The Trump administration’s campaign to secure hundreds of billions of dollars in new military appropriations has been stalled in the Senate for months. One beneficiary of that stalemate is the Economic Defense Unit, an obscure Pentagon investment office known as the EDU.

Deputy Secretary of War Stephen Feinberg created the EDU earlier this year and appointed George Kollitides to run it. Kollitides previously worked at Feinberg’s former private equity firm, Cerberus Capital Management, and was recently examined by ProPublica over his role in steering a $350 million Department of War contract to a consulting firm where he had been a partner until weeks earlier.

The office was established through a memo from Feinberg and has operated for months without congressional authorization. It has assumed a central role in the administration’s multibillion dollar campaign to support domestic military and energy supply chains.

Those deals have drawn scrutiny over the benefits flowing to well connected Wall Street firms, President Donald Trump, and people in his inner circle. A source familiar with the strategy described the EDU as a “venture capital firm-type entity that looks at deals, what the government’s going to do and evaluates them, and determines, ‘Okay, what’s the government’s stake going to be in this, if any.’”

The source said analysts in the Industrial Base Policy office identify gaps requiring government attention. The EDU then considers whether the government should acquire a stake rather than simply distribute grant money, an approach the source attributed particularly to Feinberg.

A Senate Armed Services Committee draft of the National Defense Authorization Act shows that lawmakers have noticed the Pentagon’s private equity style transformation. The proposal would remove the EDU’s power to lead equity investments and give the Office of Strategic Capital the only express authorization to acquire stakes in private companies.

That authorization would come with limits. The head of the Office of Strategic Capital could not take board seats at portfolio companies and would have to provide Congress with a report on a company’s ownership before completing an investment.

The proposal would also require the DoW to provide all term sheets for Pentagon equity deals made during the previous two years. That requirement reflects how little outside oversight the details of those investments have received.

“They’re probably going to be not totally enthusiastic about the oversight that Congress is going to get and the restrictions Congress is going to place on them,” said the source familiar with the Pentagon investment offices’ thinking.

Under the committee proposal, every Pentagon funding stream other than the Office of Strategic Capital would be barred from financing company stakes. Those other streams collectively represent hundreds of billions of dollars, but the Pentagon has continued tapping funds outside the authorized office.

Since the Armed Services Committee approved its draft, the Pentagon has made four new direct equity investments using money from outside the Office of Strategic Capital. The investments total $775 million and all involve critical minerals companies.

The committee draft passed with support from four Democratic senators. Democratic lawmakers later blocked the package during a procedural Senate vote in July, largely because it included a 50% increase in overall funding.

That delay has left Feinberg and the Pentagon’s investment offices free to continue their existing approach. Nearly one third of the administration’s requested budget increase would finance “Defense Industrial Base” investments, most managed by the Office of Strategic Capital, the Economic Defense Unit, and the Industrial Base Policy office.

The administration requested more than $20 billion for the Office of Strategic Capital this year, compared with $300 million last year. It also sought $70 billion for the Pentagon’s Industrial Base Analysis and Sustainment and Defense Production Act programs after requesting $2 billion last year.

Exactly how the offices would use such enormous sums remains unclear. They have already helped direct billions of dollars into private military and energy supply chain companies through low interest loans and direct stock purchases.

The Office of Strategic Capital was initially established during the Biden administration to help small military manufacturers move beyond prototypes and bring military grade products to market. During the past two years, it shifted toward substantial loans and direct equity stakes in rare earth mining companies.

ProPublica also reported that the office helped broker the administration’s Venezuelan oil deal. It directed how a new U.S. government led energy venture would seat board members and developed terms that “could not be undone by Trump’s successor.”

The administration’s public account of the office’s investments has hardly been consistent. Shortly before an investment in the U.S. led Venezuelan oil venture was announced, a Pentagon spokesperson told The New York Times that the office “does not take equity stakes in private companies.”

Days later, the administration announced that the office had acquired a “35% equity stake” in the venture. A Department of War spokesperson later told the Prospect that DoW “values its longstanding working relationship with Congress” and is “working closely with the committees with jurisdiction to ensure the Department can continue to unleash the arsenal of freedom.”