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[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4952 Introduced in House (IH)]
<DOC>
118th CONGRESS
1st Session
H. R. 4952
To amend title 10, United States Code, to establish the Office of
Strategic Capital in the Office of the Secretary of Defense, and for
other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 26, 2023
Mr. Wittman (for himself, Mr. Khanna, and Mr. Mills) introduced the
following bill; which was referred to the Committee on Armed Services
_______________________________________________________________________
A BILL
To amend title 10, United States Code, to establish the Office of
Strategic Capital in the Office of the Secretary of Defense, and for
other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. ESTABLISHMENT OF OFFICE OF STRATEGIC CAPITAL.
(a) In General.--Chapter 4 of title 10, United States Code, is
amended by adding at the end the following new section:
``Sec. 148. Office of Strategic Capital
``(a) Establishment.--There is in the Office of the Secretary of
Defense an office to be known as the Office of Strategic Capital (in
this section referred to as the `Office').
``(b) Director.--The Office shall be headed by an Executive
Director (in this section referred to as the `Director'), who shall be
appointed by the Secretary of Defense from among employees of the
Department of Defense in Senior Executive Service or equivalent
positions (as defined in section 3132 of title 5).
``(c) Duties.--The Office shall--
``(1) 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;
``(2) protect vital tangible and intangible assets from
theft, acquisition, and transfer by countries that are
adversaries of the United States; and
``(3) provide capital assistance to eligible entities
engaged in eligible investments.
``(d) Applications.--An eligible entity seeking capital assistance
for an eligible investment shall submit to the Director an application
at such time, in such manner, and containing such information as the
Director may require.
``(e) Selection of Investments.--The Director shall establish
criteria for selecting among eligible investments for which
applications are submitted under subsection (d). Such criteria shall
include--
``(1) the extent to which an investment is significant to
the national security of the United States;
``(2) the creditworthiness of an investment; and
``(3) 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.
``(f) Capital Assistance.--The Secretary of Defense is authorized
to provide capital assistance within this section.
``(1) Loans and loan guarantees.--
``(A) In general.--The Office may provide loans or
loan guarantees to finance or refinance the costs of an
eligible investment selected pursuant to subsection
(e).
``(B) Administration of loans.--
``(i) Interest rate.--
``(I) In general.--Except as
provided by 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.
``(II) Exception.--The Director 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.
``(III) Criteria.--The Director
shall establish separate and distinct
criteria for the interest rates for
loan guarantees with private sector
lending institutions.
``(ii) Final maturity date.--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.
``(iii) Prepayment.--A loan provided under
subparagraph (A) may be paid earlier than is
provided for under the loan agreement without a
penalty.
``(iv) Nonsubordination.--
``(I) In general.--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.
``(II) Waiver.--The Director may
waive the requirement under subclause
(I) with respect to the investment in
order to mitigate risks to loan
repayment.
``(v) Sale of loans.--For which a loan is
provided under subparagraph (A) and after
notifying the obligor, the Director may sell to
another entity or reoffer into the capital
markets a loan for the investment if the
Director determines that the sale or reoffering
can be made on favorable terms.
``(vi) Loan guarantees.--
``(I) In general.--If the Director
determines that the holder of a loan
guaranteed by the Office defaulted on
the loan, the Director shall pay the
holder as specified in the loan
guarantee agreement.
``(II) Loan guarantee percentage.--
A loan guarantee agreement entered into
by the Office under this paragraph
shall specify the percentage of the
principal amount of the loan guaranteed
by the Office under such agreement.
``(vii) Terms and conditions.--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
Director determines appropriate.
``(viii) Investment-grade rating.--The
Director shall establish a credit rating system
to ensure a reasonable likelihood of repayment
of loans made or guaranteed under this
subsection. The credit rating system may
include the use of existing credit rating
agencies as the Director determines
appropriate.
``(ix) Applicability of federal credit
reform act of 1990.--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.).
``(2) Equity investments.--
``(A) In general.--The Director may, as a minority
investor and subject to the availability of
appropriations this purpose, support an eligible
investment selected pursuant to subsection (e) 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, warrants, or quasi-equity
securities 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 Director may determine.
``(B) Sales and liquidation of position.--The
Office 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.
``(3) Technical assistance.--Subject to the availability of
appropriations, the Director 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 subsection.
``(4) Terms and conditions.--
``(A) Fees.--The Director may charge fees for the
provision of capital assistance under this subsection
to cover the administrative costs to the Office of
providing such assistance.
``(B) Use of fees.--Fees collected pursuant to
subparagraph (A) may only be used to pay for the cost
of administering the activities authorized by this
section.
``(C) Amount of capital assistance.--The Director
shall provide to an eligible investment selected
pursuant to subsection (e) the minimum amount of
assistance necessary to carry out the investment.
