{"id":12760,"date":"2026-06-18T18:26:22","date_gmt":"2026-06-18T18:26:22","guid":{"rendered":"https:\/\/sawahsolutions.com\/range\/ndaa-provisions-would-reshape-pentagons-use-of-ownership-stakes-in-private-companies\/"},"modified":"2026-06-18T18:26:23","modified_gmt":"2026-06-18T18:26:23","slug":"ndaa-provisions-would-reshape-pentagons-use-of-ownership-stakes-in-private-companies","status":"publish","type":"post","link":"https:\/\/sawahsolutions.com\/range\/ndaa-provisions-would-reshape-pentagons-use-of-ownership-stakes-in-private-companies\/","title":{"rendered":"NDAA provisions would reshape Pentagon\u2019s use of ownership stakes in private companies"},"content":{"rendered":"<div>\n<p>The Pentagon office that lends money to weapons developers would be allowed to take equity stakes in private companies deemed critical to national security under draft provisions of the 2027 defense policy bill.<\/p>\n<p>\u201cWe have allowed them to take equity in certain sectors. We have, what I think, is a very robust reporting regime and ethics regime, and we are working to reorganize or rationalize equity at the department by co-locating it with the loan authority at the Office of Strategic Capital and leaving the industrial-based fund, IBAS, as a tool for smaller dollar grants\u2026as it&#8217;s traditionally been used,\u201d a congressional staffer with the Senate Armed Services Committee told reporters last week.\u00a0<\/p>\n<p>Meanwhile, the defense spending bill passed out of the House Appropriations Committee\u2019s defense panel would give the Office of Strategic Capital $2.16 billion in loan authority and $216 million \u201cto carry out the capital assistance program, including loans, loan guarantees, and technical assistance,\u201d according to legislative language and the bill summary.\u00a0<\/p>\n<p>The Senate Armed Services Committee passed its version of the 2027 National Defense Authorization Act earlier this week to be considered on the Senate floor. It included provisions regarding the Pentagon\u2019s ability to take financial stakes in defense contractors.<\/p>\n<p>Using existing authorities, the Pentagon has already taken equity stakes worth more than a billion dollars in defense-related companies. High-profile examples include taking a $400 million stake in a rare-earths producer last July and a $1 billion stake in L3Harris\u2019 solid rocket motor business in April. The latter drew congressional scrutiny.<\/p>\n<p>The SASC bill does several things with respect to equity investments, according to the bill summary:\u00a0<\/p>\n<ul>\n<li aria-level=\"1\">Explicitly bestows that power to the Office of Strategic Capital, which facilitates private investment in critical technologies through loans, and creates a \u201cdefense equity investment account\u201d in the U.S. Treasury;<\/li>\n<li aria-level=\"1\">Requires congressional notification of debt and equity investments<\/li>\n<li aria-level=\"1\">Mandates the defense secretary to conduct ownership reviews, including \u201cany conflicts of interest before obligating or disbursing any funds for an equity investment;\u201d and\u00a0<\/li>\n<li aria-level=\"1\">Bars the use of the Pentagon\u2019s industrial-base fund, which is used to address supply chain vulnerabilities, assess and expand the defense industrial base, for equity stakes.\u00a0<\/li>\n<\/ul>\n<p>The bill also limits use of the direct equity investment account to fund \u201ccritical minerals, materials, and chemicals; and batteries,\u201d and direct equity investments would be limited to 40 percent \u201cof the total amount of all equity investments made to the entity,\u201d according to the text. Investments would also be capped at $500 million.<\/p>\n<p>The bill would also create an Economic Defense Unit, which would meet quarterly and enforce briefing requirements, including the defense secretary\u2019s \u201cownership review of all companies in which the Department of Defense holds equity\u201d and certification the Pentagon \u201cdoes not hold, and does not have the option to hold, any seat on the board of directors or any other form of voting representation or control in any entity in which the Department holds equity,\u201d according to the bill\u2019s executive summary.