Office of Strategic Capital plans to lend more than $200 billion to defense manufacturers
The Pentagon’s Office of Strategic Capital is offering salaries of up to $438,000 and has hired an executive-search firm known for recruiting Wall Street C-suite executives as it seeks to hire dozens of investment bankers and private-equity professionals to manage a $200 billion lending program, The Wall Street Journal reported.
The Office of Strategic Capital, which lent no funds before 2025, has added 30 professionals in recent weeks and plans to hire 40 more from private-equity firms, private-credit firms and investment banks, OSC Director David Lorch told the Journal. Some job offers have gone to mid-career investment professionals at business schools who paused their master of business administration studies at schools including Stanford University and the University of Pennsylvania, Lorch said.
The hiring spree is part of the Trump administration’s campaign to shore up the U.S. industrial base using a Wall Street playbook. Under Deputy Defense Secretary Steve Feinberg — who previously headed private-equity firm Cerberus Capital Management — the Pentagon has already struck agreements to invest billions of dollars into mining companies, refiners and rocket-motor makers.
President Donald Trump in May signed an executive order authorizing the federal government to pay up to 400 key officials as much as $400,000 a year. Some high-level OSC positions now pay up to $438,000 annually under specific circumstances, Lorch said.
“These are people, many of whom have taken seven-figure pay cuts to do this,” Lorch told the Journal. He said the deals involve “highly complex, multibillion-dollar transactions that require the deep transactional expertise that’s only found in the private sector.”
The office’s recruitment drive has tapped Heidrick & Struggles, a headhunting firm best known for recruiting C-suite and high-level Wall Street executives, Lorch said. A Heidrick & Struggles spokeswoman said the search firm does not comment on client work.
The OSC plans to lend more than $200 billion over the coming years to companies in more than 30 sectors, from missile production to telecom networks. Lending targets need not directly serve the military as long as their business is considered important to national security, officials said.
Lorch said the OSC has committed $5 billion in direct loans so far this year and signed term sheets for an additional $14 billion. The office in June offered $500 million in loan commitments to Phoenix Tailings and $725 million to Energy Fuels, two companies involved in processing critical materials.
The Pentagon lender this week said it would broaden its activities to award more loans through qualified investment fund managers, which the office has not yet selected. The Trump administration has also taken equity stakes in companies, including mining company MP Materials and the missile business of defense contractor L3Harris, overseen by the Pentagon’s separate Economic Defense Unit.
The federal interventions fit with the Trump administration’s preference for lending or buying shares versus awarding cash grants to companies, officials said.
The OSC was started under the Biden administration with a much smaller budget, the Journal reported. The Trump administration this year asked Congress for an additional $20 billion for the lending office, out of a proposed $1.5 trillion military budget. Some Republicans have pushed back on the request.
The Pentagon faces so many requests for funding that it must often triage its activities to focus on high-priority industries, according to Samantha Carl-Yoder, a principal of public policy at law firm Brownstein Hyatt Farber Schreck who works with companies seeking government investments.
“They are pretty strapped,” Carl-Yoder said of the Pentagon’s investment team. “Every time I see them, they say, ‘we need more people.’”