FY2017 National Defense Authorization Act- R&D

This bill authorizes FY2017 appropriations and sets forth policies regarding the military activities of the Department of Defense (DOD), military construction, and the national security programs of the Department of Energy (DOE).

Related FY2017 budgets:

The bill authorizes appropriations, but does not provide budget authority, which is provided by appropriations legislation.

The bill authorizes appropriations to DOD for:

  • Procurement;
  • Research, Development, Test, and Evaluation;
  • Operation and Maintenance;
  • Cooperative Threat Reduction;
  • Working Capital Funds;
  • the National Defense Sealift Fund;
  • Chemical Agents and Munitions Destruction;
  • Defense-Wide Drug Interdiction and Counter-Drug Activities;
  • the Defense Inspector General;
  • the Defense Health Program; and
  • the National Sea-Based Deterrence Fund.

The bill also authorizes appropriations for Overseas Contingency Operations (OCO), which are exempt from discretionary spending limits. OCO appropriations authorized in the bill support base budget requirements as well as OCO activities.

The bill authorizes the FY2017 personnel strengths for active duty and reserve forces and sets forth policies regarding:

  • military personnel;
  • compensation and other personnel benefits;
  • health care;
  • acquisition policy and management;
  • DOD organization and management;
  • civilian personnel matters;
  • matters relating to foreign nations;
  • cooperative threat reduction; and
  • strategic programs, cyber, and intelligence matters.

The bill authorizes appropriations and sets forth policies regarding military construction; base realignment and closure (BRAC) activities; and DOE national security programs, including the National Nuclear Security Administration. The bill prohibits an additional BRAC round.

The bill includes provisions that affect the application of the Endangered Species Act to the greater sage grouse, the lesser prairie chicken, and the American burying beetle.

The bill also amends the Uniform Code of Military Justice (UCMJ) to reorganize the UCMJ and revise the procedures and structure of the military justice system.

R&D Highlights:

The new NDAA mandates that in February 2018 the existing position of Under Secretary of Defense for Acquisition, Technology, and Logistics (AT&L) will be replaced by two positions: Under Secretary for Research and Engineering (R&E) (also known as “chief technology officer”) and Under Secretary for Acquisition and Sustainment.

The new NDAA requires DOD to establish a new position for a senior official with principal responsibility for directed energy weapons. Supported by DOD’s existing High Energy Laser Joint Technology Office, now redesignated the Joint Directed Energy Transition Office, that official will develop a strategic plan for moving directed energy weapons through development and prototyping into acquisition, and will otherwise support DOD’s efforts in the field. The new official may use funds for basic research, applied research, advanced technology development, prototyping, studies and analyses, and organizational support.

The legislation also authorizes all requested funds for directed energy weapons. However, it authorizes neither a special $25 million directed energy prototyping program included by the Senate as a “defense technology offset,” nor $15 million that the House specially authorized to reclaim schedule slippage on a low power laser demonstrator. It also does not authorize a cooperative program with Israel for defensive directed energy technology that was included by the House, although it does call for a report on the potential of such a program.

Several provisions of the 2017 NDAA address R&D conducted within DOD.

Laboratory Quality Enhancement Program. This newly mandated program will comprise four panels of DOD officials who will make recommendations to the Defense Secretary relating to the policies and practices of “science and technology reinvention laboratories.” These organizations include the Army Research Laboratory, the Naval Research Laboratory, the Office of Naval Research, and the Air Force Research Laboratory, and are listed in full in Sec. 1105 of the 2010 NDAA. The respective jurisdictions of the four panels are:

  • Personnel, workforce development, and talent management;
  • Facilities, equipment, and infrastructure;
  • Research strategy, technology transfer, and industry and university partnerships; and
  • Governance and oversight processes.

Enhancements to DOD labs’ discretionary spending authority. Under Sec. 219 of the 2009 NDAA (last revised by the 2014 NDAA), DOD labs may, under their own authority, use a small percentage of their budget to conduct special R&D and technology transfer projects, perform maintenance and construction, and fund other activities that enhance their ability to recruit scientists and engineers.  The new NDAA delivers four important changes:

  • Due to expire at the end of fiscal year 2020, the authority will now be permanent.
  • The proportion of lab funds available for use under the authority will be changed from an upper limit of 3 percent to a range of between 2 and 4 percent.
  • Lab directors may now charge customers of their services a fee of up to 4 percent of the cost of performance in order to raise funds for use under the labs’ section 219 authority.
  • Infrastructure projects permitted under the authority are no longer limited to “minor construction” projects costing $4 million or less.

