The Defense Department on Wednesday rolled out a new initiative meant to protect its future supply chain from investors that might seek to turn U.S. intellectual property into foreign military capabilities.
The “trusted capital” program — first authorized by Congress in 2017 — has already been up and running as a pilot effort in some pockets of DoD. Officials announced Wednesday they had quietly expanded it to a wider pool of vendors and investors in December via an online marketplace, and are now actively seeking more applicants.
The program works by pairing “capital providers” the Defense Department has vetted with small and medium-sized companies who are working on dual-use or military technologies, but need influxes of cash to get their products off the ground.
The main objective is to keep those firms from partnering with investment funds that exist primarily to take an ownership stake in a U.S. company’s intellectual property and then transfer it to China or other potential adversaries, said Ellen Lord, the undersecretary of Defense for acquisition and sustainment.
“Many small and mid-sized companies in the Defense industrial base are vulnerable to adversarial capital, so we need to make sure companies can stay in business without losing their intellectual property, the foundation of so many critical technologies,” she told reporters. “Economic security can be undermined by acquisition of companies in the defense and dual-use sectors by entities that are U.S.-based, but are actually owned or controlled by