S.Amdt. 5842

1. Adds SEC. 906. ESTABLISHMENT OF OFFICE OF STRATEGIC CAPITAL at the end of subtitle A of title IX

   Adds a section

   In S.Amdt. 5499 as proposed

   Of the funds authorized to be appropriated by section 301 for fiscal year 2023 for operation and maintenance, Defense-wide, and available as specified in the funding table in section 4301 for the Office of the Secretary of Defense, not more than 75 percent may be obligated or expended until the Department of Defense complies with the requirements of section 911 of the National Defense Authorization Act for Fiscal Year 2022 (Public Law 117-81; 135 Stat. 1878) (relating to alignment of the Close Combat Lethality Task Force).

   Inserted: SEC. 906. ESTABLISHMENT OF OFFICE OF STRATEGIC CAPITAL.

   Inserted: (a) In General.--Chapter 4 of title 10, United States Code, is amended by adding at the end the following new section:

   Inserted: "Sec. 148. Office of Strategic Capital

   Inserted: "(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').

   Inserted: "(b) Director.--The Office shall be headed by a 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 positions (as defined in section 3132 of title 5).

   Inserted: "(c) Duties.--The Office shall--

   Inserted: "(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;

   Inserted: "(2) protect vital tangible and intangible assets from theft, acquisition, and transfer by the People's Republic of China, the Russian Federation, and other countries that are adversaries of the United States; and

   Inserted: "(3) provide capital assistance to eligible entities engaged in eligible investments.

   Inserted: "(d) Applications.--

   Inserted: "(1) In general.--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.

   Inserted: "(2) Preliminary rating opinion letter.--

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   Inserted: "(A) In general.--Except as provided by subparagraph (B), an application submitted under paragraph (1) seeking capital assistance for an eligible investment shall include a preliminary rating opinion letter from at least one rating agency indicating that the senior obligations of the investment have the potential to achieve an investment-grade rating.

   Inserted: "(B) Exceptions.--The Director may waive the requirement under subparagraph (A) with respect to an investment if it is not possible to obtain a preliminary rating opinion letter with respect to the investment.

   Inserted: "(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--

   Inserted: "(1) the extent to which an investment is significant to the national security of the United States;

   Inserted: "(2) the creditworthiness of an investment; and

   Inserted: "(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.

   Inserted: "(f) Capital Assistance.--

   Inserted: "(1) Loans and loan guarantees.--

   Inserted: "(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).

   Inserted: "(B) Investment-grade rating required.--

   Inserted: "(i) In general.--Except as provided by clause (ii), a loan or loan guarantee may be provided under subparagraph (A) only with respect to an investment that receives an investment-grade rating from a rating agency.

   Inserted: "(ii) Exception.--The Director may waive the requirement under clause (i) with respect to an investment if--

   Inserted: "(I) it is not possible to obtain a preliminary rating opinion letter with respect to the investment; and

   Inserted: "(II) the investment is determined by the Secretary of Defense to be vital to the national security of the United States.

   Inserted: "(C) Security.--A loan provided under subparagraph (A) is required--

   Inserted: "(i) to be payable, in whole or in part, from tolls, user fees, or other dedicated revenue sources; and

   Inserted: "(ii) to include a rate covenant, coverage requirement, or similar security feature supporting investment obligations.

   Inserted: "(D) Administration of loans.--

   Inserted: "(i) Interest rate.--

   Inserted: "(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.

   Inserted: "(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.

   Inserted: "(ii) Final maturity date.--The final maturity date of a loan provided under subparagraph (A) shall be not later than 35 years after the date of substantial completion of the investment for which the loan was provided.

   Inserted: "(iii) Prepayment.--A loan provided under subparagraph (A) may be paid earlier than is provided for under the loan agreement without a penalty.

   Inserted: "(iv) Capital reserve subsidy amount.--The Director of the Office of Management and Budget and the rating agencies shall determine the appropriate capital reserve subsidy amount for each loan provided under subparagraph (A).

   Inserted: "(v) Nonsubordination.--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.

   Inserted: "(vi) Sale of loans.--After substantial completion of an investment 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.

   Inserted: "(vii) Loan guarantees.--If the Director determines that the holder of a loan guaranteed by the Office defaults on the loan, the Director shall pay the holder as specified in the loan guarantee agreement.

   Inserted: "(viii) 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.

   Inserted: "(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.).

   Inserted: "(2) Equity investments.--

   Inserted: "(A) In general.--The Director may, as a minority investor, 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 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.

   Inserted: "(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.

   Inserted: "(3) Insurance and reinsurance.--The Director may issue insurance or reinsurance, upon such terms and conditions as the Director may determine, to an eligible entity for an eligible investment selected pursuant to subsection (e) assuring protection of the investments of the entity in whole or in part against any or all political risks such as currency inconvertibility and transfer restrictions, expropriation, war, terrorism, civil disturbance, breach of contract, or nonhonoring of financial obligations.

   Inserted: "(4) Technical assistance.--The Director shall 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.

   Inserted: "(5) Terms and conditions.--

   Inserted: "(A) Fees.--The Director may charge fees for the provision of capital assistance under this subsection to cover the costs to the Office of providing such assistance.

   Inserted: "(B) 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.

   Inserted: "(C) Use of united states dollar.--All financial transactions conducted under this subsection shall be conducted in United States dollars, unless the Director approves of the use of another currency.

   Inserted: "(g) Corporate Funds.--

   Inserted: "(1) Corporate capital account.--There is established in the Treasury of the United States a fund to be known as the 'Office of Strategic Capital Capital Account' (in this subsection referred to as the 'Capital Account') to carry out the purposes of the Office.