``(D) Use of united states dollar.--All financial
transactions conducted under this subsection shall be
conducted in United States dollars.
``(g) Establishment of Accounts.--
``(1) Credit program account.--
``(A) Establishment.--There is established in the
Treasury of the United States an account to be known as
the `Department of Defense Credit Program Account' (in
this subsection referred to as the `Credit Program
Account') to make loans and loan guarantees under this
section in accordance with the Federal Credit Reform
Act of 1990 (2 U.S.C. 661 et seq.).
``(B) Funding.--The Credit Program Account shall
consist of amounts appropriated to the Credit Program
Account pursuant to an authorization of appropriations
and all fees as described in subparagraph (C).
``(C) Fee authority.--
``(i) In general.--The Secretary may charge
and collect fees for providing capital
assistance in an amount to be determined by the
Secretary to cover the costs to the Office of
providing such capital assistance.
``(ii) Amount.--The amount of the fees
under clause (i) shall equal, but not exceed,
the costs to the Office of providing capital
assistance.
``(iii) Use of fees.--Fees collected
pursuant to clause (i) may only be used to pay
for the cost of administering the activities
authorized by this section.
``(2) Equity account.--
``(A) Establishment.--There is established in the
Treasury of the United States an account to be known as
the `Department of Defense Strategic Capital Equity
Account' (in this subsection referred to as the
`Strategic Capital Equity Account').
``(B) Funding.--The Strategic Capital Equity
Account shall consist of all amounts appropriated to
the Strategic Capital Equity Account pursuant to an
authorization of appropriations.
``(3) Use of funds.--Subject to appropriations Acts, the
Secretary is authorized to pay, from the Credit Program Account
or the Strategic Capital Equity Account--
``(A) 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;
``(B) administrative expenses of the Office
associated with activities under this section;
``(C) project-specific transaction costs under this
section;
``(D) the cost of providing support authorized by
this section; and
``(E) the costs of equity investments under this
section.
``(h) Regulations.--
``(1) In general.--The Secretary of Defense shall prescribe
such regulations as are necessary to carry out this section.
``(2) Limitation on authorities.--The Secretary of Defense
may not exercise the authorities under this section prior to
promulgating the regulations required by paragraph (1).
``(i) Annual Report.--Not later than the first Monday in February
of each year, the Secretary of Defense shall submit to the
congressional defense committees an annual report describing the
activities of the Office in the preceding fiscal year and the goals of
the Office for the next fiscal year.
``(j) Congressional Notification.--Not later than 30 days after the
Director exercises the authority under subsection (f) to make a loan or
equity investment or to provide a loan guarantee, insurance, or
reinsurance, the Secretary of Defense shall notify the congressional
defense committees of such exercise of authority.
``(k) Sunset.--The authorities provided under this section shall
expire on October 1, 2028.
``(l) Definitions.--In this section:
``(1) Capital assistance.--The term `capital assistance'
means loans, loan guarantees, equity investments, or technical
assistance provided under subsection (f).
``(2) Eligible entity.--The term `eligible entity' means--
``(A) an individual;
``(B) a corporation, including a limited liability
corporation;
``(C) a partnership, including a public-private,
limited, and general partnership;
``(D) a joint venture, including a strategic
alliance;
``(E) a trust;
``(F) a State, including a political subdivision or
any other instrumentality of a State;
``(G) a Tribal government or consortium of Tribal
governments;
``(H) any other governmental entity or public
agency in the United States, including a special
purpose district or public authority, including a port
authority; or
``(I) a multi-State or multi-jurisdictional group
of public entities.
``(3) Eligible investment.--The term `eligible investment'
means an investment that facilitates the efforts of the
Office--
``(A) 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
``(B) to protect vital tangible and intangible
assets from theft, acquisition, and transfer by
countries that are adversaries of the United States.
``(4) Investment-grade rating.--The Director shall
establish a credit rating system to ensure a reasonable
reassurance of repayment. This may include use of existing
credit rating agencies where appropriate.
``(5) Obligor.--The term `obligor' means a party that is
primarily liable for payment of the principal of or interest on
a loan.
``(6) Rating agency.--The term `rating agency' means a
credit rating agency registered with the Securities and
Exchange Commission as a nationally recognized statistical
rating organization (as that term is defined in section 3(a) of
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a))).
``(7) Subsidy amount.--The term `subsidy amount' means the
amount of budget authority sufficient to cover the estimated
long-term cost to the Federal Government of a loan--
``(A) calculated on a net present value basis; and
``(B) excluding administrative costs and any
incidental effects on governmental receipts or outlays
in accordance with the Federal Credit Reform Act of
1990 (2 U.S.C. 661 et seq.).''.
(b) Clerical Amendment.--The table of sections at the beginning of
chapter 4 of such title is amended by adding at the end the following
new item:
``148. Office of Strategic Capital.''.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Armed Services.
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