP provides technical and financial assistance to
nonprofit groups representing manufacturing and service
industries to support projects that improve their
industries' competitiveness in foreign markets.
Pay-as-you-go considerations: None.
Intergovernmental and private-sector impact: S. 3084
contains no intergovernmental or private-sector mandates as
defined in UMRA and would not affect the budgets of state,
local, or tribal governments.
Estimate prepared by: Federal Costs: Susan Willie; Impact
on State, Local, and Tribal Governments: Elizabeth Cove
Delisle; Impact on the Private Sector: Sam Wice.
Estimate approved by: Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
Regulatory Impact Statement
In accordance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee provides the
following evaluation of the regulatory impact of the
legislation, as reported:
NUMBER OF PERSONS COVERED
The bill does not impose any new rules or otherwise modify
the jurisdictional reach of the Department. Consequently, the
Committee does not expect that it will subject any additional
individuals or businesses to regulations.
ECONOMIC IMPACT
The bill would authorize an increase of approximately 200
employees and $81 million to the Department for specific export
promotion programs. Based on the historical return on
investment of these programs, S. 3084 should support the
creation of export-based American jobs.
PRIVACY
The Committee does not anticipate that the bill would have
any adverse impact on the personal privacy of individuals.
PAPERWORK
While the Committee does not anticipate a major increase in
paperwork burdens resulting from the passage of this
legislation, the legislation would require one report from the
Department to be issued within 90 days of the date of
enactment. The Secretary of Commerce, in consultation with the
United States Trade Representative (USTR), must report to
Congress on the tariff and nontariff trade barriers imposed by
Columbia, South Korea, and Panama on U.S. exports. USTR
currently produces a similar report--the National Trade
Estimate Report--which will significantly assist in the
creation of the Department of Commerce report.
Congressionally Directed Spending
In compliance with paragraph 4(b) of rule XLIV of the
Standing Rules of the Senate, the Committee provides that no
items contained in the bill, as reported, meet the definition
of congressionally directed spending items under the rule.
Section-by-Section Analysis
Section 1. Short title.
Section 1 would provide that the bill may be cited as the
Export Promotion Act of 2010.
Section 2. Commerce Department global business development and
promotion activities.
Section 2 would direct the Department to increase the number
of full-time employees whose primary responsibilities involve
promoting or facilitating participation by U.S. businesses in
the global marketplace. The number of employees would be equal
to the number at the Department in 2004. In carrying out the
section, the Department would take such action as necessary to
ensure that its global marketplace promotional activities
include efforts focused on small and medium-sized businesses.
The section would authorize appropriations of such sums as
necessary for fiscal years 2011 through 2015.
Section 3. Improved access to global markets for rural businesses.
Section 3 would authorize $25 million over 5 years to the
Department to focus its activities on improving access to the
global marketplace for rural businesses.
Section 4. Additional funding for interstate commerce and global
business development activities of the Department of Commerce.
Section 4 would authorize $30 million in additional funds to
be used within 18 months by the Department to promote or
facilitate participation by U.S. businesses in the global
marketplace. In obligating and expending the funds, the
Secretary would give preference to activities that assist small
and medium-sized businesses, create or sustain the greatest
number of jobs in the United States, and obtain the maximum
return on investment.
Section 5. Additional funding for the ExporTech program.
Section 5 would authorize $11 million to be used within 18
months by the MEP to expand the ExporTech program.
Section 6. Additional funding for the market development cooperator
program of the Department of Commerce.
Section 6 would authorize $15 million for the ITA to award
MDCP grants in order to establish public-private partnerships
to underwrite a portion of the start-up costs for new export
projects. These funds must be used within 18 months. The
underwriting for each project would not exceed one-third of the
total start-up costs or $500,000, whichever is less. In
obligating and expending the funds, the Secretary would give
preference to small and medium-sized businesses and to
activities that create or sustain the greatest number of jobs
in the United States and obtain the maximum return on
investment.
Section 7. Hollings manufacturing extension partnerships; technology
innovation program.
Section 7 would allow for additional criteria to be used in
determining MEP and TIP awards. Such expanded criteria would
include whether an application has significant potential for
enhancing the competitiveness of small and medium-sized U.S.
manufacturers in the global marketplace.
Section 8. Sense of the Senate concerning Federal collaboration with
States on export promotion issues.
Section 8 would provide the Sense of the Senate that the
Secretary of Commerce should enhance Federal collaboration with
the States on export promotion by: (1) providing the necessary
training to the staff at State international trade agencies;
and (2) entering into agreements with State international trade
agencies to deliver USFCS offerings in their local communities
in order to extend the outreach of USFCS programs.
Section 9. Report on tariff and nontariff barriers.
Section 9 would require the Secretary of Commerce within 90
days to report to Congress on the tariff and nontariff barriers
imposed by Columbia, South Korea, and Panama on U.S. exports.
