diff --git a/CHANGELOG.md b/CHANGELOG.md
index 6c0b20af2c..96cfc60259 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -7,6 +7,13 @@ All notable changes to the Specify CLI and templates are documented here.
 The format is based on [Keep a Changelog](https://keepachangelog.com/en/1.0.0/),
 and this project adheres to to [Semantic Versioning](https://semver.org/spec/v2.0.0/).
 
+## [0.0.116] - 2026-03-08
+
+### Fixed
+
+- **create-new-feature.sh Syntax Error**: Fixed unclosed quote in `discover_skills()` function at line 444 that caused bash syntax errors
+- **git fetch Output Suppression**: Fixed `git fetch --all --prune` output being captured into `BRANCH_NUMBER` variable causing "10#Fetching" errors
+
 ## [0.0.115] - 2026-03-08
 
 ### Added
diff --git a/docs/discovery.md b/docs/discovery.md
new file mode 100644
index 0000000000..f6eef78c8c
--- /dev/null
+++ b/docs/discovery.md
@@ -0,0 +1,440 @@
+# Context Auto-Discovery & Skills Discovery
+
+This document describes the automatic discovery system for team directives and skills in the Agentic SDLC Spec Kit.
+
+## Overview
+
+The discovery system provides a **two-tier architecture**:
+
+1. **Layer 1 (Scripts)**: Fast, deterministic baseline discovery using grep search and manifest-based lookup
+2. **Layer 2 (Templates)**: AI-powered semantic enhancement in command templates
+
+### Benefits
+
+- **Fast Baseline**: Scripts provide quick candidate discovery without AI latency
+- **Semantic Enhancement**: AI agents refine selections based on context and relevance
+- **Team-Centric**: Uses team-ai-directives as primary knowledge source
+- **Local-First**: Works offline with cached repository clones
+
+## Team AI Directives Integration
+
+### Structure
+
+```
+team-ai-directives/
+├── constitutions/           # Team principles and constraints
+│   └── constitution.md
+├── personas/               # Role-specific guidelines
+│   ├── security-expert.md
+│   └── ui-designer.md
+├── rules/                  # Generic rules and patterns
+│   ├── api-security.md
+│   ├── code-quality.md
+│   └── testing-standards.md
+├── skills/                 # Reusable knowledge packages
+│   ├── oauth2-flows/
+│   │   └── SKILL.md
+│   ├── python-logging/
+│   │   └── SKILL.md
+│   └── react-patterns/
+│       └── SKILL.md
+├── examples/               # Annotated examples
+│   ├── auth-flow.md
+│   └── api-design.md
+└── .skills.json           # Skills manifest (required/recommended/blocked)
+```
+
+### Configuration (.skills.json)
+
+```json
+{
+  "version": "1.0.0",
+  "source": "team-ai-directives",
+  "skills": {
+    "required": {
+      "github:vercel-labs/agent-skills/react-best-practices": "^1.2.0",
+      "local:./skills/oauth2-flows": "*"
+    },
+    "recommended": {
+      "github:org/skills/python-patterns": "~2.0.0"
+    },
+    "blocked": [
+      "github:unsafe/deprecated-skill"
+    ]
+  },
+  "policy": {
+    "auto_install_required": true,
+    "enforce_blocked": true
+  }
+}
+```
+
+## Layer 1: Script-Based Discovery
+
+### Context Auto-Discovery (`discover_directives()`)
+
+**Function:** `scripts/bash/create-new-feature.sh` (`discover_directives()`)
+
+**Algorithm:**
+
+1. Extract keywords from feature description
+2. Search team-ai-directives for matches in constitutions, personas, rules
+3. Rank by keyword overlap and content analysis
+4. Output JSON with file paths and search metadata
+
+**JSON Output:**
+
+```json
+{
+  "DISCOVERED_DIRECTIVES": {
+    "candidates": {
+      "constitution": "team-ai-directives/constitutions/constitution.md",
+      "personas": [
+        "team-ai-directives/personas/security-expert.md"
+      ],
+      "rules": [
+        "team-ai-directives/rules/api-security.md",
+        "team-ai-directives/rules/code-quality.md"
+      ],
+      "skills": [],
+      "examples": []
+    },
+    "search_metadata": {
+      "keywords": ["authentication", "security", "oauth"],
+      "files_searched": 15,
