Defense Procurement:

DOD Purchases of Foreign-Made Machine Tools

NSIAD-91-70: Published: Feb 15, 1991. Publicly Released: Mar 20, 1991.

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Pursuant to a congressional request, GAO analyzed the Department of Defense's (DOD): (1) procurement of foreign-made machine tools during fiscal years (FY) 1987 through 1989; and (2) use of waivers of the legislative restriction on purchasing machine tools not manufactured in the United States or Canada.

GAO found that: (1) between FY 1987 and 1989, DOD procured $29 million in foreign-made restricted machine tools and $1.9 million in nonrestricted foreign-made machine tools; (2) waivers were approved on $16.5 million of the foreign-made, restricted machine tool procurements; (3) about $10.4 million of the procurements were not subject to the appropriation acts' restriction, since DOD procured the tools with funds appropriated to it before the machine tools became restricted, awarded the procurements before the effective date of the restriction, did not purchase the tools for government use or a DOD-controlled facility, modified contracts that were exempt from the restriction, or purchased the tools as spare parts for an existing machine tool; (4) between FY 1987 and 1989, the military services and agencies requested 57 waivers for foreign-made, restricted machine tool purchases totalling $18.3 million; (5) most waivers were properly approved before the procurement was awarded, signed by appropriate approving official, and approved for the appropriate reason; (6) in 1989, the military services procured $1.2 million of tools that were subject to the restriction provisions; (7) the Buy American Act was rarely applicable to DOD foreign-made machine tool procurement; (8) DOD did not identify all machine tools of foreign manufacture in its procurement reporting system; and (9) DOD reliance on contractor self-certifications could allow them to pass off foreign-made machine tools as domestic items.

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