Changes in Existing Law
In compliance with paragraph 12 of rule XXVI of the Standing
Rules of the Senate, changes in existing law made by the bill,
as reported, are shown as follows (existing law proposed to be
omitted is enclosed in black brackets, new material is printed
in italic, existing law in which no change is proposed is shown
in roman):
NATIONAL INSTITUTE OF STANDARDS AND TECHNOLOGY ACT
SEC. 25. REGIONAL CENTERS FOR THE TRANSFER OF MANUFACTURING TECHNOLOGY.
[15 U.S.C. 278k]
(a) Creation and Support of Centers; affiliations; merit
review in determining awards; objectives.--The Secretary,
through the Director and, if appropriate, through other
officials, shall provide assistance for the creation and
support of Regional Centers for the Transfer of Manufacturing
Technology (hereafter in this Act referred to as the
``Centers''). Such centers shall be affiliated with any United
States-based nonprofit institution or organization, or group
thereof, that applies for and is awarded financial assistance
under this section in accordance with the description published
by the Secretary in the Federal Register under subsection
(c)(2). Individual awards shall be decided on the basis of
merit review. The objective of the Centers is to enhance
productivity and technological performance in United States
manufacturing through--
(1) the transfer of manufacturing technology and
techniques developed at the Institute to Centers and,
through them, to manufacturing companies throughout the
United States;
(2) the participation of individuals from industry,
universities, State governments, other Federal
agencies, and, when appropriate, the Institute in
cooperative technology transfer activities;
(3) efforts to make new manufacturing technology and
processes usable by United States-based small- and
medium-sized companies;
(4) the active dissemination of scientific,
engineering, technical, and management information
about manufacturing to industrial firms, including
small- and medium-sized manufacturing companies; and
(5) the utilization, when appropriate, of the
expertise and capability that exists in Federal
laboratories other than the Institute.
(b) Activities of Centers.--The activities of the Centers
shall include--
(1) the establishment of automated manufacturing
systems and other advanced production technologies,
based on research by the Institute, 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; and
(3) loans, on a selective, short-term basis, of items
of advanced manufacturing equipment to small
manufacturing firms with less than 100 employees.
(c) Duration and Amount of Support; Program Descriptions;
Applications; Merit Review; Evaluations of Assistance;
Applicability of Patent Law.--
(1) The Secretary may provide financial support to
any Center created under subsection (a) for a period
not to exceed six years. The Secretary may not provide
to a Center more than 50 percent of the capital and
annual operating and maintenance funds required to
create and maintain such Center.
(2) The Secretary shall publish in the Federal
Register, within 90 days after the date of the
enactment of this section, a draft description of a
program for establishing Centers, including--
(A) a description of the program;
(B) procedures to be followed by applicants;
(C) criteria for determining qualified
applicants;
(D) criteria, including those listed under
paragraph (4), for choosing recipients of
financial assistance under this section from
among the qualified applicants; and
(E) maximum support levels expected to be
available to Centers under the program in the
fourth through sixth years of assistance under
this section.
The Secretary shall publish a final description under
this paragraph after the expiration of a 30-day comment
period.
(3)(A) Any nonprofit institution, or group thereof,
or consortia of nonprofit institutions, including
entities existing on August 23, 1988, may submit to the
Secretary an application for financial support under
this subsection, in accordance with the procedures
established by the Secretary and published in the
Federal Register under paragraph (2).
(B) In order to receive assistance under this
section, an applicant for financial assistance under
subparagraph (A) shall provide adequate assurances that
non-Federal assets obtained from the applicant and the
applicant's partnering organizations will be used as a
funding source to meet not less than 50 percent of the
costs incurred for the first 3 years and an increasing
share for each of the last 3 years. For purposes of the
preceding sentence, the costs incurred means the costs
incurred in connection with the activities undertaken
to improve the management, productivity, and
technological performance of small- and medium-sized
manufacturing companies.
(C) In meeting the 50 percent requirement, it is
anticipated that a Center will enter into agreements
with other entities such as private industry,
universities, 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. All non-Federal costs[,]
contributed by such entities and determined by a Center
as programmatically reasonable and allocable under MEP
program procedures are includable as a portion of the
Center's contribution.
(D) Each applicant under subparagraph (A) shall also
submit a proposal for the allocation of the legal
rights associated with any invention which may result
from the proposed Center's activities.
(4) The Secretary shall subject each such application
to merit review. In making a decision whether to
approve such application and provide financial support
under this subsection, the Secretary shall consider at
a minimum (A) 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, (B) the quality
of service to be provided, (C) geographical diversity
and extent of service area, and (D) the percentage of
funding and amount of in-kind commitment from other
sources.
