This bill, known as the Security Sector Governance Compacts Act, establishes a comprehensive framework to assess and improve the quality of security sector governance in U.S. partner countries. It aims to strategically align U.S. security assistance with a partner's commitment to transparent, accountable, and civilian-led security institutions. The legislation mandates the Secretary of State, in coordination with the Secretary of Defense, to develop a Security Sector Governance Index within 90 days. This Index will evaluate critical aspects such as state corruption, civilian oversight, military involvement in politics, and accountability for human rights violations. A summary will be publicly published, forming the basis for subsequent country assessments. Each security partner country will then be assessed and assigned one of four tiers, from Tier One (low quality governance) to Tier Four (high quality). These assessments and designations will be updated annually and reported to Congress, creating a dynamic system for evaluating partner performance. A core provision links these tiers directly to the types of security sector assistance a country can receive. Tier One countries are restricted to foundational aid, while Tier Two countries may also receive nonlethal equipment and tailored capacity-building. Eligibility for lethal equipment and advanced military cooperation is reserved for Tier Three and Tier Four partners, with Tier Four countries having access to the broadest range of assistance. The bill includes a waiver mechanism for strategically important partners, allowing assistance regardless of tier designation, provided specific justifications and improvement plans are submitted to Congress. These waivers are subject to annual review and generally expire after five consecutive years unless specifically continued by Congress. Furthermore, the Act authorizes Security Sector Governance Compacts with Tier Two and Tier Three countries not under a waiver. These multi-year compacts facilitate joint planning and assistance, dedicating at least 30 percent of funds to institutional capacity building, to achieve shared security objectives and improve governance. To fund these initiatives, a dedicated Security Sector Compact Fund is established for fiscal years 2027 through 2031, supporting training, technical assistance, and defense equipment, with a final provision requiring an assessment of Tier Four countries after five years to evaluate assistance effectiveness, though key allies are exempt.