(a) Limitation on Prototype Project Duration.—A prototype project shall be completed within two years of its initiation.

(b) Merit-based Selection Process.—A prototype project shall be selected by the service acquisition executive of the military department concerned through a merit-based selection process that identifies the most promising, innovative, and cost-effective prototypes that address one or more of the elements set forth in subsection (c)(1) of section 2447b of this title and are expected to be successfully demonstrated in a relevant environment.

(c) Type of Transaction.—Prototype projects shall be funded through contracts, cooperative agreements, or other transactions.

(d) Funding Limit.—(1) Each prototype project may not exceed a total amount of $10,000,000 (based on fiscal year 2017 constant dollars), unless—

(A) the Secretary of the military department, or the Secretary's designee, approves a larger amount of funding for the project, not to exceed $50,000,000; and

(B) the Secretary, or the Secretary's designee, submits to the congressional defense committees, within 30 days after approval of such funding for the project, a notification that includes—

(i) the project;

(ii) expected funding for the project; and

(iii) a statement of the anticipated outcome of the project.

(2) The Secretary of Defense may adjust the amounts (and the base fiscal year) provided in paragraph (1) on the basis of Department of Defense escalation rates.

(e) Related Prototype Authorities.—Prototype projects that exceed the duration and funding limits established in this section shall be pursued under the rapid prototyping process established by section 804 of the National Defense Authorization Act for Fiscal Year 2016 (Public Law 114–92; 10 U.S.C. 2302 note). In addition, nothing in this subchapter shall affect the authority to carry out prototype projects under section 2371b or any other section of this title related to prototyping.