Rep. Khanna Introduces Bill to Require Defense Department Review of Private Equity Buyouts of Military Suppliers
This bill was recently introduced and is currently being reviewed by the House Committee on Armed Services. It is in the early stages of the legislative process and is considered active. There are no upcoming votes scheduled at this time.
While there is bipartisan concern about the defense supply chain, bills that increase regulation on private investment firms often face significant opposition and rarely pass without major changes.
Small defense contractors and subcontractors could benefit from reduced private equity rollups that often lead to consolidation and less competition. However, some small defense firms that rely on investment companies for capital or exit strategies may find it harder to attract buyers or funding, since acquisition deals would face new government review hurdles.
“means any prime contractor or subcontractor that supplies or could supply goods or services directly or indirectly to the Department of Defense or any company with technology potentially significant to defense capabilities”
Referred to the House Committee on Armed Services.
Introduced in House
The bill was officially filed and given a number. It now enters the legislative queue.
No votes have been recorded for this legislation yet.
Senators Warren and Blumenthal introduced the Critical Defense Ownership Review Act on June 10. The Act would require a mandatory premerger review for transactions where private equity funds acquire 25% or greater equity interest in a major defense supplier, expanding the regulatory framework.
The Senate Armed Services Committee's version of the 2027 NDAA includes provisions mandating the defense secretary to conduct ownership reviews of companies in which the DoD holds equity, reflecting legislative efforts to increase transparency and oversight of defense industry investments.
Criticizing the 'statutory architecture for a Pentagon stock portfolio,' this analysis notes that the Senate bill includes ownership reviews and identification of 5 percent equity holders as part of a new process for the Department of Defense to manage equity stakes in private companies.
Document Type
Congressional Bill
Official Title
Critical Defense Ownership Review Act
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