Defense Acquisition:

Rationale for Imposing Domestic Source Restrictions

NSIAD-98-191: Published: Jul 17, 1998. Publicly Released: Jul 17, 1998.

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Pursuant to a congressional request, GAO reviewed the basis for the domestic source restrictions imposed by Department of Defense (DOD) policy and by 10 U.S.C. 2534, focusing on: (1) DOD's policy for restricting procurement to domestic sources and the rationale for the legislative restrictions; and (2) the suppliers and manufacturing locations for items currently restricted. GAO did not assess other congressionally imposed restrictions.

GAO noted that: (1) national security and industrial base concerns form the basis for domestic source restrictions imposed by DOD and, to the extent known, the basis for those imposed under 10 U.S.C. 2534; (2) DOD guidance specifies the rationale for approving domestic source restrictions; (3) the rationale for congressional restrictions is not always identifiable; (4) in response to changes in defense requirements, DOD has reevaluated domestic source restrictions; (5) with the end of the Cold War, DOD is no longer preparing for large-scale mobilization but is focusing on smaller conflicts that would use readily available defense inventories; (6) at the same time, DOD wants to take advantage of more competitive markets when doing so is consistent with national security needs; (7) in 1995, DOD required the services to provide detailed justification for maintaining the domestic source restrictions covered by DOD policy; (8) DOD eliminated those restrictions it determined were no longer essential to national security; (9) of those items currently restricted by 10 U.S.C. 2534, all but one were in place at the time of DOD's review; and (10) in only one case has DOD performed an industrial base assessment to determine the need for a 10 U.S.C. 2534 restriction.

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