The U.S. military plans to spend $1 billion to take an ownership stake in a future L3Harris Technologies spinoff focused on dramatically ramping up solid rocket motor production for tactical missiles.

The pending investment will acquire convertible, preferred equity in the spinoff of the L3Harris Missile Solutions business, which would make the U.S. military a capital investor in a member of the defense industrial base for the first time.

“The era of business as usual is over,” said Michael Duffey, under secretary for acquisition and sustainment. “This equity position allows the American people to share in its future success.”

The spinoff’s goal is to address soaring demand for tactical ballistic missiles powered by solid rocket motors, a component in short supply due to decades of industry consolidation following the end of the Cold War.

The transaction also creates concerns within the defense industry about the possibility that the Pentagon’s investment creates a conflict of interest in a competitive sector. But Duffey said the investment is necessary.

“We’ve had a pattern within the defense industry of writing checks from the Department of [Defense] on behalf of the taxpayer to expand the industrial base with no promise of return,” Duffey said. “This is a direct change to that.”

The $1 billion comes from the Pentagon’s Industrial Base Analysis and Sustainment fund. Speaking to reporters Jan. 13, Duffey declined to clarify the size of the Pentagon’s ownership interest in the new spinoff based on the $1 billion equity investment.

The overall commitment to the new business will require an investment of several additional billion dollars, which will be raised privately, L3Harris CEO Chris Kubasik said.

The spinoff will be in a market segment now occupied by traditional competitors, such as Northrop Grumman, as well as a slew of new startups and nontraditional companies.

“The market that we’re pursuing will have such promise of growth that there will be room for future competition,” Duffey said.