The current Senate version of the National Defense Authorization Act gives the Defense Department explicit authority to take ownership stakes in companies. A provision titled "Equity Investments and Related Matters" establishes a new "Department of Defense Equity Investment Account" within the Treasury Department, which the Defense Department can use to make equity investments in critical minerals, materials, chemicals, and batteries.

While administration officials say this move allows the Defense Department to better align its goals with the private sector and for taxpayers to earn a return if the companies do well, critics have raised concerns about establishing a legal basis for government expansion into the private sector.

Government investments in companies under this bill would be limited to a 50 percent stake, non-voting shares, and a dollar cap of $500 million.

Michael Duffey, under secretary of defense for acquisition and sustainment, stated in January that the Trump administration is "fundamentally shifting our approach to securing our munitions supply chain."

"By investing directly in suppliers we are building the resilient industrial base needed for the Arsenal of Freedom," Duffey said.

The Pentagon has been actively buying stakes in private companies over the past year, including a $400 million investment in MP Materials, a rare-earths mining company, in 2025, and a $1 billion investment a L3Harris Technologies, a rocket motor manufacturer, in April, as well as a 10 percent stake in chipmaker Intel.

"Equity ownership can align incentives in ways that grants and subsidies cannot," Carliss Chatman, a law professor at Southern Methodist University, told The Epoch Times.

"If taxpayers are assuming significant financial risk to help develop strategically important industries, an equity stake allows the public to participate in the upside if those investments succeed," she said. "Equity may also provide the government with governance rights, access to information, or long-term alignment that grants generally do not."

Potential For Conflicts Of Interest

Critics, however, say this initiative marks a new expansion of the state into private industry. While the U.S. government has taken stakes in banks, insurers, and carmakers in the past, those have been short-term measures to rescue companies from bankruptcy, and typically done with congressional approval and oversight.