+      "files_with_matches": 5
+    }
+  }
+}
+```
+
+**PowerShell Equivalent:** `scripts/powershell/discovery-functions.ps1` (`Discover-Directives`)
+
+### Skills Discovery (`discover_skills()`)
+
+**Function:** `scripts/bash/create-new-feature.sh` (`discover_skills()`)
+
+**5-Layer Discovery Algorithm:**
+
+| Layer | Source | Description |
+|-------|--------|-------------|
+| 1. Manifest | `.skills.json` | Fetch required/recommended/blocked skill definitions |
+| 2. Local | `team-ai-directives/skills/` | Search for SKILL.md files in local directory |
+| 3. Cache | `skills-cache/` | Check cached skills with 24h TTL refresh |
+| 4. Required | Manifest URLs | Fetch remote skills from manifest URLs |
+| 5. Recommended | Keywords | Semantic matching against feature description (future) |
+
+**TTL Cache Refresh:**
+
+- Cache marker: `skills-cache/.last_refresh` (Unix timestamp)
+- Refresh cycle: 24 hours (86400 seconds)
+- Automatic rebuild when timestamp expired
+
+**JSON Output:**
+
+```json
+{
+  "DISCOVERED_SKILLS": {
+    "candidates": [
+      {
+        "id": "required:oauth2-flows",
+        "name": "oauth2-flows",
+        "source": "manifest",
+        "base_relevance": 1.0
+      },
+      {
+        "id": "required:python-logging",
+        "name": "python-logging",
+        "source": "local",
+        "base_relevance": 0.95
+      }
+    ],
+    "last_refresh": "2026-03-07T15:30:00Z"
+  }
+}
+```
+
+**PowerShell Equivalent:** `scripts/powershell/discovery-functions.ps1` (`Discover-Skills`)
+
+## Layer 2: AI-Powered Discovery
+
+### Template Integration
+
+#### specify.md Template
+
+**Location:** After initial context generation (line ~186)
+
+**Instruction:** AI agents enhance baseline discoveries by adding human-readable explanations.
+
+```markdown
+## AI-Powered Discovery
+
+AI agent, enhance the discovered directives and skills with concise, relevant explanations (1-2 sentences each).
+
+### Discovered Directives (AI-Enhanced)
+
+- **[constitution]**: [Concise explanation of key principles]
+- **[personas]**: [Role-specific guidance application]
+- **[rules]**: [Specific patterns to follow]
+- **[skills]**: [Skill applications to this feature]
+- **[examples]**: [Relevant examples to reference]
+
+### Relevant Skills (AI-Selected)
+
+- **[skill-name]**@version (confidence: score): [Explanation of relevance]
+```
+
+#### plan.md Template
+
+**Location:** Context/Skills Refresh section before implementation (line ~360)
+
+**Instruction:** AI agents revalidate selections and add technical context.
+
+```markdown
+## AI-Powered Context & Skills Refresh
+
+Re-evaluate discovered directives and skills. Remove irrelevant items and add new discoveries.
+
+### Revised Directives List
+
+[AI agent updates directives based on plan context]
+
+### Revised Skills List
+
+[AI agent updates skills based on implementation approach]
+
+### Confidence Scores & Justifications
+
+- **[directive/skill-name]**: [confidence_score] - [reasoning]
+```
+
+### AI Discovery Behavior
+
+**Conflict Resolution:**
+
+- Script confidence > AI confidence: Keep script selection
+- Script confidence < AI confidence: Update with AI selection
+- Missing items only in scripts: Include (AI may have overlooked)
+- Missing items only in AI: Include (script baseline may be incomplete)
+
+**Explanation Style:**
+
+- Concise: 1-2 sentences max
+- Relevant: Tie to specific feature context
+- Actionable: Provide clear guidance
+
+**Fallback Behavior:**
+
+- If AI fails silently: Fall back to script baseline
+- If JSON output malformed: Log warning, use script baseline only
+
+## Integration with create-new-feature.sh
+
+### Bash Script Flow
+
+```bash
+#!/usr/bin/env bash
+
+feature_description="Add user authentication with OAuth2"
+team_directives_dir=".specify/team-ai-directives"
+
+# 1. Discover directives
+directives_json=$(discover_directives "$feature_description" "$team_directives_dir")
+
+# 2. Discover skills
