LegiStorm

Summary:

The Hollings Manufacturing Extension Partnership (MEP) program is a national network of centers established by the Omnibus Trade and Competitiveness Act (P.L. 100-418). MEP centers provide custom services to small and medium-sized manufacturers (SMMs) to improve production processes, upgrade technological capabilities, and facilitate product innovation. Operating under the auspices of the National Institute of Standards and Technology (NIST), the MEP system includes centers in all 50 states and Puerto Rico. NIST provides funding to support MEP center operations, with matching funds provided by nonfederal sources (e.g., state governments, fees for services). Initially established with a goal of transferring technology developed in federal laboratories to SMMs, MEP shifted its focus in the early 1990s to responding to needs identified by SMMs, including off-the-shelf technologies and business advice. As MEP evolved, its focus shifted to reducing manufacturing costs through lean production, quality, and other programs targeting plant efficiencies and to increasing profitability through growth. Current MEP efforts focus on innovation and growth strategies, cybersecurity, commercialization, lean production, process improvements, workforce training, supply chain optimization, and exporting. In 2017, NIST completed a system-wide revamp of MEP to better align center funding levels with the national distribution of manufacturing activity and to result in a single center in each state and Puerto Rico. Other objectives included aligning center activities to the NIST MEP strategic plan; aligning center activities with state and local strategies; providing opportunities for new partnering arrangements; and restructuring and reinvigorating the boards of local centers. As originally conceived, the centers were intended to become self-supporting after six years. The original legislation provided for a 50% federal cost-share for the first three years of operation, followed by declining levels of federal support for the final three years; federal funding after a center’s sixth year of operation was prohibited. In 1998, Congress eliminated the prohibition on federal funding after year six. In 2017, Congress authorized NIST to provide up to 50% of the capital and annual operating and maintenance funds required to establish and support a center. Previously, the federal cost-share was limited to 50% for a center’s first three years of operation, 40% in year four, and one-third in fifth and subsequent years. The MEP program has, at times, been included in discussions surrounding termination of federal programs that provide direct support for industry. Invoking the intent of the original legislation, President George W. Bush proposed in his FY2009 budget to eliminate federal funding for MEP and to provide for “the orderly change of MEP centers to a self-supporting basis.” Nevertheless, Congress appropriated $110 million for the program. Proponents assert that SMMs play a central role in the U.S. economy and that the MEP system provides assistance not otherwise available to SMMs. Some opponents have asserted that such services are available from other sources and that MEP inappropriately shifts a portion of the costs of these services to taxpayers. Continued federal support for MEP centers remains a point of contention. In his FY2018 budget, President Trump sought to eliminate federal support for MEP centers, requesting $6.0 million for the program’s “orderly wind down.” The House committee-reported appropriations bill included $100 million for MEP, while the Senate committee-reported bill included $130.0 million. The Consolidated Appropriations Act, 2018 (P.L. 115-141), provides $140.0 million for MEP for FY2018. President Trump has again proposed the elimination of MEP in his FY2019 budget. As Congress makes appropriation decisions, it may continue to discuss support for MEP in the context of the federal government’s role in bolstering innovation and competitiveness, and in the context of the appropriate federal role in such activities.