Comments on the Defense Production Act

Testimony was given on extending titles I and III of the Defense Production Act beyond its current March 31, 1983, expiration date and using title III authorities to provide financial and other assistance to private industry for the production of nonfuel minerals and materials needed for national defense. GAO agrees with extending title I and III authorities of the act, but believes that amendments to title III are needed. GAO found that expiration of the act could result in: (1) difficulty in acquiring desired products; (2) schedule or delivery delays; (3) cost growth; (4) problems in administering and enforcing act authorities and regulations, and (5) contractual problems. While GAO foresees instances where the use of title III authorities may be needed to stimulate domestic production of strategic and critical minerals and materials, GAO work indicates that title III authorities may not always be the most effective alternative for promoting national security. Therefore, GAO believes that Congress should consider amending title III to ensure that the economic and national security benefits and costs of each title III proposal are properly considered. Since the results of any such analysis are only as valid as the data, assumptions, and methodology used, GAO believes that Congress should consider amending the act to give itself ample opportunity to review each title III proposal prior to entering into any commitment to provide financial or other assistance.