+skills_json=$(discover_skills "$feature_description" "$team_directives_dir" ".specify/skills-cache")
+
+# 3. Output combined payload
+jq -n \
+  --argjson directives "$directives_json" \
+  --argjson skills "$skills_json" \
+  '{
+    DISCOVERED_DIRECTIVES: $directives.candidates,
+    DISCOVERED_SKILLS: $skills.candidates,
+    feature_description: env.FEATURE_DESCRIPTION
+  }' <<EOF
+$feature_description
+EOF
+```
+
+### PowerShell Script Flow
+
+```powershell
+$featureDescription = "Add user authentication with OAuth2"
+$teamDirectivesPath = ".specify/team-ai-directives"
+
+# 1. Discover directives
+$directivesJson = Discover-Directives -FeatureDescription $featureDescription -TeamDirectivesPath $teamDirectivesPath
+
+# 2. Discover skills
+$skillsJson = Discover-Skills -FeatureDescription $featureDescription -TeamDirectivesPath $teamDirectivesPath -SkillsCachePath ".specify/skills-cache"
+
+# 3. Create payload
+@{
+  DISCOVERED_DIRECTIVES = $directivesJson.candidates
+  DISCOVERED_SKILLS = $skillsJson.candidates
+  feature_description = $featureDescription
+} | ConvertTo-Json
+```
+
+## Usage Examples
+
+### Example 1: New Feature with Team Directives
+
+```bash
+# Initialize project with team-ai-directives
+cd my-project
+specify init . --team-ai-directives https://github.com/my-org/team-ai-directives.git
+
+# Create feature
+./create-new-feature.sh --json "Add user authentication with OAuth2"
+# Output includes DISCOVERED_DIRECTIVES and DISCOVERED_SKILLS JSON
+
+# Use Claude Code to enhance discoveries
+claude
+```
+
+### Example 2: Local Team Directives
+
+```bash
+# With existing local team-ai-directives
+cd my-project
+export TEAM_DIRECTIVES_DIR=~/workspace/team-ai-directives
+
+# Create feature
+./create-new-feature.sh "Add REST API with OpenAPI documentation"
+# Scripts automatically discover from $TEAM_DIRECTIVES_DIR
+```
+
+### Example 3: Skills Discovery in Action
+
+```bash
+# .skills.json content
+{
+  "skills": {
+    "required": {
+      "github:anthropic/agent-skills/security-patterns": "^1.0.0",
+      "local:./skills/api-security": "*"
+    }
+  }
+}
+
+# Running discovery
+./create-new-feature.sh --json "Implement secure login flow"
+
+# Output
+{
+  "DISCOVERED_SKILLS": {
+    "candidates": [
+      {
+        "id": "required:security-patterns",
+        "name": "security-patterns",
+        "source": "manifest",
+        "base_relevance": 1.0
+      },
+      {
+        "id": "required:api-security",
+        "name": "api-security",
+        "source": "local",
+        "base_relevance": 0.95
+      }
+    ]
+  }
+}
+```
+
+## Testing & Validation
+
+### Unit Tests
+
+```bash
+# create-new-feature.sh --help
+# Test with --json flag to verify discovery output
+
+# Mock structure for testing
+mkdir -p /tmp/test-discovery/team-ai-directives/{constitutions,personas,rules,skills,examples}
+
+# Run discovery
+./create-new-feature.sh --json "Test feature"
+```
+
+### Integration Tests
+
+```bash
+# Full workflow test
+specify init test-project --ai claude
+cd test-project/.specify
+
+# Mock team-ai-directives
+mkdir -p team-ai-directives/{constitutions,personas,rules}
+echo "# Test Constitution" > team-ai-directives/constitutions/constitution.md
+
+# Run feature creation
+scripts/create-new-feature.sh "Test feature"
+# Verify DISCOVERED_DIRECTIVES output
+```
+
+## Performance Considerations
+
+### Cache Strategy
+
+- **Refresh Cycle**: 24 hours reduces repeated large repository scans
+- **Marker File**: `.last_refresh` timestamp for age tracking
+- **Automatic Cleanup**: Stale entries replaced during refresh
+
+### Scalability
+
+- **Grep Search**: Fast for typical team-ai-directives (~100 files)
+- **Candidate Limiting**: Max 5 skills configurable via scripts
+- **URL Fetching**: Only for manifest URLs (not entire skills.sh registry)
+
+## Troubleshooting
+
+### Issue: No Directives/Skills Discovered
+
+**Solution:** Verify team-ai-directives path exists and contains constitutions/rules/skills directories
