(a) Designation
Not later than 90 days after the date of the enactment of this Act, the Secretary of Defense shall designate an office within the Office of Industrial Base Policy with primary responsibility for assessing and mitigating risks related to the use of adversarial capital by the entities in the national technology and industrial base (as defined in section 4801 of title 10, United States Code).
(b) Duties
The Secretary shall ensure the office designated under subsection (a) is responsible for the following:
Facilitating collaboration among elements of the Department of Defense and with other stakeholders, including private sector entities and academia, to identify and mitigate such risks, including—
by coordinating, deconflicting, and synchronizing adversarial capital risk management activities;
by facilitating timely sharing with entities in the national technology and industrial base of threat information, vulnerability assessments, and risk indicators; and
by establishing relationships, including through cooperative research and development agreements, to support shared informational understanding of the commercial and economic domain to advance the economic security interests of the Department.
Tracing the flow of adversarial capital from its source to entities in the national and technological industrial base.
Identifying and monitoring dependencies of entities in the national and technological industrial base on foreign adversaries by identifying—
single points of failure, critical chokepoints, and foreign adversary-controlled aspects of relevant supply chains that could vulnerable to adversarial capital; and
tactics, techniques, and procedures used by foreign adversaries to gain influence or control over such entities.
Providing specific recommendations to Secretary of Defense on actions or policies necessary to reduce adversarial capital flows for mission-critical weapons systems, technologies, and materials.
Working with stakeholders to develop and implement clear legal, contractual, and technical procedures to—
support and enable identification of beneficial ownership data of subcontractors (at any tier) and suppliers in the national and technological industrial base that is relevant to national security;
ensure appropriate liability protections for such subcontractors and suppliers making good-faith disclosures of data described in subparagraph (A);
implement a voluntary risk-sharing framework under which national and technological industrial base entities may share supplier risk information and receive validated risk assessments of the supply chain of such entity in return, with safeguards for proprietary data.
Implementing and maintaining continuous automated monitoring of entities in the national and technological industrial base for changes in corporate control, beneficial ownership, geographic sourcing, and supply chain structure.
Issuing automated alerts to appropriate members of the acquisition workforce and affected stakeholders upon detection of significant risk indicators of adversarial capital.
Applying corroboration protocols requiring validation of significant risk indicators of adversarial capital across not fewer than two independent data sources before forming the basis for risk-tier elevation, mitigation action, or referral to appropriate law enforcement or regulatory authorities.
(c) Economic security risk assurance capability
Not later than 180 days after the date of the enactment of this Act, the head of the office designated under subsection (a) shall establish and maintain a capability to be known as the Economic Security Risk Assurance capability, which shall—
consolidate and analyze information related to adversarial capital flows to entities in the national and technological industrial base, supplier identifiers, links between programs of the Department of Defense and suppliers, and other information as determined by such head;
enable analysis and reporting to support the assessment and risk mitigation of adversarial capital in the national technology and industrial base;
provide visualization of the risk of adversarial capital on entities in the national and technological industrial base;
enable federated access by program managers, portfolio acquisition executives, and other appropriate officials of the Department of Defense to supply chain illumination efforts of the Department; and
enable the office to better perform the duties outlined by this subsection.
(d) Reporting requirements
(1) Initial establishment
The Secretary shall submit to the congressional defense committees a notification of the designation of an office under subsection (a) and the establishment of the Economic Security Risk Assurance tool in accordance with subsection (c).
(2) Annual report
Not later than December 1, 2027, and annually thereafter, the Secretary shall submit to the congressional defense committees an annual report analyzing the activities of the office designated under subsection (a). The report may be provided in classified form and may include any recommendations of the Secretary to reduce or further mitigate risks related to adversarial capital in the national and technological industrial base.
(e) Adversarial capital defined
In this section, the term adversarial capital means loans or other forms of financial assistance provided to entities in the national and technological industrial base.