Industrial Base:

Significance of DOD's Foreign Dependence

NSIAD-91-93: Published: Jan 10, 1991. Publicly Released: Feb 15, 1991.

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Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) dependency on foreign sources for critical components of its weapon systems, focusing on the M1 Abrams tank and the F/A-18 Hornet fighter aircraft.

GAO found that: (1) DOD did not know the overall extent of foreign sourcing or dependency and their significance for national security; (2) DOD had limited information on foreign supply sources at the lower tiers of the supply base; (3) there were no criteria for determining the appropriate maximum tolerance levels for foreign dependency and DOD actions to reduce the associated risks; (4) DOD had little awareness of the extent of foreign sourcing or dependency beyond the prime contractors and their immediate subcontractors; (5) DOD program officials were not required, and took no special action, to track foreign sourcing or dependency; (6) several Abrams tank components continued to be foreign dependent, and DOD did not award contracts or subcontracts to domestic sources because of availability, quality, and cost considerations; (7) even if DOD were willing to pay the higher prices of domestic suppliers, they would be unable to satisfy DOD total requirements due to production capacity constraints; (8) DOD planned to develop a second domestic source for the F/A-18 aircraft's foreign-dependent ejection seat; (9) such policy goals as the standardization and interoperability of weapon systems and equipment with North Atlantic Treaty Organization allies and the desire to minimize the cost of weapon systems limited DOD use of Buy American restrictions; and (10) DOD had ongoing efforts to improve its information on the U.S. defense industrial base and revise acquisition directives and procedures.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DOD noted that these responsibilities are part of the mission of the recently established Office of the Deputy Assistant Secretary of Defense for Production Resources, including, among others, industrial preparedness planning, industrial resources, and production readiness. Industrial base studies and reports will be referred to this office for action or review.

    Recommendation: The Secretary of Defense should assign responsibility to an individual or group within the Office of the Secretary of Defense for identifying, reviewing, evaluating, prioritizing, and, when decisions have been made, to take action, following up on timely implementation of the recommendations of major reports and studies on the defense industrial base to better enable DOD to take advantage of potentially valuable ideas.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: DOD cited a number of activities under way to determine key issues and policy questions regarding the industrial base. DOD actions have not fulfilled the recommendation. However, statutory amendments (title XLII, ch. 148, 1993 National Defense Authorization At) have partially fulfilled the recommendation by requiring DOD to periodically assess several key issues.

    Recommendation: The Secretary of Defense should, after consulting with other agencies and private-sector experts and considering existing studies regarding critical technologies, critical and strategic industries, and foreign dependencies, determine the key issues and policy questions for which information is needed.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: DOD has serious reservations regarding the development of a database and data collection system on the foreign content of "every DOD weapon system end item, component, and piece part". However, DOD misconstrued the recommendation, which only applied to critical items. Moreover, DOD is developing the recommended response per statutory requirements.

    Recommendation: The Secretary of Defense should, after consulting with other agencies and private-sector experts and considering existing studies regarding critical technologies, critical and strategic industries, and foreign dependencies, develop a plan for a viable management information system to provide visibility on foreign dependencies for weapon system components throughout the lower production tiers.

    Agency Affected: Department of Defense

  4. Status: Closed - Not Implemented

    Comments: In 1991, DOD responded that the recommended actions would not provide benefits commensurate with the costs involved. Notwithstanding the DOD position, Congress approved section 831(a) of the National Defense Authorization Act for Fiscal Years 1992 and 1993 requiring DOD to submit by March 15, 1992, a plan for collecting and assessing defense industrial base information.

    Recommendation: The Secretary of Defense should, after consulting with other agencies and private-sector experts and considering existing studies regarding critical technologies, critical and strategic industries, and foreign dependencies, submit, within a reasonable time, a program proposal to Congress for effectively addressing the key issues and policy questions.

    Agency Affected: Department of Defense

 

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