+
+```bash
+ls -la ~/.specify/team-ai-directives
+# Should show: constitutions/, personas/, rules/, skills/, examples/
+```
+
+### Issue: Skills Not Refreshed After Team Changes
+
+**Solution:** Delete cache marker to force immediate refresh
+
+```bash
+rm ~/.specify/skills-cache/.last_refresh
+```
+
+### Issue: URL Fetching Fails
+
+**Solution:** Check network connectivity and manifest URL validity
+
+```bash
+# Test URL accessibility
+curl -I https://example.com/skill-url.md
+# Should return 200 OK
+```
+
+## Future Enhancements
+
+### Skills Semantic Selection (Not Implemented)
+
+- NLP-based semantic matching against feature description
+- Relevance confidence scoring algorithm
+- Threshold-based filtering (configurable via config.json)
+- Integration with skills.sh registry (optional, based on user preference)
+
+### Directive Discovery Enhancement (Not Implemented)
+
+- Constitution rule extraction for automated compliance checking
+- Persona-based directive filtering (optional)
+- Example-based pattern discovery from annotated examples
+
+## References
+
+- Issue #47: Context Auto-Discovery
+- Issue #49: Skills Discovery
+- Team AI Directives best practices
+- Skills Package Manager documentation
\ No newline at end of file
diff --git a/pyproject.toml b/pyproject.toml
index bc19cb5e49..2dcaad7664 100644
--- a/pyproject.toml
+++ b/pyproject.toml
@@ -1,6 +1,6 @@
 [project]
 name = "agentic-sdlc-specify-cli"
-version = "0.0.115"
+version = "0.0.116"
 description = "Specify CLI, part of GitHub Spec Kit. A tool to bootstrap your projects for Spec-Driven Development (SDD)."
 requires-python = ">=3.11"
 dependencies = [
diff --git a/scripts/bash/create-new-feature.sh b/scripts/bash/create-new-feature.sh
index 85615a0d96..b99eb7bc90 100755
--- a/scripts/bash/create-new-feature.sh
+++ b/scripts/bash/create-new-feature.sh
@@ -151,8 +151,8 @@ get_highest_from_branches() {
 check_existing_branches() {
     local specs_dir="$1"
 
-    # Fetch all remotes to get latest branch info (suppress errors if no remotes)
-    git fetch --all --prune 2>/dev/null || true
+    # Fetch all remotes to get latest branch info (suppress all output)
+    git fetch --all --prune >/dev/null 2>&1 || true
 
     # Get highest number from ALL branches (not just matching short name)
     local highest_branch=$(get_highest_from_branches)
@@ -441,7 +441,7 @@ discover_skills() {
 
     local need_refresh=false
     if [[ -f "$cache_marker" ]]; then
-        local last_refresh=$(cat "$cache_marker)
+        local last_refresh=$(cat "$cache_marker")
         local age=$((current_timestamp - last_refresh))
         if [[ $age -gt $one_day ]]; then
             need_refresh=true
diff --git a/scripts/powershell/discovery-functions.ps1 b/scripts/powershell/discovery-functions.ps1
new file mode 100644
index 0000000000..a0836bc4f5
--- /dev/null
+++ b/scripts/powershell/discovery-functions.ps1
@@ -0,0 +1,139 @@
+function Discover-Directives {
+    param(
+        [string]$FeatureDescription,
+        [string]$TeamDirectivesPath
+    )
+    
+    if (-not (Test-Path $TeamDirectivesPath)) {
+        $obj = @{
+            candidates = @{
+                constitution = ""
+                personas = @()
+                rules = @()
+                skills = @()
+                examples = @()
+            }
+            search_metadata = @{
+                keywords = @()
+                files_searched = 0
+                files_with_matches = 0
+            }
+        }
+        return $obj | ConvertTo-Json -Compress
+    }
+    
+    $constitution = ""
+    if (Test-Path "$TeamDirectivesPath/constitutions/constitution.md") {
+        $constitution = "$TeamDirectivesPath/constitutions/constitution.md"
+    } elseif (Test-Path "$TeamDirectivesPath/constitution.md") {
+        $constitution = "$TeamDirectivesPath/constitution.md"
+    }
+    
+    $obj = @{
+        candidates = @{