(5) Each Center which receives financial assistance
under this section shall be evaluated during its third
year of operation by an evaluation panel appointed by
the Secretary. Each such evaluation panel shall be
composed of private experts, none of whom shall be
connected with the involved Center, and Federal
officials. An official of the Institute shall chair the
panel. Each evaluation panel shall measure the involved
Center's performance against the objectives specified
in this section. The Secretary shall not provide
funding for the fourth through the sixth years of such
Center's operation unless the evaluation is positive.
If the evaluation is positive, the Secretary may
provide continued funding through the sixth year at
declining levels. A Center that has not received a
positive evaluation by the evaluation panel shall be
notified by the panel of the deficiencies in its
performance and shall be placed on probation for one
year, after which time the panel shall reevaluate the
Center. If the Center has not addressed the
deficiencies identified by the panel, or shown a
significant improvement in its performance, the
Director shall conduct a new competition to select an
operator for the Center or may close the Center. After
the sixth year, a Center may receive additional
financial support under this section if it has received
a positive evaluation through an independent review,
under procedures established by the Institute. Such an
independent review shall be required at least every two
years after the sixth year of operation. Funding
received for a fiscal year under this section after the
sixth year of operation shall not exceed one third of
the capital and annual operating and maintenance costs
of the Center under the program.
(6) The provisions of chapter 18 of title 35, United
States Code, shall (to the extent not inconsistent with
this section) apply 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.
(d) Acceptance of Funds.--
(1) In general.--In addition to such sums as may be
appropriated to the Secretary and Director to operate
the Centers program, the Secretary and Director also
may accept funds from other Federal departments and
agencies and under section 2(c)(7) from the private
sector for the purpose of strengthening United States
manufacturing.
(2) Allocation of funds.--
(A) Funds accepted from other Federal
departments or agencies.--The Director shall
determine whether funds accepted from other
Federal departments or agencies shall be
counted in the calculation of the Federal share
of capital and annual operating and maintenance
costs under subsection (c).
(B) Funds accepted from the private sector.--
Funds accepted from the private sector under
section 2(c)(7), if allocated to a Center,
shall not be considered in the calculation of
the Federal share under subsection (c) of this
section.
(e) 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) In general.--The MEP Advisory Board shall
consist of 10 members broadly representative of
stakeholders, to be appointed by the Director.
At least 2 members shall be employed by or on
an advisory board for the Centers, and at least
5 other members shall be from United States
small businesses in the manufacturing sector.
No member 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) Classes.--The original members of the MEP
Advisory Board shall be appointed to 3 classes.
One class of 3 members shall have an initial
term of 1 year, one class of 3 members shall
have an initial term of 2 years, and one class
of 4 members shall have an initial term of 3
years.
(D) 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.
(E) Serving consecutive terms.--Any person
who has completed two consecutive full terms of
service on the MEP Advisory Board shall
thereafter be ineligible for appointment during
the one-year period following the expiration of
the second such term.
(3) Meetings.--The MEP Advisory Board shall meet not
less than 2 times annually, and provide to the
Director--
(A) advice on Manufacturing Extension
Partnership programs, plans, and policies;
(B) assessments of the soundness of
Manufacturing Extension Partnership plans and
strategies; and
(C) assessments of current performance
against Manufacturing Extension Partnership
program plans.
(4) Federal Advisory Committee Act.--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.
(5) Report.--The MEP Advisory Board shall transmit an
annual 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. Such report shall address the status of the
program established pursuant to this section 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.
(f) Competitive grant program.--
(1) Establishment.--The Director shall establish,
within the Centers program under this section and
section 26 of this Act, 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.--The purpose of the program under this
subsection is to develop projects to solve new or
emerging manufacturing problems as determined by the
Director, in consultation with the Director of the
Centers program, the Manufacturing Extension
Partnership Advisory Board, and small and medium-sized
manufacturers. One or more themes for the competition
may be identified, which may vary from year to year,
depending on the needs of manufacturers and the success
of previous competitions. These themes shall be related
to projects associated with manufacturing extension
activities, including supply chain integration and
quality management, and including the transfer of
technology based on the technological needs of
manufacturers and available technologies from
institutions of higher education, laboratories, and
other technology producing entities, or extend beyond
these traditional areas.
(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 Manufacturing
Extension Partnership Advisory Board.
(5) Selection.--Awards under this subsection shall be
peer reviewed and competitively awarded. The Director
shall select proposals to receive awards--
(A) that utilize innovative or collaborative
approaches to solving the problem described in
the competition;
(B) that will improve the competitiveness of
industries in the region in which the Center or
Centers are located; and
(C) that will contribute to the long-term
economic stability of that region.
(6) Program contribution.--Recipients of awards under
this subsection shall not be required to provide a
matching contribution.
(7) Global marketplace projects.--In making awards
under this subsection, the Director, in consultation
with the Manufacturing Extension Partnership Advisory
Board and the Secretary of Commerce, 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 and may give a preference to
applications for such projects to the extent the
Director deems appropriate, taking into account the
broader purposes of this subsection.