Office of Strategic Capital (OSC)

The Office of Strategic Capital (OSC) program element (PE 0604679D8Z) within the Office of the Secretary of Defense is designed to attract and scale private capital investments into technologies deemed critical for the national and economic security of the United States. The OSC's overarching goal is to leverage proven commercial sector capital investment strategies to shape and expand funding for critical technologies and assets, particularly those not typically supported through direct government investment. This approach is intended to strengthen the Department of Defense's (DoD) ability to secure supply chains, rebuild the industrial base, and maintain technological superiority in areas of strategic competition.

The OSC utilizes a variety of financial instruments, including loans, loan guarantees, and technical assistance, to incentivize private sector investment in alignment with government priorities. These tools are intended to efficiently use taxpayer resources by crowding in private capital and aligning incentives between public and private sectors. The OSC's investments are guided by its annual Investment Strategy, which is updated to reflect evolving defense priorities and competitive dynamics identified in key strategic documents such as the Interim National Defense Strategic Guidance, National Security Strategy, National Defense Strategy, and Defense Planning Guidance.

A key initiative within OSC is the Transition Acceleration Program (TAP), which aims to co-invest in critical technology companies developing advanced military capabilities with clear transition pathways to DoD programs of record. TAP leverages RDT&E funding and private investment to validate advanced manufacturing methods, particularly to meet critical demand for solid rocket motors. In FY2025, TAP supported a Pathfinder program and awarded contracts to companies proposing novel manufacturing approaches. The program's objectives include increasing domestic production capacity and strengthening the supply chain for essential defense components. Due to funding reductions, TAP's focus in FY2026 will shift to transitioning projects to the Services and monitoring existing awards.

The Global Technology Scouting and Co-Investment Program (GTS) leads OSC's international activities, fostering co-investment opportunities with allied nations in critical technology sectors. GTS aims to advance interoperability, integrated deterrence, and prevent adversarial capital investment in key areas. In FY2025, GTS developed an international strategic engagement plan and sourced deal opportunities aligned with Combatant Command priorities. For FY2026, GTS will formalize international relationships and continue implementing its engagement and origination strategy, supporting shared national security objectives through collaboration with partners.

The Investment Strategy program serves as the analytical backbone of OSC, responsible for developing, drafting, and coordinating the office's investment approach to ensure alignment with DoD priorities. The program conducts quantitative and qualitative research to map economic networks, assess key industries, and identify critical technologies essential to national security. In FY2025, the Investment Strategy program enhanced its data platform and analytics capabilities, integrating inputs from Combatant Commands, the private sector, interagency partners, and the Intelligence Community. For FY2026, the program plans to release an updated strategy, incorporate more specialized data sets, and employ advanced analytical techniques such as war games and simulations to provide real-time investment insights.

OSC's activities are closely coordinated with other DoD agencies, Combatant Commands, the National Security Council, and interagency partners to identify and prioritize areas for investment. The office also develops new financial products tailored to the needs of manufacturers and technology companies, such as equipment finance loans, project finance loans for capital-intensive projects, working capital loans, and loan guarantees through private banks. These efforts are designed to enhance the commercialization of DoD and U.S. Government science and technology investments, increase private capital participation, and address vulnerabilities in critical supply chains.