House Lawmakers Propose Defense Study on Foreign Capital Investments

The 2025 National Defense Authorization Act (NDAA) proposes a study by the Department of Defense (DOD) to investigate foreign capital investments in commercial companies, private equity, and venture capital funds, aiming to identify potential security threats and risks of technology transfers and sensitive information access. The study, to be conducted by a federally-funded research center, will examine best practices for reporting foreign investments and provide a comprehensive assessment of their implications for national security and economic competitiveness. This description focuses on the primary topic of the article (the proposed study), the main entities involved (DOD, commercial companies, private equity, and venture capital funds), the context (national security and economic competitiveness), and the significant actions and implications (identifying security threats and informing policy decisions). The description also provides objective and relevant details that will help an AI generate an accurate visual representation of the article's content, such as the involvement of the DOD and the focus on national security and economic competitiveness.

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Nitish Verma
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House Lawmakers Propose Defense Study on Foreign Capital Investments

House Lawmakers Propose Defense Study on Foreign Capital Investments

House lawmakers have proposed the 2025 National Defense Authorization Act (NDAA), which includes a requirement for the Department of Defense (DOD) to study and report on foreign capital investments in commercial companies, private equity, and venture capital funds. The aim is to address potential risks of technology transfers and sensitive information access.

Why this matters: This study is crucial in identifying potential security threats posed by foreign investments in critical sectors, which can have far-reaching consequences for national security and economic competitiveness. By understanding these risks, the government can develop targeted policies to mitigate them and protect sensitive information and technologies.

Under the proposed legislation, the DOD would hire a federally-funded research-and-development center to conduct the study within 60 days of the 2025 NDAA's passage. The study will focus on commercial companies backed by private equity or venture capital funds, as well as the level of foreign investment in those funds. DOD entities, including the Defense Innovation Unit and National Security Innovation Capital, will be part of the study.

The study will examine best practices for reporting on foreign investments and the risks they pose. According to a 2019 Government Accountability Office report, foreign investors can gain access to sensitive technology investments, with risks of technology transfers if the investor is linked to Russia or China.

The DOD will report back to Congress within 270 days of the study's commencement. The report will be unclassified but may have a classified annex. The 2025 NDAA is still months away from final passage, with the DOD set to hire a research organization within 60 days of the act's approval and submit the report to Congress within 270 days of the study's start.

This proposed study is part of broader efforts to enhance national cybersecurity and address emerging threats. The 2025 NDAA provision aims to provide a comprehensive assessment of foreign capital investments in critical sectors and their potential implications for sensitive technology and information security. The findings will inform future policy decisions to safeguard U.S. national security interests.

Key Takeaways

  • 2025 NDAA proposes study on foreign investments in US companies and funds.
  • Study aims to identify security risks and sensitive info access.
  • DOD to hire research center to conduct study within 60 days of NDAA passage.
  • Report to Congress due within 270 days, with classified annex possible.
  • Study informs national cybersecurity efforts and future policy decisions.