However, one requested change, allowing section 219 funds to accumulate from year to year, was not included.

Recruitment and retention of technical talent. The NDAA includes several provisions designed to recruit and retain technical talent, including:

  • Allowing DOD to establish a “public–private talent exchange,” make noncompetitive appointments that last up to 18 months to address “critical hiring needs,” and use direct-hire authority to recruit students and recent graduates of post-secondary institutions;
  • Modifying and making permanent the direct-hire authority of defense labs and certain other organizations, including the Defense Advanced Research Projects Agency, to recruit research and engineering personnel;
  • Allowing DOD to establish a pilot program to use higher pay rates to recruit and retain personnel for “positions responsible for managing and performing complex, high-cost research and technology development efforts”; and
  • Extending DOD direct-hire authority, for fiscal years 2017 and 2018 only, to encompass personnel hired at test, evaluation, and industrial facilities.

Micro-purchase threshold raised. For federally funded programs at universities and independent or nonprofit research institutes, and for the basic research activities of DOD science and technology reinvention laboratories (see “Laboratory Quality Enhancement Program” above), the threshold defining “micro-purchases” will be raised from $3,000 to $10,000, facilitating procurement of relatively low-cost supplies.

NNSA facilities are currently facing a backlog in deferred maintenance of some $3.7 billion, and the Obama administration’s budget request for fiscal year 2017 asked for new funding to arrest the backlog’s growth. The new NDAA’s funding authorization meets that request, and authorizes a further $106 million to address “high-priority” needs in preventative and deferred maintenance. The authorization does not, however, guarantee that the funds will be appropriated.

Laboratory-directed R&D overhead. The new NDAA initiates a three-year pilot program at NNSA that will exempt laboratory-directed R&D from overhead charges.

Other R&D and innovation-focused provisions

Space-based environmental monitoring and weather data. The new NDAA instructs DOD to make several changes to its satellite-based environmental monitoring activities, including:

  • Formulating a plan to transfer acquisition authority for space-based environmental monitoring missions from the Air Force to the National Reconnaissance Office;
  • Establishing a mechanism to improve coordination and collaboration with the National Oceanic and Atmospheric Administration in space-based environmental monitoring; and
  • Establishing a pilot project to assess the viability of commercial satellite weather data to support DOD requirements.

Defense R&D Rapid Innovation Program. DOD maintains a Rapid Innovation Fund, which issues awards of up $3 million that allow promising R&D projects to circumvent some of the administrative hurdles the department’s ordinary acquisitions process presents. Due to expire in 2023, the Defense R&D Rapid Innovation Program will now be permanent.

SBIR/STTR programs. Due to expire at the end of fiscal year 2017, the new NDAA extends through fiscal year 2022 the federal government’s Small Business Innovation Research and Small Business Technology Transfer programs across all R&D-funding agencies.

Manufacturing Engineering Education Program. The new NDAA instructs DOD to establish a grant program targeted to industry, non-profit institutions, and institutions of higher education in order to support projects that will improve education in manufacturing engineering.

R&D and military educational institutions. The new NDAA authorizes the National Defense University and Defense Acquisition University to enter into cooperative R&D agreements. It also establishes a pilot program to foster “enhanced interaction” between the Defense Advanced Research Projects Agency and the military service academies.

Nuclear weapons dismantlement. The new NDAA caps at $56 million the amount of appropriated funds that the National Nuclear Security Administration may use for the dismantlement and disposition of nuclear weapons. It also prohibits the use of any funds appropriated to NNSA in fiscal years 2017 through 2021 for the acceleration of nuclear weapons dismantlement. The legislation does make room for certain exceptions to this provision.

MOX facility. The new NDAA directs DOE to continue construction of a mixed oxide (MOX) fuel fabrication facility in South Carolina, and authorizes expenditure of $340 million, which is $70 million more than the Obama administration requested. The purpose of the facility is to convert plutonium from dismantled nuclear warheads into commercially usable nuclear fuel.

Prohibition on R&D for LEU-based naval fuel systems. The NDAA allows for $5 million to be spent on “initial planning and early research and development” in fiscal year 2017, and demands that future budget requests for such R&D be included under a “defense nuclear nonproliferation” line item.

Ballistic missile defense. The new NDAA signals a shift in U.S. policy by replacing the word “limited” with the word “robust” in describing the ballistic missile defense system the nation is aiming to develop. Among its various provisions relating to ballistic missile defense, the legislation permits DOD’s Missile Defense Agency to begin planning for the development of a “non-terrestrial missile defense intercept and defeat capability” if it determines that “such potential program of record is technically feasible and could be deployed by December 31, 2027.”

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