Sec. 834. Pilot program on capital assistance to support defense investment in the industrial base
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The Secretary of Defense may carry out a pilot program under this section to use capital assistance to support the duties and elements of sections 901 and 907. An eligible entity seeking capital assistance for an eligible investment under this section shall submit to the Secretary of Defense an application at such time, in such manner, and containing such information as the Secretary may require. The Secretary shall establish criteria for selecting among eligible investments for which applications are submitted under subsection (c)(2).
The criteria shall include— the extent to which an investment supports the national security of the United States; the likelihood that capital assistance provided for an investment would enable the investment to proceed sooner than the investment would otherwise be able to proceed; and the creditworthiness of an investment. The Secretary may provide loans or loan guarantees to finance or refinance the costs of an eligible investment selected pursuant to subsection (b)(2). Except as provided under subclause (II), the interest rate on a loan provided under subparagraph
(A)shall be not less than the yield on marketable United States Treasury securities of a similar maturity to the maturity of the loan on the date of execution of the loan agreement. The Secretary may waive the requirement under subclause
(I)with respect to an investment if the investment is determined by the Secretary of Defense to be vital to the national security of the United States. The Secretary shall establish separate and distinct criteria for interest rates for loan guarantees with private sector lending institutions. The final maturity date of a loan provided under subparagraph
(A)shall be not later than 50 years after the date of substantial completion of the investment for which the loan was provided. A loan provided under subparagraph
(A)may be paid earlier than is provided for under the loan agreement without a penalty. A loan provided under subparagraph
(A)shall not be subordinated to the claims of any holder of investment obligations in the event of bankruptcy, insolvency, or liquidation of the obligor. The Secretary may waive the requirement under subclause
(I)with respect to the investment in order to mitigate risks to loan repayment. The Secretary may sell to another entity or reoffer into the capital markets a loan provided under subparagraph
(A)if the Secretary determines that the sale or reoffering can be made on favorable terms. Any loan guarantee provided under subparagraph
(A)shall specify the percentage of the principal amount guaranteed. If the Secretary determines that the holder of a loan guaranteed by the Department of Defense defaults on the loan, the Secretary shall pay the holder as specified in the loan guarantee agreement. The Secretary shall establish a credit rating system to ensure a reasonable reassurance of repayment. The system may include use of existing credit rating agencies where appropriate. Loans and loan guarantees provided under subparagraph
(A)shall be subject to such other terms and conditions and contain such other covenants, representations, warranties, and requirements (including requirements for audits) as the Secretary determines appropriate. Loans and loan guarantees provided under subparagraph
(A)shall be subject to the requirements of the Federal Credit Reform Act of 1990 ( 2 U.S.C. 661 et seq. ). The Secretary may, as a minority investor, support an eligible investment selected pursuant to subsection (b)(2) with funds or use other mechanisms for the purpose of purchasing, and may make and fund commitments to purchase, invest in, make pledges in respect of, or otherwise acquire, equity or quasi-equity securities (such as warrants), or shares or financial interests of the eligible entity receiving support for the eligible investment, including as a limited partner or other investor in investment funds, upon such terms and conditions as the Secretary may determine. The Secretary shall seek to sell and liquidate any support for an investment provided under subparagraph
(A)as soon as commercially feasible, commensurate with other similar investors in the investment and taking into consideration the national security interests of the United States. Subjection to Appropriations acts, the Secretary may provide technical assistance with respect to developing and financing investments to eligible entities seeking capital assistance for eligible investments and eligible entities receiving capital assistance under this section. The Secretary shall provide to an eligible investment selected pursuant to subsection (b)(2) the amount of assistance necessary to carry out the investment. All financial transactions conducted under this section shall be conducted in United States dollars. There is established in the Treasury of the United States a Department of Defense Credit Program Account to execute loans and loan guarantees in accordance with section 502 of the Federal Credit Reform Act of 1990 ( 2 U.S.C. 661a ). The Credit Program Account shall consist of amounts appropriated pursuant to the authorization of appropriations and fees collected pursuant to subparagraph (C). The Secretary may charge and collect fees for providing capital assistance in amounts to be determined by the Secretary. The Secretary shall establish the amount of such fees in regulations at an amount sufficient to cover but not exceed the administrative costs to the Office of providing capital assistance. There is established in the Treasury of the United States a Department of Defense Strategic Capital Equity Account. The Strategic Capital Equity Account shall consist of all amounts appropriated pursuant to the authorization of appropriations. Subject to appropriations Acts, the Secretary is authorized to pay, from the Department of Defense Credit Program Account or the Department of Defense Strategic Capital Equity Account— the cost, as defined in section 502 of the Federal Credit Reform Act of 1990 ( 2 U.S.C. 661a ), of loans and loan guarantees and other capital assistance; administrative expenses associated with activities under this section; project-specific transaction costs; the cost of providing support authorized by this section; and the costs of equity investments. The Secretary of Defense shall prescribe such regulations as are necessary to carry out this section. The Secretary may not exercise the authorities available under this section until such time as these regulations have been issued and adopted by the Department. Not later than the first Monday in February of a fiscal year, the Secretary of Defense shall submit to the congressional defense committees an annual report describing activities carried out pursuant to this section in the preceding fiscal year and the goals of the Department of Defense in accordance with this section for the next fiscal year. The Secretary of Defense shall notify the congressional defense committees not later than 30 days after a use of loans, loan guarantees, equity investments, insurance, or reinsurance under this section. The authorities provided under this section shall expire on October 1, 2028. In this section: The term capital assistance means loans, loan guarantees, equity investments, insurance and reinsurance, or technical assistance provided under subsection (c). The term eligible entity means— an individual; a corporation, including a limited liability corporation; a partnership, including a public-private, limited, or general partnership; a joint venture, including a strategic alliance; a trust; a State of the United States, including a political subdivision or any other instrumentality of a State; a Tribal government or consortium of Tribal governments; any other governmental entity or public agency in the United States, including a special purpose district or public authority, including a port authority; or a multi-State or multi-jurisdictional group of public entities within the United States. The term eligible investment means an investment that facilitates the efforts of the Office— to identify, accelerate, and sustain the establishment, research, development, construction, procurement, leasing, consolidation, alteration, improvement, or repair of tangible and intangible assets vital to national security; or to protect vital tangible and intangible assets from theft, acquisition, and transfer by adversaries of the United States. The term obligor means a party that is primarily liable for payment of the principal of or interest on a loan.
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Sec. 834
Pilot program on capital assistance to support defense investment in the industrial base
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