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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.''.
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