Sec. 880B. Modifications to Defense Industrial Base Fund
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Section 4817 of title 10, United States Code, is amended by adding at the end the following new subsections: The Secretary may use the authorities provided by this section with respect to upstream, mid-stream, and downstream supply chains, including material, material production, components, subassemblies, and finished products, testing and qualification, infrastructure, facility construction and improvement, and equipment needed directly for the following: Castings and forgings.
Kinetic capabilities, including sensors, targeting systems, and delivery platforms. Microelectronics. Machine tools, including but not limited to subtractive, additive, convergent, stamping, forging, abrasives, metrology, and other production equipment. Critical minerals, materials, and chemicals. Workforce for the defense industrial base. Advanced manufacturing capacity, including echelon manufacturing forward in the Indo-Pacific Command theater. Unmanned vehicles, including subsurface, surface, land, air one-way, attritables, and launch and recovery platforms.
Manned aircraft. Ground systems. Power sources. Ship and submarine, including assembly and automation technologies and capabilities, new or modernized infrastructure for new construction or maintenance and sustainment and battle damage repair. Other materiel solutions required to support Indo-Pacific Command operational plans as required. Defense space systems. The Secretary may not use the authorities provided by this section for any activity in a covered country. The Secretary may not use the authorities provided by this section for a purpose not described in paragraph
(1)unless, not less than 30 days before doing so, the Secretary— determines that— the use of the authority for that purpose is essential to the national security interests of the United States; and without the use of the authority for that purpose, United States industry cannot reasonably be expected to provide the capability needed in a timely manner; and submits to the congressional defense committees a report on the determination that includes appropriate explanatory material. To create, maintain, protect, expand, or restore domestic industrial base capabilities essential for the national security interests of the United States, the Secretary may make provision for— use of contracts, grants, or other transaction authorities, including cooperative agreements; incentives for the private sector to develop capabilities in areas of national security interest; during the 5-year period beginning on the date of the enactment of this subsection, making awards to third party entities to support investments in small- and medium-sized entities working in areas of national security interest, including debt and equity investments, that would benefit missions of the Department of Defense; and subsidies to offset market manipulation or ensure allied and domestic viability of grants made from other market uncertainties. To create, maintain, protect, expand, or restore industrial base capabilities essential for the national security interests of the United States, the Secretary may make provision for purchase commitments for— Federal Government use or resale of an industrial resource or a critical technology item; the encouragement of exploration, development, and mining of strategic and critical materials; development of other materials and components; the development of production capabilities; and the increased use of emerging technologies in defense program applications and the rapid transition of emerging technologies— from Federal Government-sponsored research and development to commercial applications; and from commercial research and development to national defense applications. Except as provided by subparagraph (B), purchase commitments under paragraph
(1)may be made without regard to the limitations of existing law (other than section 1341 of title 31), for such quantities, and on such terms and conditions, including advance payments, and for such periods, but not extending beyond a date that is not more than 10 years from the date on which such purchase was initially made, as the Secretary deems necessary. Purchases commitments under paragraph
(1)involving higher than established ceiling prices (or if no such established ceiling prices exist, currently prevailing market prices) or that result in an anticipated loss on resale shall not be made, unless it is determined that supply of the materials could not be effectively increased or provisioned at lower prices or on terms more favorable to the Federal Government, or that such purchases are necessary to assure the availability to the United States of overseas supplies. The Secretary may take the actions described in subparagraph (B), if the Secretary finds that— under generally fair and equitable ceiling prices, for any raw or nonprocessed material or component, there will result a decrease in supplies from high-cost sources of such material and that the continuation of such supplies is necessary to carry out the objectives of this section; or an increase in cost of transportation is temporary in character and threatens to impair maximum production or supply in any area at stable prices of any materials. Upon a finding under subparagraph (A), the Secretary may make provision for subsidy payments on any such produced material from other than covered countries, in such amounts and in such manner (including purchase commitments of such material or component and its resale at a loss, and on such terms and conditions, as the Secretary determines to be necessary to ensure that supplies from such high-cost sources are continued, or that maximum production or supply in such area at stable prices of such materials is maintained, as the case may be. If the Secretary determines that such action will aid the national security interests of the United States, the Secretary is authorized— to procure and install additional equipment, facilities, processes or improvements to plants, factories, and other industrial facilities owned by the Federal Government; to procure and install equipment including owned by the Federal Government in plants, factories, and other industrial facilities owned by private persons; to provide for constructing new facilities, the modification, or expansion of privately owned facilities, including the modification or improvement of production processes, when taking actions under this subsection or subsection (h); to sell or otherwise transfer equipment owned by the Federal Government and installed under this subsection to the owners of such plants, factories, or other industrial facilities; to construct facilities for the purposes described in section subsection (g)(1); and to apply contracts, grants, or other transactions authorities. Metals, minerals, materials, and components acquired pursuant to this subsection which, in the judgment of the Secretary, are excess to the needs of programs under this section, shall be transferred to the National