Report on aligning Small Business Investment Company program with defense industrial base requirements

(a) In general Not later than 180 days after the date of the enactment of this Act, and annually thereafter for 5 years, the Secretary of Defense, in coordination with the Administrator of the Small Business Administration, shall submit to the congressional defense committees a report that— (1) identifies priority capital-intensive defense industrial base sectors, including— (A) munitions and energetics; (B) forgings and castings; (C) propulsion components; (D) specialty chemicals; and (E) other critical manufacturing sectors identified by the Secretary of Defense; (2) assesses the extent to which investments made through the SBIC program are aligned with the sectors identified under paragraph (1); (3) maps, to the extent practicable, SBIC-backed portfolio companies to defense-relevant production and manufacturing activities, including those supporting— (A) facility construction and expansion; (B) tooling, industrial equipment, and advanced manufacturing capabilities; (C) workforce development associated with production scaling; and (D) supply chain resilience and domestic sourcing of critical inputs; (4) assesses the extent to which the SBIC program is contributing to— (A) increased production capacity and throughput; (B) reduced production timelines and bottlenecks; (C) expanded surge capacity and mobilization readiness; and (D) mitigation of supply chain vulnerabilities, including reliance on foreign entities of concern; (5) describes the types of capital deployed through SBIC funds in defense-relevant sectors, including equity investments, subordinated debt, and other financing structures, and evaluates whether such capital is suited to capital-intensive manufacturing requirements; (6) identifies barriers to greater SBIC participation in defense industrial base sectors, including— (A) risk-return profiles associated with capital-intensive manufacturing investments; (B) statutory or regulatory limitations within the SBIC program; (C) information asymmetries between the Department of Defense and private fund managers; and (D) challenges related to contracting timelines, demand signals, or program stability; and (7) provides recommendations to improve alignment between the SBIC program and defense industrial base requirements. (b) Definitions In this section: (1) The term SBIC means a small business investment company (as defined in section 103 of the Small Business Investment Act of 1958 (15 U.S.C. 662)). (2) The term SBIC program means the small business investment company program of the Small Business Administration.