{"id":5076,"date":"2026-07-27T22:09:17","date_gmt":"2026-07-27T22:09:17","guid":{"rendered":"https:\/\/homebuyerrelocation.com\/?p=5076"},"modified":"2026-07-27T22:09:17","modified_gmt":"2026-07-27T22:09:17","slug":"rep-pat-harrigan-fears-unintended-consequences-of-pentagons-investment-stakes-in-defense-firms","status":"publish","type":"post","link":"https:\/\/homebuyerrelocation.com\/?p=5076","title":{"rendered":"Rep. Pat Harrigan fears \u2018unintended consequences\u2019 of Pentagon\u2019s investment stakes in defense firms"},"content":{"rendered":"
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The Pentagon\u2019s controversial plan to take financial stakes in private companies could inflict long-term \u201cunintended consequences\u201d on the U.S. defense industry, Rep. Pat Harrigan told the Washington Times\u2019 Threat Status Podcast in an exclusive interview.<\/p>\n

Read more Democratic Party\u2019s socialist showdown moves to Detroit<\/a><\/p>\n

The North Carolina Republican and combat-decorated Green Beret is the latest high-profile GOP member to raise questions about the Trump administration\u2019s deepening financial footprint in the private defense sector. Some critics say the arrangements could unfairly tip the scales toward certain companies, which in the long run could erode marketplace competition and actually make it harder for the military to get the munitions and raw materials it needs.<\/p>\n

\u201cI\u2019m not comfortable with it at all and I haven\u2019t been comfortable with it since it began,\u201d Mr. Harrigan said on Friday\u2019s episode of the Threat Status Podcast.<\/p>\n

\u201cI think it\u2019s brilliant in the sense that it solves legitimate short-term problems that we have, but I think the long-term problem that it creates in anti-competitiveness is going to boomerang around to bite the defense industry right in the rear end,\u201d he said. \u201cI\u2019m never a fan of unintended consequences and I think there\u2019s a lot of unintended consequences possible with this type of structure.\u201d<\/p>\n

So far, the Pentagon has taken or intends to take direct equity stakes in at least four companies: one in an L3Harris spinoff company that will produce solid rocket motors for munitions, and the others in companies that mine and process rare earth elements and other critical minerals.<\/p>\n

The Trump administration as a whole has taken direct equity stakes in more than 20 private companies, with many coming from the Commerce Department or other federal agencies, according to a tally from the Cato Institute think tank.\u00a0<\/p>\n\n

<\/p>\n

SEE ALSO: LISTEN: Should Trump declare victory and end the Iran war?<\/p>\n

<\/strong><\/p>\n\n

The Pentagon\u2019s financial interactions with private industry are changing in other ways. The Pentagon\u2019s increasingly powerful Office of Strategic Capital, for example, earlier this month announced a new program to loan money to investment fund managers, who are then expected to invest in companies working to shore up America\u2019s supply of critical minerals. That office, established in 2022, is a key Pentagon channel for the provision of loans to companies that supply products or capabilities for the military.\u00a0<\/p>\n

In a statement to The Times, a Defense Department official said the Office of Strategic Capital conducts proper due diligence on all loans but did not offer details on that process.\u00a0<\/p>\n

\u201cBefore any loan is disbursed, OSC conducts extensive due diligence on potential borrowers to fulfill all necessary conditions. To protect the integrity of this process and the proprietary information of potential borrowers, the department cannot comment on the specific commercial, contractual, financial, technical, or legal considerations raised during the conditional loan commitment process,\u201d the official said.<\/p>\n

\u201cOSC maintains a rigorous, multi-layered ethics framework that includes a detailed screening process and operates in full compliance with all federal ethics laws and regulations,\u201d the official said.<\/p>\n

Pushback on Capitol Hill<\/strong><\/p>\n

The Senate version of the $1.15 trillion National Defense Authorization Act \u2014 which has met fierce resistance from chamber Democrats \u2014 would codify the Pentagon\u2019s authority to take ownership stakes in private firms. It would also set specific monetary caps and impose other restrictions to govern the Pentagon\u2019s financial relationships with companies.<\/p>\n

But even leading Senate Republicans who support the broader NDAA have reservations about the Pentagon\u2019s evolving financial relationships with the private sector.<\/p>\n

\u201cThe concern that I have with it is that I don\u2019t want to pick winners and losers necessarily. And at what point do you suddenly start using one company because you have an interest in it? I think there\u2019s some discussion that\u2019s going to occur yet on that,\u201d Sen. Mike Rounds, South Dakota Republican, told The Washington Times earlier this month.<\/p>\n

Read more Trump hails Michigan auto boom, says other nations will no longer \u2018pillage your factories\u2019<\/a><\/p>\n

Sen. Rick Scott, Florida Republican, told The Times that the step should essentially be a last resort if the Pentagon has no other way to accelerate the production of a specific product or capability.<\/p>\n

\u201cIt\u2019s got to be rare,\u201d Mr. Scott said earlier this month.\u00a0<\/p>\n

Mr. Harrigan said the ownership stakes have set off \u201calarm bells\u201d in the halls of Congress. He said that the House and Senate have the final say over whether the Pentagon can take those steps.<\/p>\n

\u201cAll of this is only as good as the legislative branch is willing to fund at the end of the day,\u201d Mr. Harrigan said.<\/p>\n

In January, the Pentagon announced a deal to invest $1 billion in a new company to be spun off from defense industry giant L3Harris, that will produce solid rocket motors. Solid rocket motors are key components of advanced missile systems.<\/p>\n

America\u2019s stockpile of those systems has been dramatically reduced because of the U.S.-Iran war and American arms transfers to Ukraine, Israel and other allies.<\/p>\n

At the time of the announcement, Michael Duffey, undersecretary of war for acquisition and sustainment, said the investment signified a major strategic shift in how the Pentagon views its relationship with the industrial base.<\/p>\n

\u201cWe are fundamentally shifting our approach to securing our munitions supply chain,\u201d he said at the time.<\/p>\n

The Pentagon also has taken a stake in MP Materials, which mines and refines the rare earth elements used in electric vehicles, cell phones, fighter jets, advanced weapons, and other 21st-century products. The company said in a press release this month that the Pentagon \u201cagreed to purchase $400 million of a newly-created series of the company\u2019s preferred stock convertible into shares of the company\u2019s common stock, and a warrant permitting DoD to purchase additional shares of the company\u2019s common stock.\u201d<\/p>\n

Warrants allow the Pentagon to buy more stock in the future at a locked-in price. The Pentagon reportedly has such arrangements with companies such as Vulcan Elements and ReElement Technologies, despite not currently holding a direct stake in them.<\/p>\n

Trilogy Metals said the Pentagon is making a $35.6 million strategic investment in the company\u2019s domestic copper mining operations. That equity stake agreement is expected to close on July 31.<\/p>\n

The Pentagon also will take a 40% stake in a $7.4 billion Tennessee mineral smelter in partnership with Korea Zinc, according to Reuters.<\/p>\n

Read more Navy carrier strike group patrolling tension-filled South China Sea<\/a><\/p>\n

\u2022 John T. Seward contributed to this report.<\/em><\/p>\n<\/div>\n<\/div>\n

<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The Pentagon’s controversial plan to take financial stakes in private companies could inflict long-term “unintended consequences” on the U.S. defense industry, Rep. Pat Harrigan told the Washington Times’ Threat Status Podcast in an exclusive interview.<\/p>\n","protected":false},"author":1,"featured_media":5075,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6,62],"tags":[],"class_list":["post-5076","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","category-world"],"yoast_head":"\nRep. 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