BIS tasked with monitoring tech export controls facing budget crunch

The US Bureau of Industry and Security (BIS), the federal agency tasked with preventing strategic technology from falling into the hands of US adversaries, is struggling with a growing mandate and, experts say, decades of underinvestment.

Even before US President Joe Biden’s administration placed technology at the core of the US-China rivalry, restricting access to advanced technology after Russia’s invasion of Ukraine last year had stretched the limited resources at the bureau, a division of the Commerce Department.

Then in October, the White House expanded the scope of export restrictions to choke off China’s capabilities in advanced semiconductors and artificial intelligence, swelling the bureau’s portfolio.

The BIS was founded in 2001 to ensure “an effective export control and treaty compliance system, and … continued US leadership in strategic technologies”, according to the Commerce Department website.

Despite the growth of BIS’s responsibilities, its budget has not increased “anything close to adequately to reflect its new role at the centre of US technology and national security policy in the US”, said Gregory C Allen, a senior fellow at the Centre for Strategic and International Studies (CSIS) strategic technologies programme.

And Kevin Wolf, who led the bureau during the Barack Obama administration, told the House Foreign Affairs Committee this month that the BIS required “massive resources” to process more than 40,000 licence applications and other requests in addition to the new Russia and China controls.

“BIS and its other agencies are doing great work but demands of the day imposed on BIS and other export control agencies are far, far greater than what they were originally created for,” he said.

A CSIS report in November noted that the BIS budget since 2020 had “declined in real terms” since 2020. For 2023, the BIS had requested a US$66 million jump in its spending, to roughly US$200 million.

“Nearly 90 per cent of the requested US$66 million increase will go toward fighting inflation and new missions unrelated to export controls,” the report said.

US Senator Chris Van Hollen, a Maryland Democrat, noted during a Senate Appropriations Committee hearing last week that the BIS “fights way above its weight”, but Commerce Secretary Gina Raimondo told the committee that the bureau’s staffing of 500-plus “is obviously quite small”.

“It is a very real risk to our national security to cut the funding of BIS,” she said, noting that returning to 2022 funding levels would mean 125 fewer staff positions. “That’s crushing,” she added. The agency received US$141 million that year.

The CSIS report recommended a total increase of US$44.6 million annually, saying that the agency remains technologically backward: the major government databases its employees use “can perform only a fraction of the needed functionality and crash routinely”.

“Instead of knowledge graph databases and machine learning – capabilities that have revolutionised both the private sector and other federal agencies with similar missions – BIS analysts perform their work primarily using Google searches and Microsoft Excel,” it added.

But Steve Coonen, a former analyst for the Pentagon’s Defence Technology Security Administration, suggested that the bureau had other issues as well: he cited a “business-first view” and failure to “prioritise national security in its decision making” as two key BIS problems.

“Though there are scores of military uses for controlled technologies, BIS will rubber-stamp applications unless they have specific indications or intel of divergence” he told the House Foreign Affairs Committee.

Last year, Coonen said, the agency “approved 91 per cent of applications with the export of controlled militarily useful technology to China”.

Nazak Nikakhtar, a Commerce Department official in international trade during the Trump administration, went further, telling the committee that a mentality of the majority of department officials remained “pro business” and called for a “complete culture shift”.

She said that of the nearly 500 Chinese companies on the department’s “Entity List” – which names foreign individuals and businesses restricted from doing business with US suppliers – BIS is putting more than 80 per cent in a reviewing process that essentially removes them from the entity list.

“What are we doing? It’s absurd,” she said, arguing for a blanket review of all tech export to all Chinese companies.
The Commerce Department did not immediately respond to a request for comment. South China Morning Post