10 U.S.C. § 149 — Office of Strategic Capital

(a) Establishment. The Department of Defense creates a new office inside the Office of the Secretary of Defense. It is called the Office of Strategic Capital. (b) Director. A Director runs the Office. The Secretary of Defense appoints the Director. The Director must come from a senior executive position in the government, or be an outsider who has held an equally senior job before. (c) Duties. The Office must do three things. First, it builds capital investment strategies copied from the private sector, to grow investment in important technologies and assets. Second, it finds and ranks technologies and assets that need capital help and could benefit the Department of Defense. Third, it makes investments in those technologies and assets, including supply chain technology that rarely gets direct investment. (d) Non-Federal Funding Requirements for Certain Investments. If the Office gives a direct loan, at least 80 percent of the total money for that technology must come from sources other than the federal government. This is measured at the time of the investment. (e) Pilot Program on Capital Assistance to Support Defense Investment in the Industrial Base. This subsection sets up a pilot program, but only to the extent Congress specifically approves the money for it in an appropriations law first. If Congress provides the money, the Secretary of Defense, acting through the Director, may run the pilot program. It gives capital assistance — loans, loan guarantees, or technical assistance — to eligible entities that are developing technologies that support the Office's duties and meet the Department's needs. An entity that wants help must apply the way the Director requires. The Director must set criteria for picking which applications win. The criteria must look at three things: how much the investment supports U.S. national security or economic interests; how much the assistance would let the investment move forward sooner than it otherwise could; and how creditworthy the investment is. Loans and loan guarantees. If Congress provides the money, the Director may give loans or loan guarantees to pay for or refinance a picked investment. On interest rates: the rate on a loan must normally be at least as high as the rate on a U.S. Treasury security of similar length. The Director can waive that floor if the Secretary decides the investment is vital to national security. The Director must also set separate interest-rate rules for loan guarantees made with private lenders. A loan must be fully due within 50 years of being made. A borrower can pay a loan off early with no penalty. Normally, if the borrower goes bankrupt or is liquidated, this loan cannot be paid after other investment debts — it ranks at least equally with them. The Director can waive that ranking rule if doing so helps make sure the loan actually gets repaid. The Director may sell or re-offer the loan into the capital markets if the terms are good. A loan guarantee must state what percentage of the loan's principal it covers; if the borrower defaults, the Director must pay whoever the guarantee agreement names. The Director must set up a credit rating system to give reasonable assurance loans will be repaid, and may use existing credit rating agencies to help. Loans and guarantees can carry other terms, conditions, promises, and audit requirements that the Secretary decides are appropriate. And they must follow the Federal Credit Reform Act of 1990. Technical assistance. If Congress funds it, the Director may also give technical help on developing and financing investments — both to applicants seeking assistance and to entities already receiving it. Funding picked investments. If Congress funds it, the Director must give a selected investment the capital assistance amount necessary to carry it out. All money moved in these deals must be in U.S. dollars. The 80-percent non-federal funding rule from subsection (d) also applies to pilot program investments. Credit Program Account. The law creates a Department of Defense Credit Program Account in the U.S. Treasury, to make and guarantee these loans under the Federal Credit Reform Act of 1990. Money in the account comes from congressional appropriations and from fees described in subsection (f). If Congress funds it, the Director may use this account to pay: the official "cost" of loans, guarantees, and other capital assistance, as that term is defined in the Federal Credit Reform Act; administrative expenses tied to this program; costs specific to individual projects; and the cost of providing the support this subsection authorizes. The Secretary of Defense may write regulations needed to run this program. By the first Monday in February each year, the Secretary must send Congress's defense committees a report describing last year's activities and next year's goals under this subsection. The Secretary must tell Congress's defense committees within 30 days after any use of a loan, loan guarantee, or technical assistance under this subsection. The Director's power to make new loans or give new loan guarantees ends on October 1, 2028. Loans and guarantees made before then keep following this section's rules until they're resolved. The Director's power to