   Inserted: "(2) Funding.--The Capital Account shall consist of--

   Inserted: "(A) fees charged and collected pursuant to paragraph (3);

   Inserted: "(B) any amounts received pursuant to paragraph (6);

   Inserted: "(C) investments and returns on such investments pursuant to paragraph (7);

   Inserted: "(D) amounts appropriated pursuant to the authorization of appropriations under paragraph (8);

   Inserted: "(E) payments received in connection with settlements of all insurance and reinsurance claims of the Office; and

   Inserted: "(F) all other collections transferred to or earned by the Office, excluding the cost, as defined in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a), of loans and loan guaranties.

   Inserted: "(3) Fee authority.--Fees may be charged and collected for providing capital assistance in amounts to be determined by the Director. The Director shall establish the amount of such fees at an amount sufficient to cover all or a portion of the costs to the Office of providing capital assistance.

   Inserted: "(4) Use of funds.--

   Inserted: "(A) In general.--Subject to appropriations Acts, the Director is authorized to pay, from amounts in the Capital Account--

   Inserted: "(i) 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; and

   Inserted: "(ii) administrative expenses of the Office.

   Inserted: "(B) Income and revenue.--In order to carry out the purposes of the Office, all collections transferred to or earned by the Office (excluding the cost, as defined in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a), of loans and loan guaranties) shall be deposited into the Capital Account and shall be available to carry out its purpose, including--

   Inserted: "(i) payment of all insurance and reinsurance claims of the Office;

   Inserted: "(ii) repayments to the Treasury of amounts borrowed under paragraph (5); and

   Inserted: "(iii) dividend payments to the Treasury under paragraph (6).

   Inserted: "(5) Full faith and credit.--

   Inserted: "(A) In general.--All capital assistance provided by the Office shall constitute obligations of the United States, and the full faith and credit of the United States is hereby pledged for the full payment and performance of such obligations.

   Inserted: "(B) Authority to borrow.--The Director is authorized to borrow from the Treasury such sums as may be necessary to fulfill such obligations of the United States and any such borrowing shall be at a rate determined by the Secretary of the Treasury, taking into consideration the current average market yields on outstanding marketable obligations of the United States of comparable maturities, for a period jointly determined by the Director and the Secretary of Defense, and subject to such terms and conditions as the Secretary may require.

   Inserted: "(6) Dividends.--The Director, in consultation with the Director of the Office of Management and Budget, shall annually assess a dividend payment to the Treasury if the Office's insurance portfolio is more than 100 percent reserved.

   Inserted: "(7) Investment authority.--

   Inserted: "(A) In general.--The Director may request the Secretary of the Treasury to invest such portion of the Capital Account as is not, in the Director's judgment, required to meet the current needs of the Capital Account.

   Inserted: "(B) Form of investments.--Investments described in subparagraph (A) shall be made by the Secretary of the Treasury in public debt obligations, with maturities suitable to the needs of the Capital Account, as determined by the Director, and bearing interest at rates determined by the Secretary, taking into consideration current market yields on outstanding marketable obligations of the United States of comparable maturities.

   Inserted: "(8) Authorization of appropriations.--

   Inserted: "(A) In general.--There are authorized to be appropriated to the Capital Account--

   Inserted: "(i) for fiscal year 2023, $20,000,000;

   Inserted: "(ii) for fiscal year 2024, $30,000,000;

   Inserted: "(iii) for fiscal year 2025, $40,000,000; and

   Inserted: "(iv) for fiscal year 2026 and each fiscal year thereafter, $50,000,000.

   Inserted: "(B) Availability of amounts.--Amounts appropriated pursuant to the authorization of appropriations under subparagraph (A) shall remain available until expended.

   Inserted: "(9) Collections subject to appropriations acts.--Interest earnings made pursuant to paragraph (6), earnings collected related to equity investments, and other amounts (excluding fees related to insurance or reinsurance) collected, may not be collected for any fiscal year except to the extent provided in advance in appropriations Acts.

   Inserted: "(h) Regulations.--The Secretary of Defense shall prescribe such regulations as are necessary to carry out this section.

   Inserted: "(i) Annual Report.--Not later than December 31 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.

   Inserted: "(j) Definitions.--In this section:

   Inserted: "(1) Capital assistance.--The term 'capital assistance' means loans, loan guarantees, equity investments, insurance and reinsurance, or technical assistance provided under subsection (f).

   Inserted: "(2) Eligible entity.--The term 'eligible entity' means--

   Inserted: "(A) an individual;

   Inserted: "(B) a corporation;

   Inserted: "(C) a partnership, including a public-private partnership;

   Inserted: "(D) a joint venture;

   Inserted: "(E) a trust;

   Inserted: "(F) a State, including a political subdivision or any other instrumentality of a State;

   Inserted: "(G) a Tribal government or consortium of Tribal governments;

   Inserted: "(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

   Inserted: "(I) a multi-State or multi-jurisdictional group of public entities.

   Inserted: "(3) Eligible investment.--The term 'eligible investment' means an investment that facilitates the efforts of the Office--

   Inserted: "(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

   Inserted: "(B) to protect vital tangible and intangible assets from theft, acquisition, and transfer by the People's Republic of China, the Russian Federation, and other countries that are adversaries of the United States.

   Inserted: "(4) Investment-grade rating.--The term 'investment-grade rating' means a rating of BBB minus, Baa3, bbb minus, BBB (low), or higher assigned by a rating agency to investment obligations.

   Inserted: "(5) Obligor.--The term 'obligor' means a party that is primarily liable for payment of the principal of or interest on a loan.

   Inserted: "(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))).

   Inserted: "(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--

   Inserted: "(A) calculated on a net present value basis; and

   Inserted: "(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.).".

   Inserted: (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:

   Inserted: "148. Office of Strategic Capital.".

   Original wording

   At the end of subtitle A of title IX, add the following:

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As printed