Warren, Jayapal Raise Concerns about Commerce Department Tasking Wall Street Financiers with Allocating $39 Billion in CHIPS Semiconductor Funding

Letter

Dear Secretary Raimondo:
We are concerned that the Department of Commerce (Commerce, or the Department) is relying
on "a small team of elite Wall Street financiers to help allocate $39 billion in [CHIPS Act]
taxpayer-funded manufacturing subsidies and other incentives to hundreds of companies."
Your decision to staff the Investment Team with "a handful of bankers" raises questions about the
abuse of the revolving door between government service and the private sector. It also creates a
risk of this key panel misusing taxpayer dollars by directly or indirectly favoring previous -- or
potentially future -- employers, clients, or colleagues as the panel divvies up billions in taxpayer
funds designed to help the domestic semiconductor industry.

In order to address the supply chain disruption and subsequent economic impacts caused by the
COVID-19 pandemic, the bipartisan Creating Helpful Incentives to Produce Semiconductors
(CHIPS) and Science Act was signed into law.The Act aims to boost domestic research and
manufacturing of semiconductors in the United States and includes $39 billion in subsidies for
chip manufacturing, 25 percent investment tax credits for the costs of manufacturing equipment,
and a roughly $13 billion investment for semiconductor research and workforce training to
strengthen and revitalize the U.S. supply chain and workforce.

The Department of Commerce is responsible for the distribution and oversight of these funds.The CHIPS Program Office -- along with the Investment Office -- is charged with determining how the $39 billion in subsidies for chips manufacturing on U.S. soil will be allocated. This includes selecting winners and losers among over 450 entities that are seeking government funding for manufacturing capabilities.But instead of building a broad-based team of experts from different sectors of government and the private sector, the Department has "been quietly building a small team of elite Wall Street financiers" to dole out the funds.The team includes a former partner at McKinsey & Co, a former private-equity Blackstone employee, and former Goldman Sachs and KKR executives-- all companies that have been implicated in wrongdoing ranging from foreign bribery to child labor. Indeed, "the recruitment of an entire team of private-sector professionals is unprecedented" in such a large and expensive program. While we recognize that private sector perspectives can contribute valuable expertise, without strong oversight, clear guardrails, and the
inclusion of other perspectives, staffers using the Wall Street revolving door can also provide their former -- and potentially future -- employers and colleagues an undue advantage in proposal decisions. Inadequate consideration of these conflicts of interest risks an outcome in which CHIPS funding is disproportionately spent based on industry wish-lists, and not in the public interest.

The abuse of the revolving door between government service and the private sector can corrupt
government decision-making, raising questions about the extent to which special interests gain
access to key decision makers, undermining public officials' integrity and casting doubt on the
fairness of government subsidies and decision-making. We have introduced bills to limit and/or
outright ban revolving door practices that are ripe for abuse. And we have called out government officials for revolving door abuses involving lobbying, advising, or serving as board members and executives of the companies they used to or will regulate in the future. We have been particularly concerned about these revolving door concerns in the Commerce Department and U.S. Trade Representative (USTR) during secret trade negotiations with Big Tech.We have fresh concerns about the industry-dominated Commerce Department panel that will be handing out tens of billions of dollars in CHIPS funding.
We are seeking answers to the following questions on how the Department of Commerce and
CHIPS Program Office plans to maintain objectivity and prevent revolving-door abuses, and be
"good stewards of taxpayer dollars," by February 8:
1. What process did the Department use to determine the composition of the CHIPS
investment team?
2. Please provide a full list of all members of the CHIPS investment team, including their
affiliations prior to joining the Department of Commerce.
3. How are members of the CHIPS investment team classified (i.e., FACA special
government employees (SGEs), non-FACA SGEs,independent contractors,
competitive service federal employees, excepted service federal employees, etc.)? What
ethics rules are they subject to under this classification?
4. What information must members of the investment team submit concerning their
potential conflicts of interest?
a. What ethics rules apply to these officials?
b. Have these members filed personal financial disclosure forms?
c. Do they have ethics agreements in place? If so, please provide copies of these
materials?
d. Have these individuals signed the Biden Administration ethics pledge, as
established by the Executive Order on Ethics Commitments by Executive
Branch Personnel signed by President Biden on January 20, 2021?
e. Do any of the ethics agreements for these officials include recusal requirements?
If so, when will recusals be required?
f. Have Commerce Department ethics officials reviewed these disclosures and
ethics agreements?
5. Has the Department established any post-employment restrictions on members of the
investment team that would prevent them from lobbying or working for or on behalf of
companies that receive CHIPS funding? If so, what post-employment restrictions are in
place?

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