<\/p>\n<p>\u201cWe can see some value in this tool. We have differing opinions about how much value,\u201d the SASC staffer said.\u00a0\u00a0<\/p>\n<p>Senators on the committee are aiming for a long-lasting solution to match the yearslong challenge of reshoring supply chains and sectors to the U.S.\u00a0<\/p>\n<p>\u201cBecause whether you&#8217;re talking about critical minerals, batteries, some of these other fundamental sectors where the Chinese have domination\u2014this is going to be a decade-plus long project,\u201d the staffer said.\u00a0<svg class=\"content-tombstone\">\n<use xlink:href=\"http:\/\/www.defenseone.com\/static\/base\/svg\/spritesheet.svg#icon-d1-logo-tiny\"\/>\n<\/svg><\/p>\n<\/div>\n<p><script>\n!function(f,b,e,v,n,t,s)\n{if(f.fbq)return;n=f.fbq=function(){n.callMethod?\nn.callMethod.apply(n,arguments):n.queue.push(arguments)};\nif(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version='2.0';\nn.queue=[];t=b.createElement(e);t.async=!0;\nt.src=v;s=b.getElementsByTagName(e)[0];\ns.parentNode.insertBefore(t,s)}(window,document,'script',\n'https:\/\/connect.facebook.net\/en_US\/fbevents.js');\nfbq('init', '10155007044873614'); \nfbq('track', 'PageView');\n<\/script><script>\n  window.fbAsyncInit = function() {\n    FB.init({\n      appId      : '1546266055584988',\n      autoLogAppEvents : true,\n      xfbml      : true,\n      version    : 'v2.11'\n    });\n  };\n  (function(d, s, id){\n     var js, fjs = d.getElementsByTagName(s)[0];\n     if (d.getElementById(id)) {return;}\n     js = d.createElement(s); js.id = id;\n     js.src = \"https:\/\/connect.facebook.net\/en_US\/sdk.js\";\n     fjs.parentNode.insertBefore(js, fjs);\n   }(document, 'script', 'facebook-jssdk'));\n<\/script><br \/>\n<br \/>Read the full article <a href=\"https:\/\/www.defenseone.com\/defense-systems\/2026\/06\/senate-pentagon-equity-stakes-private-companies\/414279\/\" target=\"_blank\" rel=\"nofollow noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Pentagon office that lends money to weapons developers would be allowed to take equity stakes in private companies deemed critical to national security under draft provisions of the 2027 defense policy bill. \u201cWe have allowed them to take equity in certain sectors. We have, what I think, is a very robust reporting regime and<\/p>\n","protected":false},"author":1,"featured_media":12761,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/cdn.defenseone.com\/media\/img\/cd\/2026\/06\/18\/GettyImages_2273260688\/open-graph.jpg","fifu_image_alt":"","footnotes":""},"categories":[31],"tags":[],"class_list":["post-12760","post","type-post","status-publish","format-standard","has-post-thumbnail","category-defense"],"_links":{"self":[{"href":"https:\/\/sawahsolutions.com\/range\/wp-json\/wp\/v2\/posts\/12760","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sawahsolutions.com\/range\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sawahsolutions.com\/range\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sawahsolutions.com\/range\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/sawahsolutions.com\/range\/wp-json\/wp\/v2\/comments?post=12760"}],"version-history":[{"count":1,"href":"https:\/\/sawahsolutions.com\/range\/wp-json\/wp\/v2\/posts\/12760\/revisions"}],"predecessor-version":[{"id":12762,"href":"https:\/\/sawahsolutions.com\/range\/wp-json\/wp\/v2\/posts\/12760\/revisions\/12762"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sawahsolutions.com\/range\/wp-json\/wp\/v2\/media\/12761"}],"wp:attachment":[{"href":"https:\/\/sawahsolutions.com\/range\/wp-json\/wp\/v2\/media?parent=12760"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sawahsolutions.com\/range\/wp-json\/wp\/v2\/categories?post=12760"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sawahsolutions.com\/range\/wp-json\/wp\/v2\/tags?post=12760"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}