The Department of Defense’s Office of Strategic Capital has released a strategy that identifies and prioritizes investment areas for OSC’s credit-based financial products.

DOD said Thursday the Fiscal Year 2025 Investment Strategy integrates new authorities, establishes a framework to optimize capital allocations, defines arenas of strategic competition and identifies areas of particular interest for OSC investments.

“This Investment Strategy will ensure that we continue to build the foundation for ongoing technological leadership, economic strength, and American security,” said Lloyd Austin, secretary of DOD and a three-time Wash100 awardee.

Industry Segments of Particular Interest

The document has identified 15 industry segments of particular interest for OSC’s credit program: advanced bulk materials; advanced manufacturing; autonomous mobile robots; battery storage; biochemicals; bioenergetics; biomass; hydrogen generation and storage; microelectronics assembly, testing and packaging; microelectronics manufacturing equipment; microelectronics materials; nanomaterials and metamaterials; sensor hardware; spacecraft; and synthetic biology.

According to DOD, these segments comprise a subset of 31 covered technologies categories, or CTCs, where OSC will place focus for its credit-based financial products.

Key Arenas of Strategic Competition

The new strategy provides a framework that classifies national security impacts aligned to three core arenas of strategic competition: near-term control over chokepoints in economic networks; medium-term leadership within key industries; and long-term development of critical technologies.

“The OSC FY25 Investment Strategy provides an overarching framework as the office deploys its federal credit tools to build enduring advantages for our nation,” said Heidi Shyu, under secretary of defense for research and engineering.

“With the Investment Strategy as a guide, OSC investments will help reduce vulnerabilities to economic chokepoints, support the production of key industrial capabilities, and lead the development of next generation critical technologies,” added Shyu, a four-time Wash100 Award recipient.

In line with the release of the strategy, OSC’s application window for equipment finance loans opened on Thursday, Jan. 2, and will run through Feb. 3.

What Is OSC?

In December 2022, Austin formed OSC to help attract and scale private capital for national security priorities.

The following year, Congress enacted the office into law through the FY 2024 National Defense Authorization Act, authorizing OSC to provide loans, loan guarantees and technical assistance to eligible companies and other entities working in 31 CTCs listed in statute.

In late September, OSC issued its first notice of funding availability as part of efforts to finance companies’ equipment needs.

In line with the release of the new strategy, the office’s application window for equipment finance loans opened on Thursday, Jan. 2, and will run through Feb. 3.

The Defense Counterintelligence and Security Agency has announced that 23 federal agencies have completed the onboarding process into continuous vetting, or CV, services for the non-sensitive public trust, or NSPT, workforce.

The agency said Thursday a total of 26,540 NSPT members have already enrolled in the CV services, as of Dec. 12. It aims to onboard the whole NSPT population by the end of fiscal year 2025.

Continuous Vetting Services

The DCSA launched the phased rollout of the CV services for NSPT members in August 2024. The ongoing process, part of the Trusted Workforce 2.0 whole-of-government personnel vetting reform initiative, is being implemented in lieu of the current reinvestigation requirement conducted every five years. It is accompanied by attendant services, such as threat reporting to agencies, alert management and real-time threat analysis.

The CV regularly performs background checks on the NSPT population to maintain their adherence to security clearance requirements. This is necessary for identifying and managing potential risks.

The NSPT workforce is composed of individuals in non-national security roles whose possible misconduct could negatively impact the integrity and efficiency of government service. These non-sensitive roles, designated as public trust, may include rulemaking, law enforcement, public safety and health services, safeguarding government information systems and other critical functions.

DCSA Director David Cattler remarked, “Expansion of CV to the NSPT workforce is a critical component of federal Trusted Workforce 2.0 policy and enhances the trustworthiness of all federal employees.”

The Department of Defense has started soliciting public comments on a plan to establish and implement a pilot program to incentivize contractor performance for specific, measurable criteria by increasing the customary progress payment rate.

According to a notice published Monday in the Federal Register, the comment period will run through Jan. 29.

What Is the Progress Payment Incentive Pilot?

The planned implementation of the Progress Payment Incentive Pilot, or PPIP, is authorized under Section 874 of the fiscal year 2024 National Defense Authorization Act, or NDAA.

This section of the NDAA authorizes an increase of up to 10 percentage points higher than the current customary progress payment rate for contractor performance against clear, measurable criteria on a contract-by-contract basis.

Vendors seeking to participate in the pilot must be eligible for customary progress payments and their participation must be voluntary.

To be included in the pilot program, DOD plans to require contract actions to be nominated by the cognizant contracting officer and approved by the director of price, cost and finance within Defense Pricing, Contracting and Acquisition Policy during the acquisition’s preaward phase.

The department expects the nominated contract or order to have a performance period of no more than three years to ensure that all performance, including potential new work and options, will be finalized before the pilot’s sunset date.

DOD expects PPIP to focus on payment time to subcontractors to help improve cash flow throughout the supply base.