FY27 BIS Budget: the AI Arms Race and the ICTS Office

This hearing of the House Foreign Affairs Committee Republicans on July 15, 2026, focused on the Bureau of Industry and Security's (BIS) fiscal year 2027 budget request and its role in the AI arms race against China. Undersecretary Jeffrey Kessler testified about the need for a significant budget increase to bolster enforcement efforts against illegal technology transfers, particularly advanced AI chips and semiconductor manufacturing equipment. The budget request includes a 147% increase for the enforcement unit to expand staffing and overseas presence. Committee members questioned Kessler extensively on BIS's export control policies, enforcement effectiveness, licensing decisions, and coordination with allies. Concerns were raised about the lack of new entity list additions since October 2025, delays in license processing, and potential loopholes exploited by Chinese and Russian entities. Kessler emphasized enforcement as the agency's priority, citing an 18-fold increase in penalties from 2024 to 2025, while acknowledging the need for more resources and better policy implementation. The hearing also covered BIS's efforts to implement the connected vehicles rule to exclude foreign adversary technology from U.S. passenger vehicles and the challenges of aligning export controls with allied countries. Several members highlighted the importance of whistleblower programs, transparency, and clear regulatory guidelines for AI technologies. The committee expressed bipartisan concern over maintaining U.S. technological leadership and national security in the face of foreign threats, with a focus on strengthening BIS's enforcement capabilities and export control regime.