Companies looking to do business with the Pentagon under President Trump are receiving some remarkably blunt instructions. At an acquisition reform event last November, Deputy Defense Secretary Stephen Feinberg put contractors on notice. “The contractors that are willing to change with us will prosper and grow; those who don’t and resist it will be gone.”
Feinberg’s warning could be read as a demand that complacent contractors improve. But a LinkedIn post shared by George Kollitides, head of the Pentagon’s Economic Defense Unit (EDU), gives it a more troubling meaning.
The post by a mining executive described Washington as the “state as limited partner” and declared that “sovereign backing is now a competitive variable.” Companies receiving federal equity investments or debt guarantees, it says, “will have easier access to offtake agreements, permitting support, and follow-on institutional capital.” Meanwhile, “projects without state alignment will face higher hurdles, regardless of grade or jurisdiction.”
Those words came from the mining executive, but Kollitides chose to amplify them. Read alongside Feinberg’s warning, they offer a remarkably candid description of the emerging arrangement. Get aligned with the government, and opportunities multiply. Remain outside the favored circle, and the hurdles grow.
A Pentagon Role as a Private Asset
That backdrop makes today’s Bloomberg Government report on Kollitides especially troubling.
Kollitides runs the EDU, but he also serves as a director of D. Boral Acquisition I, a Special Purpose Acquisition Company (SPAC) affiliated with an investment bank active in several sectors in which EDU operates.
Kollitides agreed to become a director nominee shortly before his February 4 appointment to the Pentagon and formally joined the board six days later. His indirect interest in 100,000 founder shares could be worth up to $1 million if the SPAC (or “blank check company”) completes a successful acquisition.
D. Boral’s prospectus expressly touts Kollitides as “responsible for all Department of War investing and economic activities.” Danielle Caputo of the Campaign Legal Center called the company’s use of his Pentagon position “very brazen,” which seems about right. The investment vehicle is presenting Kollitides’s federal authority as a qualification while granting him a private financial interest in its success. The SPAC currently has no announced target or Pentagon contract. But its affiliate, D. Boral Capital, finances blank check companies pursuing acquisitions in sectors the EDU is charged with supporting.
Bloomberg also traced deals and board relationships between D. Boral affiliates and entities tied to Donald Trump Jr. and Eric Trump:
On the day D. Boral Acquisition I named Kollitides a director, it appointed two other board members, Kevin McGurn and Luisa Ingargiola, who currently serve on boards of several defense-related companies that count Donald Trump Jr. and Eric Trump as investors or senior advisers. D. Boral Acquisition I gave McGurn and Ingargiola indirect shares worth as much as a combined $3 million, according to filings with the SEC.
Whatever the arrangement’s ultimate treatment under federal ethics rules, the whole affair reeks. The official helping coordinate which businesses receive the benefits of government alignment holds a contingent interest in an investment vehicle that markets his Pentagon role to investors.
The Department of Cerberus
A separate Bloomberg investigation shows that the overlap surrounding Kollitides is part of a broader private equity makeover at the Pentagon.
Before becoming deputy defense secretary, Feinberg co-founded Cerberus Capital Management. He says he divested his interests before entering government, but several former Cerberus executives now occupy key Pentagon positions. Kollitides runs EDU, David Lorch heads the Office of Strategic Capital (OSC), and other Cerberus veterans serve in Feinberg’s immediate office.
As I discussed in March, the EDU has been recruiting Wall Street to staff its “investment teams.” A headhunting presentation promised that their “exit opportunities will be exceptional,” including the possibility of forming a new investment fund with colleagues from the government team. It also advertised access to fundraising channels involving royal families and foreign sovereign investors. Semafor reported that candidates were promised “unmatched access” to top government officials and privileged information.
Build and Own
The Pentagon has been clear about where this has been heading. Its fiscal year 2027 budget proposal calls the OSC the department’s “internal investment bank” and describes the EDU as the “central nervous system” for economic statecraft. It proposed a $1 billion National Security Investment Fund tied to Trump’s desire for a sovereign wealth fund and says direct investment, including taking equity stakes in private companies, will serve as the Pentagon’s primary “build and own” function.
That combination is inherently corrupting. Pentagon officials will insist that every procurement and policy decision is driven by national security. Yet the government’s financial interest in selected companies will remain in the background, raising unavoidable questions about favored treatment.
The Pentagon’s investment in L3Harris illustrates the danger. In April, the government closed a $1 billion purchase of convertible preferred stock and warrants in the company’s Missile Solutions business, which combines the company’s legacy Aerojet Rocketdyne operations with other missile capabilities from across L3Harris.
Bloomberg adds another layer: Cerberus acquired the aerospace company Stratolaunch while Feinberg ran the firm. Stratolaunch later partnered with Aerojet Rocketdyne on a potential hypersonic propulsion project, though L3Harris says the collaboration did not result in a contract.
When Bloomberg asked how Stratolaunch’s earlier relationship with Aerojet was handled during the L3Harris transaction, the Pentagon declined to comment. Six months after Feinberg entered government, the Pentagon also awarded a $90 million contract to Cerberus-owned Stratolaunch for air-launched flight tests.
On Monday, the Pentagon announced two seven-year framework agreements involving L3Harris and Lockheed Martin. Although the agreements still must be finalized and their value has not been disclosed, the Pentagon says they are intended to provide “clear, stable, long-term demand” for missile components. Basically, the government invested first and then moved to underwrite demand.
Congress Should Pull the Plug
The security of strategic supply chains is a legitimate concern, and the Pentagon’s procurement system is in perpetual need of reform. But those challenges don’t require federal ownership. Washington already has ample tools to address supply chain issues without becoming a shareholder.
Under current law, the OCS’s capital assistance authority is limited to loans, loan guarantees, and technical assistance. The Republican-controlled Senate Armed Services Committee’s fiscal year 2027 defense bill would go much further by giving the office explicit authority to acquire equity in certain companies and establish a Pentagon equity investment account. Yet the committee’s own report acknowledges a “high possibility for distorting markets or corruption” from tools such as equity stakes and says the Pentagon “has not been forthcoming” with Congress about equity investments it has already made.
As I told Bloomberg, this will come back to haunt Republicans if a future Democratic administration uses the same apparatus to steer capital toward different companies while attaching its own labor, green, or progressive social policy conditions. It’ll be hard to complain if they created the investment fund and allowed the Trump administration to make “state alignment” the price of doing business with the federal government.