Policymakers on the House and Senate Armed Services committees are preparing to allow the Pentagon’s credit office to collect fees from loan and loan guarantee borrowers following a late June legislative proposal from the Defense Department asking lawmakers to grant the office additional authorities.
The Office of Strategic Capital, established in December 2022 under then-Defense Secretary Lloyd Austin, manages the department’s credit program, which uses the office’s loan and loan guarantee authority to “attract and scale investments for national security,” per a DOD webpage on the OSC credit program.
A policy bill draft for fiscal year 2026 from the House Armed Services cyber, information technologies and innovation subcommittee includes a provision allowing OSC to charge and collect fees from borrowers under the credit program to reimburse costs incurred by the strategic capital office associated with an application for or the administration of capital assistance under the credit program.
The Senate Armed Services Committee’s version of the FY-26 defense policy bill appears to grant the Pentagon’s fledgling credit office the same authority, according to an executive summary the panel released today.
The upper chamber’s version “allows the Office of Strategic Capital to collect fees from loan and guarantee recipients,” according to the summary.
The move brings “OSC’s authorities in line with other federal loan programs and save[s] taxpayer money,” lawmakers added.
The provisions come nearly two weeks after the Defense Department sent a legislative proposal to lawmakers asking to grant its credit office additional authorities — including the ability to collect “project-specific” transaction fees — citing the need for accelerated recovery of taxpayer dollars and costs incurred by the department in administering loans enabling critical technology development.
While OSC is already authorized to charge a “credit risk premium” fee, these “project-specific” fees would further align the department’s credit office with “private-sector norms” dictating borrowers bear such costs, DOD wrote.
The department also asked lawmakers to put the strategic capital office director in charge of determining default on a guaranteed loan — an authority that currently belongs to the defense secretary.
“Determining default is an objective criterion,” DOD wrote, “and demands a level of proximity and detail more appropriate at the OSC Director level.”
The Pentagon reasoned that pushing the decision down in such a manner would make decision making and the recovery of taxpayer dollars easier and faster in the event of a default.
The House panel’s CITI subcommittee included language allowing for that change in its draft, but the Senate panel’s executive summary did not include such a stipulation, so it remains to be seen if the upper chamber’s policy bill draft will include such a provision.
Originally published Inside Defense