give new technical assistance also ends on October 1, 2028. Presumption of compliance. Every loan or guarantee agreement the Director signs is automatically treated as meeting this section's requirements. Authority to collect debts. If a borrower defaults, the Director can use any special legal priority the United States has for collecting debts. Additional authorities. The Director may also: let applicants and recipients pay directly for outside services the Office uses in connection with their own transactions; hire temporary or occasional expert or consultant help under the normal civil-service rule for that, only for this subsection's purposes; and, with another federal agency's consent, agree to use that agency's services, equipment, personnel, or facilities, with or without paying the agency back. (f) Fees. If Congress funds it, the Director may charge fees to cover specific costs and to offset the expense of administering these programs — but the fees can only be set to recover real costs, not to make a profit. The costs the Director can charge for include: due diligence paid to outside experts, covering national security, legal, engineering, technical, and financial checks on applicants, borrowers, guarantors, sponsors, and other key parties, their owners, managers, and employees, and their property and operations; outside costs for ratings analysis, underwriting, appraisals, valuations, and site-visit travel and inspection; outside legal costs for negotiating and writing up deals; outside costs for monitoring troubled deals, restructuring them, or working them out; and administrative expenses tied to running the credit program, following the federal budget office's rules as of August 2025 — including a fair share of costs the program shares with non-credit programs, building and maintaining loan computer systems, checking that lenders follow the rules, running the loan process from extension through servicing, write-off, and close-out, and collecting overdue or defaulted loans. Fee money goes into the Credit Program Account described in subsection (e), and stays available until it's spent. Even though subsection (e) lists other allowed uses for account money, fees specifically cannot pay Department of Defense civilian employees' salaries or expenses, and cannot be used for anything besides what's described in this subsection or in subsection (e)'s additional-authorities paragraph. The power to charge fees generally ends on the same date the loan program's new-loan authority ends — October 1, 2028. But for a loan or guarantee still outstanding on that date, the Director can keep charging fees for services on it for as long as that loan or guarantee lasts. By March 1 each year, the Director must report to Congress's defense committees on the fees collected the year before and how they were allocated. The Department of Defense Inspector General must review the fees charged and collected in fiscal year 2026 and report the results to Congress's defense committees. The Inspector General must also audit the fees collected in fiscal years 2026 and 2027, and give Congress's defense committees a report on that audit no later than 180 days after fiscal year 2027 ends. (g) Authority to Accept Services. The Director may accept services — like legal, financial, technical, or other professional help — connected to running these programs. The Office can even accept such services as an indirect, in-kind payment instead of cash. (h) Definitions. "Capital assistance" means a loan, a loan guarantee, or technical assistance. "Covered technology category" is a long list of technology areas: advanced bulk materials; advanced manufacturing; autonomous mobile robots; battery storage; biochemicals; bioenergetics; biomass; cybersecurity; data fabric; decision science; edge computing; external communication; hydrogen generation and storage; mesh networks; microelectronics assembly, testing, or packaging; microelectronics design and development; microelectronics fabrication; microelectronics manufacturing equipment; microelectronics materials; nanomaterials and metamaterials; nuclear fission and fusion energy technologies; Open RAN; optical communications; sensor hardware; solar; space launch; spacecraft; space-enabled services and equipment; synthetic biology; quantum computing; quantum security; quantum sensing; strategic maritime infrastructure; and critical minerals and materials. "Eligible entity" covers almost any kind of applicant: an individual; a corporation; a partnership of any kind, including a public-private, limited, or general partnership; a joint venture; a trust; a State, including any political subdivision or other part of a State; a Tribal government or a group of them; any other governmental entity or public agency in the United States, including a special purpose district or a port authority; a group of public entities spanning multiple states or jurisdictions; or a strategic alliance made up of two or more of these. "Eligible investment" means an investment, made as capital assistance to an eligible entity, for a technology that is in a covered technology category and that does not have only defense applications. "Obligor" means whoever is primarily liable for paying back a loan's principal or interest.