Both the House and Senate have passed the fiscal year 2017 “National Defense Authorization Act." The NDAA is a bill, passed annually, that authorizes and sets policy for defense programs at the Defense and Energy Departments, including defense R&D.
Yesterday, the Senate passed the fiscal year 2017 “National Defense Authorization Act” (NDAA) conference bill with a vote of 92 to 7. The House passed the bill on Dec. 2 with a vote of 375 to 34. It now heads to President Obama, who is expected to sign it.
The NDAA establishes policy for the Department of Defense as well as for national security-related activities in the Department of Energy. With yesterday’s vote, Congress has now successfully passed a new version of the bill every year for the past 55 years. Each year’s NDAA contains numerous provisions and line-item funding authorizations that concern R&D and defense technologies.
Research and engineering to be directed at under secretary level
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.
Currently, the Assistant Secretary for R&E reports to the Under Secretary for AT&L and has jurisdiction over all DOD activities in R&D and in equipment testing and evaluation. However, as reported in FYI #83, this year the Senate proposed raising R&E responsibility to the under secretary level to facilitate the rapid technological development called for under DOD’s Third Offset Strategy (see FYIs #88 and #138). DOD and the Obama administration, though, resisted that proposal, arguing that it is important to keep acquisition and R&E well integrated. The NDAA conference report explains that Congress chose not to heed this advice because the conferees feel the two new positions will exist in productive tension with each other:
The conferees believe the technology and acquisition missions and cultures are distinct. The conferees expect that the Under Secretary of Defense for Research and Engineering would take risks, press the technology envelope, test and experiment, and have the latitude to fail, as appropriate. Whereas the conferees would expect the Under Secretary of Defense for Acquisition and Sustainment to focus on timely, cost-effective delivery and sustainment of products and services, and thus seek to minimize any risks to that objective.
Some will argue that the agreement exacerbates the technology ‘valley of death.’ The conferees acknowledge that there will be seams in any organizational construct, but also believe that this seam creates a healthy tension that can be mitigated through effective leadership and management. As an Under Secretary, third in precedence, the conferees expect that the ‘chief technology officer’ would have the stature and resources to drive innovation throughout the Department, including as needed through development and implementation of innovative policies and practices. At the same time, the conferees would expect the Under Secretary of Defense for Acquisition and Sustainment to challenge any advanced technology ideas that the Under Secretary cannot confidently deliver on within cost, schedule, and performance objectives, and shape those efforts appropriately.
Sec. Carter’s DIUx project on short leash
One of the initiatives that Defense Secretary Ash Carter has been heavily promoting as part of DOD’s Third Offset Strategy is the new Defense Innovation Unit Experimental (DIUx), which aims to improve the department’s interaction with agile, innovation-focused firms (see FYIs #88 and #138). To date, DIUx has opened offices in Silicon Valley, Boston, and Austin, Texas, and Carter has arranged for the unit to report directly to him. However, some members of Congress have expressed skepticism, reflected in the new NDAA, that this effort will be successful.
Although funding authorizations in the NDAA do not bind congressional appropriators, the bill sends a strong message by zeroing out $30 million in funds that DOD has requested for DIUx (under the line-item “Defense Technology Innovation”) through DOD’s research, development, testing, and evaluation accounts. (The administration also requests almost $15 million, which the NDAA does not specifically address, through DOD’s operations and management accounts.) The bill also places significant restrictions on the expenditure of whatever funds are ultimately appropriated to DIUx until DOD delivers a report to Congress detailing the department’s justification and vision for the offices.
The conference report explains that, while the conferees support DIUx in principle, they are concerned that the offices are not sufficiently concentrating on delivering “game-changing technologies” and that their “customer base is not as diverse as expected.” Moreover, the report suggests that DIUx is not effectively integrated with the rest of DOD’s “innovation ecosystem,” thereby inhibiting the offices’ ability “to multiply [their] effectiveness and networking potential.” The report also expresses skepticism that DOD has reformed its acquisition and contracting procedures to the point where the department can successfully engage “non-traditional vendors,” and argues that, for this reason, vendors who do work with DIUx could ultimately become frustrated and alienated from DOD.
Directed energy weapons
Some members of Congress have taken a strong interest in efforts to perfect and implement directed energy weapons, a category that encompasses lasers, microwave weapons, and related technologies.
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.
Provisions affecting DOD labs
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. As reported in FYI #125, this “section 219” authority has proven popular with lab directors, who have sought certain enhancements to it from Congress. 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.
- The upper threshold for minor construction projects is increased from $4 million to $6 million, and the authorization for this use of section 219 funds is extended to the year 2025.
However, one requested change, allowing section 219 funds to accumulate from year to year, was not included. [Update, 5/17/2017: Accumulation of section 219 funds for infrastructure projects was permitted through the 2014 NDAA, but there are often difficulties in implementing this provision.]
Recruitment and retention of technical talent. As reported in FYIs #83 and #138, DOD is currently working to improve its ability to attract technical talent. The NDAA includes several provisions designed to meet that goal, 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.
Provisions affecting NNSA labs
Maintenance at labs and other facilities. As reported in FYI #107, 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.
As reported in FYIs #55, #81, and #84, Congress, led by House Environment Subcommittee Chairman Jim Bridenstine (R-OK), has been pushing DOD and NOAA to improve their performance in satellite-based environmental monitoring, and to increase their use of commercial space services.
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. As reported in FYI #76, bills introduced this year in the House and Senate had proposed making the programs permanent and increasing the proportion of extramural R&D funds that must be set aside for the programs. This bill leaves the set aside unchanged.
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.
Advanced nuclear reactors. In July, the House amended the Senate-passed version of the NDAA to include the provisions of the “Nuclear Energy Innovation Capabilities Act,” which mandates new R&D on advanced nuclear reactors (see FYIs #27 and #48). However, these provisions were not included in the final NDAA conference bill.
Selected provisions relating to nuclear weapons
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, but, as reported in FYI #19, DOE urged cancelation of the facility on the grounds that it is excessively expensive.
Prohibition on R&D for LEU-based naval fuel systems. The new NDAA generally prohibits the use of NNSA funds for R&D on naval nuclear fuel systems based on low-enriched uranium (LEU). The Obama administration supports such R&D because of an LEU-based system’s potential benefits for nuclear nonproliferation efforts. The NDAA does allow $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. The term “limited” had been used to minimize frictions in relations with Russia and China that the development of a large-scale system could cause. 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.” This qualifier was absent from the House’s version of the NDAA. As reported in FYI #66, the feasibility of space-based missile defense is a subject with which the physical sciences community has long been engaged.