July 10, 2023

Senator Warren Raises Concerns Over Conflict of Interest in DoD’s Office of Strategic Capital

“I am concerned that this office is already too cozy with private investment firms.”

Text of Letter (PDF)

Washington, D.C. – United States Senator Elizabeth Warren (D-Mass), member of the Senate Armed Services Committee, sent a letter to the Department of Defense (DoD) Under Secretary of Defense for Research and Engineering, Heidi Shyu, following reporting that DoD’s new Office of Strategic Capital (OSC) is relying on consultants who will continue to work for private defense consultants and defense investment companies. Senator Warren is raising concerns that DoD lacks the necessary safeguards to prevent conflicts of interest in the OSC.

Recent reporting revealed that several individuals hired to work for the OSC were hired as special government employees (SGE) and appear to have a direct conflict of interest. Under their SGE status, these individuals are exempt from having to file public financial disclosure forms that would allow the public and Congress to monitor whether their work would touch upon the clients or investments of these consultants.

“Their positions provide them access to non-public political intelligence information, which ‘can be collected through briefings, meetings, committee hearings, public or non-public documents, personal conversations, and other communications between an employee of a political intelligence firm and an executive branch employee, a Member of Congress, or a legislative branch employee,’” said Senator Warren.

The OSC was originally created in 2022 to help integrate efforts across the DOD to develop and implement partnered capital strategies that would result in shaping investments in critical technologies. However, in recent months, the OSC has hired two consultants that generate cause for concern – one simultaneously working at WestExec Advisors, an “ultraconnected Washington consultancy that works with tech and defense companies” and another OSC adviser  still works at New Vista Capital, which focuses on “supporting emerging companies in aerospace, defense, and logistics and transportation.” 

“The OSC appears to be providing these consultants an opportunity to refresh their rolodexes without having appropriate guardrails in place to protect the public interest,” concluded Senator Warren. “As one of the consultants has observed, winning defense contracts is ‘about relationships and connectivity.’”

In order to better understand how the OSC is preventing conflicts of interest, Senator Warren is asking for answers from the Under Secretary no later than July 23, 2023.

Senator Warren has been consistent in her fight to strengthen ethics rules to fundamentally change the way our federal agencies and their employees do business.

  • In June 2023, Senator Warren and Representative Andy Kim (D-N.J.) introduced the Department of Defense (DoD) Ethics and Anti-Corruption Act to limit the influence of contractors on the military, constrain foreign influence on retired senior military officers, and assert greater transparency over contractors and their interaction with DoD.
  • In June 2023, Senator Warren and Representative Jayapal reintroduced the bicameral Judicial Ethics and Anti-Corruption Act, legislation to strengthen our nation’s judicial ethics laws, impose an enforceable code of conduct on the Supreme Court, and ban federal judges from owning individual stock.
  • In December 2022, Senator Warren sent a letter to Defense Secretary Lloyd Austin raising a series of questions for the Department of Defense (DoD) regarding press reports that former Google chief executive officer Eric Schmidt used his positions on defense advisory boards to further his own financial interests. 
  • In October 2022, Senator Warren sent two letters to Under Secretary of Defense for Acquisition and Sustainment, Bill LaPlante urging the Department of Defense (DoD) to insist on receiving certified cost data to justify any adjustments for inflation to current contracts and another to David Norquist, President and Chief Executive Officer of the National Defense Industrial Association (NDIA), expressing concerns that their lobbying efforts to increase the Pentagon’s budget to account for inflation could be violating post-government ethics restrictions.
  • Senator Warren has also fought to preserve existing ethics laws, including defeating a DoD provision in the fiscal year 2021 National Defense Authorization Act to weaken post-government lobbying restrictions.
  • In May 2022 Senator Warren and Representative Jayapal introduced their Judicial Ethics and Anti-Corruption Act (S. 4177, 117th Congress) to overhaul our nation’s judicial ethics laws and restore public faith in our court system.
  • In February 2022, Senator Warren introduced the Political Corruption Review of Infractions for Misconduct by Executive Servants (CRIMES) Act (S. 3582, 117th Congress), to strengthen the Hatch Act, which is a federal law that bars executive branch employees from engaging in partisan political activities using their official title, or taxpayer-funded government resources, and prevents sitting presidents from using the federal government as an arm of their political campaigns. 
  • In July 2021, Senator Warren released a statement on the Senate Armed Services Committee’s bipartisan adoption of her amendment to raise the recusal standard for Department of Defense employees. Under her amendment, Pentagon officials will be prohibited from participating in matters that affect the financial interests of their former employer, former clients, or former direct competitors for four years.
  • In March 2021, Senator Warren sent a letter to Secretary of Defense Lloyd Austin praising his decision to suspend dozens of Defense Department advisory boards and relieve hundreds of appointees to these boards pending a “zero-based review.” In the letter, Senator Warren also called for improvements as the Department of Defense (DoD) considers candidates for repopulating the boards that survive DoD's review.
  • In December 2020, Senator Warren and Representative Pramila Jayapal (D-Wash.) reintroduced the Anti-Corruption & Public Integrity Act to fundamentally change the way Washington does business and restore the American public's faith in democracy, including by creating a new, independent anti-corruption agency dedicated to enforcing federal ethics laws and by expanding an independent and empowered Congressional ethics office insulated from Congressional politics.