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Impact of Defense Downsizing on Selected Abrams Tank Subcontractors

NSIAD-93-214: Published: Jul 15, 1993. Publicly Released: Jul 15, 1993.

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Pursuant to a congressional request, GAO provided information on the: (1) effect of declining defense budgets on second- and third-tier Abrams tank contractors; and (2) ability of contractors to shift from commercial work to defense production when required.

GAO found that: (1) of the 14 contractors involved in tank production, 11 lost sales or released employees due to reductions in defense spending; (2) although all the contractors were able to remain in business through completion of Abrams tank production contracts and spare part sales, foreign military sales, and commercial and other defense sales, contractors were unsure that they could retain their current tank production capabilities; (3) factors affecting the contractors' ability to reconstitute Abrams tank production depended on whether they had comparable commercial businesses and produced similar components using the same facilities, equipment, and personnel used in commercial production; (4) contractors estimated that 6 months to 5 years would be required to reconstitute tank production; (5) contractors involved in similar commercial production reported it would take less time for them to reconstitute production; and (6) impediments to reconstitution include obtaining critical skills, vendors, materials, test equipment, and production facilities along with meeting government requirements and specifications.

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