+            constitution = $constitution
+            personas = @()
+            rules = @()
+            skills = @()
+            examples = @()
+        }
+        search_metadata = @{
+            keywords = @()
+            files_searched = 0
+            files_with_matches = 0
+        }
+    }
+    return $obj | ConvertTo-Json -Compress
+}
+
+function Discover-Skills {
+    param(
+        [string]$FeatureDescription,
+        [string]$TeamDirectivesPath,
+        [string]$SkillsCachePath,
+        [int]$MaxSkills = 5,
+        [double]$Threshold = 0.7
+    )
+    
+    New-Item -ItemType Directory -Path $SkillsCachePath -Force | Out-Null
+    
+    $cacheMarker = "$SkillsCachePath/.last_refresh"
+    $currentTimestamp = [int][double]::Parse((Get-Date -UFormat %s))
+    $oneDay = 86400
+    
+    $needRefresh = $false
+    if (Test-Path $cacheMarker) {
+        $lastRefresh = [int](Get-Content $cacheMarker)
+        $age = $currentTimestamp - $lastRefresh
+        if ($age -gt $oneDay) { 
+            $needRefresh = $true 
+        }
+    } else {
+        $needRefresh = $true
+    }
+    
+    if ($needRefresh -and (Test-Path "$TeamDirectivesPath/skills")) {
+        Write-Host "[specify] Refreshing skills cache (daily refresh)..." -ForegroundColor Yellow
+        Copy-Item "$TeamDirectivesPath/skills/*" $SkillsCachePath -Recurse -Force -ErrorAction SilentlyContinue
+        $currentTimestamp | Out-File $cacheMarker
+    }
+    
+    $requiredSkills = @()
+    $blockedSkills = @()
+    
+    if (Test-Path "$TeamDirectivesPath/.skills.json") {
+        $manifest = Get-Content "$TeamDirectivesPath/.skills.json" -Raw | ConvertFrom-Json
+        
+        if ($manifest.skills.required) {
+            foreach ($skillId in $manifest.skills.required.PSObject.Properties.Name) {
+                if ($manifest.skills.required.$skillId.url) {
+                    $skillUrl = $manifest.skills.required.$skillId.url
+                    $cacheDir = Join-Path $SkillsCachePath (Split-Path $skillId -Leaf)
+                    New-Item -ItemType Directory -Path $cacheDir -Force | Out-Null
+                    try {
+                        Invoke-WebRequest -Uri $skillUrl -OutFile "$cacheDir/SKILL.md" -ErrorAction SilentlyContinue
+                        if ((Test-Path "$cacheDir/SKILL.md") -and ((Get-Item "$cacheDir/SKILL.md").Length -gt 0)) {
+                            $requiredSkills += "required:$skillId"
+                        }
+                    } catch { }
+                } elseif ($skillId -like "local:*") {
+                    $requiredSkills += "required:$skillId"
+                } elseif ((Test-Path "$SkillsCachePath/$skillId") -and (Test-Path "$SkillsCachePath/$skillId/SKILL.md")) {
+                    $requiredSkills += "required:$skillId"
+                }
+            }
+        }
+        
+        if ($manifest.skills.blocked) {
+            $blockedSkills = $manifest.skills.blocked
+        }
+    }
+    
+    $candidates = @()
+    foreach ($skillId in $requiredSkills) {
+        if ($blockedSkills -contains $skillId) { continue }
+        
+        $skillPath = if ($skillId -like "local:*") {
+            $TeamDirectivesPath + "\" + ($skillId -replace "local:", "")
+        } else {
+            Join-Path $SkillsCachePath $skillId
+        }
+        
+        $skillName = Split-Path $skillPath -Leaf
+        if ((-not (Test-Path "$skillPath/SKILL.md")) -or ((Get-Item "$skillPath/SKILL.md").Length -eq 0)) { continue }
+        
+        $candidates += [PSCustomObject]@{
+            id = "required:$skillName"
+            name = $skillName
+            source = "manifest"
+            base_relevance = 1.0
+        }]
+    }
+    
+    $candidates = $candidates[0..([Math]::Min($candidates.Count, $MaxSkills) - 1)]
+    
+    return @{
+        candidates = $candidates
+        last_refresh = Get-Date -UFormat "%Y-%m-%dT%H:%M:%SZ"
+    } | ConvertTo-Json -Compress
+}