Defense Stockpile established by the Strategic and Critical Materials Stock Piling Act ( 50 U.S.C. 98 et seq. ), or other national reserves if available, when the Secretary deems such action to be in the public interest. Transfers made pursuant to this paragraph shall be made without charge against or reimbursement from funds appropriated for the purposes of the Strategic and Critical Materials Stock Piling Act ( 50 U.S.C. 98 et seq. ), or other national reserves if available, except that costs incident to such transfer, other than acquisition costs, shall be paid or reimbursed from such funds. When, in the judgment of the Secretary, it will aid the national security interests of the United States, the Secretary may make provision for the development and qualification a of substitutes for strategic and critical materials, components, critical technology items, and other industrial resources. The Secretary may provide appropriate incentives to develop, maintain, modernize, restore, and expand the productive capacities of sources for strategic and critical materials, components, critical technology items, and industrial resources essential for the execution of the national security strategy of the United States. The Secretary shall take appropriate actions to ensure that strategic and critical materials, components, critical technology items, and industrial resources are available from reliable sources when needed to meet defense requirements during peacetime, graduated mobilization, and national emergency. For purposes of this paragraph, appropriate action may include— restricting contract solicitations to reliable sources; stockpiling or placing into reserve strategic and critical materials, components, and critical technology items; planning for necessary long-lead times for acquiring such materials, components, and items; or developing and qualifying substitutes for such materials, components, and items. Subsections (g), (h), (i), and
(j)may only be carried out using amounts appropriated on or after the date of the enactment of this subsection. Not later than one year after the date of the enactment of the National Defense Authorization Act for Fiscal Year 2026, and annually thereafter, the Secretary shall submit to the congressional defense committee a report evaluating investments made and any other activities carried out using amounts in the Fund during the year preceding submission of the report. Each report required by paragraph
(1)shall include— measures of effectiveness of the investments and activities described in that paragraph in meeting the needs of the Department of Defense and the defense industrial base; an evaluation of the return on investment of all ongoing investments from the Fund; and a description of efforts to coordinate activities carried out using amounts in the Fund with activities to support the defense industrial base carried out under other authorities. In preparing a report required by paragraph (1), the Secretary shall take into account the advice of the defense industry and such other individuals as the Secretary considers relevant. Not later than 90 days after the date of the enactment of the National Defense Authorization Act for Fiscal Year 2026, the Secretary shall submit to the congressional defense committees a report detailing how activities carried out under this section will be coordinated with— activities carried out using amounts in the Defense Production Act Fund under section 304 of the Defense Production Act of 1950 ( 50 U.S.C. 4534 ); activities of the Office of Strategic Capital; and any other efforts designed to enhance the defense industrial base. In this section: The term chokepoint means a situation in which— components of the munitions supply chains, including all elements of the munitions supply chain such as chemicals, casings, or other materials, are produced by only one reliable source; or the increased production of a component would significantly increase total output of munitions. The term covered country means— the Russian Federation; the Democratic People’s Republic of Korea; the Islamic Republic of Iran; and the People’s Republic of China. The term reliable source means a citizen or business entity organized under the laws of— the United States or any territory or possession of the United States; a country of the national technology and industrial base, as defined in section 4801; or a qualifying country, as defined in section 225.003 of the Defense Federal Acquisition Regulation Supplement or any successor document. The term strategic and critical materials has the meaning given that term in section 12(1) of the Strategic and Critical Materials Stock Piling Act ( 50 U.S.C. 98h–3(1) ). . Section 149 of title 10, United States Code, is amended— in subsection (e)— in paragraph (3)(A)(ii)(l)(bb), by inserting or with regard to loans that include an equity feature, the Director reasonably believes the rate of return on the portfolio of such loans will exceed the rate of return on investment of a loan at the yield on marketable securities of a similar maturity to the maturity of the loan on the date of execution of the loan agreement before the period at the end; in paragraph (3), by adding at the end the following new subparagraph: The Director may support an eligible investment selected pursuant to this subsection 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 of the eligible entity, receiving support for the eligible investment, or any of its parent or subsidiary companies, including as a limited partner or other investor in investment funds, upon such terms and conditions as the Director may determine. The Director shall develop criteria, taking into consideration the national security and economic interests of the United States, pursuant to which the Director may hold, sell, or otherwise liquidate support for an investment described under clause (i). Solely for the purposes of purchasing equity securities under this subparagraph, the Director shall be treated as a qualified purchaser (as defined in section 2(a)(51) of the Investment Company Act of 1940 ( 15 U.S.C. 80a–2(a)(51) )) and as an accredited investor under section 2 of the Securities Act of 1933 ( 15 U.S.C. 77d ). ; and in paragraph (8), by striking after and all that follows through the period at the end and inserting the following: after the formal approval of the use of any capital assistance under this subsection. ; and by amending subsection (f)(1) to read as follows: The term capital assistance means a loan, loan guarantee, or technical assistance, or the purchase of or investment in equity, (including options, warrants, or other financing in a security with subordination or nonamortization characteristics as the Director determines to be substantially similar to equity financing). .
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- 50 USC 98h–3(1)
- 15 USC 80a–2(a)(51)
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Sec. 880B
Modifications to Defense Industrial Base Fund
Cite50 USC 98h–3(1)
Cite15 USC 80a–2(a)(51)
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