A new bill proposes a provision enabling the Army Department to invest in private companies. This is outlined in section 1051 of the Senate version of the National Defense Authorization Act for 2027 (NDAA). Titled “Authority for Equity Investments by the Office of Strategic Capital,” it might establish a new bank account within the U.S. Treasury to oversee these investments. Consequently, the Office of Strategic Capital (OSC), part of the Department of Defense, could buy stocks, shares, and other forms of ownership in private companies.
The bill states that the OSC will be able to make equity investments amounting to up to $500 million.
A Pentagon representative clarified, “No company gets preferential treatment. We’re focused on what benefits the warfighter, not on specific organizations.” They emphasized that external parties have no influence over funding decisions.
As per the proposal, the OSC and DOW will not be allowed to have board positions or majority stakes in any companies. Additionally, any profits generated from these investments will not go to the Army but will be returned to the U.S. Treasury.
Both the House and Senate drafts of the 2027 NDAA outline measures designed to facilitate DOW officials in engaging with defense manufacturers, authorizing them to repair military equipment, and allocating $2 billion for foreign interests.
Neither the OSC nor the White House has commented on this development.
Follow the Money
The OSC was set up in December 2022 to draw in private funding to enhance national security efforts. A May 4 Congressional Research Service report highlighted the OSC’s responsibilities, including developing a capital investment strategy.
The Senate’s version of the 2027 NDAA introduces an equity investment account and enables the OSC director to invest in companies connected to crucial minerals and materials.
However, allowing the Pentagon to engage in private equity has potential downsides, according to the Congressional Research Service. Concerns include politicization of company decisions, preferential treatment based on government investments, distortions in the stock market, and increased financial risks for the government.
Proponents argue that the OSC’s involvement would empower U.S.-based companies to produce essential technology and weapons. They view it as a commitment by the Department of Defense to maintain U.S. military superiority.
Investments by DOW could fortify America’s supply chains for vital resources, as pointed out by a defense official. They indicated that such strategic investments would enhance capabilities across various stages of the rare earth supply chain.
Not every lawmaker supports this bill. Democratic Senator Elizabeth Warren expressed concerns about inadequate safeguards against conflicts of interest within the OSC. She pointed out that these concerns could lead to divisive issues.
The amendment to prevent OSC investments in companies where executive branch officials or their relatives hold significant ownership was quietly dismissed by the Senate Armed Services Committee.
Vulcan Elements, a startup linked to Donald Trump Jr., recently secured $620 million. There’s apprehension among at least one Democrat regarding potential benefits Trump Jr. may receive from this deal.
The company asserts that it boasts unique capabilities for manufacturing rare earth magnets, which are crucial for defense operations and have no dependency on China’s supply chain. Vulcan received its initial contracts with the Department of Defense in 2024.
Democratic Representative Maxine Dexter has raised issues about Trump Jr.’s perceived financial gains from this arrangement. Additionally, Trump Jr.’s venture capital firm acquired a stake in Vulcan Elements in 2025.
Democrats in the House attempted to compel Trump Jr. to testify regarding this deal, but that effort was blocked. A Republican claimed this move was merely political in nature.
Some believe the NDAA addresses serious issues, despite concerns of nepotism and financial risk. The intention is to ensure U.S. competitiveness against China in the race for rare earth minerals.
According to Michael Cadenazzi Jr., an assistant secretary within the Army, the supply chain for critical minerals is an essential aspect of U.S. national security.
The recent loan to Vulcan is part of a broader effort to support U.S. production of advanced rare earth elements. Earlier, the Department of Defense invested $400 million in stock from another rare earth mining company.
Neither the White House nor the Army Department immediately responded to questions about Vulcan.
Stephen Bucci from the Heritage Foundation mentioned that the overall objective is to foster collaboration and support emerging companies, noting that profit isn’t the main aim.
The proposed bill additionally includes provisions establishing limits on foreign involvement in these investments. OSC directors would need to assess foreign ownership and any potential influence on management or operational aspects of the companies targeted for investment.
The directors are also tasked with identifying individuals or parties holding at least a 5% stake in any entity being considered for investment, ensuring no conflicts of interest arise.
I Don’t See Any Risks
Bucci remarked that similar investments have been undertaken by significant intelligence agencies, and he sees minimal risks in this approach. He described it as an opportunity for the Department to engage smaller, promising companies without hampering interactions with larger firms.
These strategic investments have historically helped incubate major companies, such as Palantir, which was among In-Q-Tel, the CIA’s venture capital arm, early investments.
In-Q-Tel, founded in 1999, aims to discover private sector innovations relevant to the CIA’s mission. Previous reports indicate significant investments from the agency that have assisted in building substantial companies.
Importantly, the CIA engaging in profit-driven venture capital activities is a controversial topic. Some assert that while this funding is legally sanctioned, it raises ethical concerns.
