Defense Trade:

Weaknesses Exist in DOD Foreign Subcontract Data

NSIAD-99-8: Published: Nov 13, 1998. Publicly Released: Nov 13, 1998.

Additional Materials:

Contact:

Louis J. Rodrigues
(202) 512-4841
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) foreign procurement data, focusing on DOD's: (1) reported trends on contracts performed outside the United States; and (2) use of foreign subcontract information and the completeness and accuracy of how DOD collects and manages its data.

GAO noted that: (1) for prime contracts, DOD purchases the majority of its defense equipment and services from contractors operating in the United States; (2) though subject to annual fluctuations, DOD's prime contract awards outside the United States remained about 5.5 percent of total DOD contract awards from fiscal year (FY) 1987 to 1997; (3) over this period, the value of DOD prime contracts performed both in and out of the United States declined; (4) prime contracts performed outside the United States tended to be concentrated in certain countries such as Germany, Italy, Japan, South Korea, and the United Kingdom and in certain sectors such as services, fuel, and construction; (5) at the subcontract level, the value of DOD's reported foreign subcontract awards ranged from almost $2 billion in FY 1990 to almost $1.1 billion in FY 1997, but this data has its limitations; (6) the Office of Foreign Contracting does not consider the data needs of industrial base specialists in its efforts to collect foreign subcontract data; (7) industrial base specialists are often unaware that data of this nature are available; (8) furthermore, weaknesses in the Office of Foreign Contracting's data collection and management processes undermine DOD's ability to use the foreign subcontract data for defense trade and industrial base decision-making; (9) the Office has no mechanism for ensuring that contractors provide required foreign subcontract information, which contributes to the underrepresentation of foreign subcontract activity; (10) GAO's review of selected subcontracts disclosed instances in which foreign subcontracts were not reported to the Office because contractors were unaware of the reporting requirement or misunderstood the criteria for reporting a foreign subcontract; and (11) the Office's poor database management also compromises the credibility and usefulness of its foreign subcontract data.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: DOD states that it has already instituted regulations and procedures that govern the collection of data needed to address defense trade and industrial base issues. The Office of Foreign Contracting provides the data it collects to other DOD components and has no need to redefine its data collection requirements. DOD officials believe the regulations provide clear instructions to defense contractors to respond to reporting requirements.

    Recommendation: The Secretary of Defense should direct the Under Secretary of Defense for Acquisition and Technology to review the existing subcontract reporting requirement and amend it, as needed, to ensure that data collected satisfy the common information needs of the offices working on defense trade and industrial base issues, thus also avoiding duplicative data collection efforts within DOD. As part of this effort, DOD should provide additional guidance containing clear criteria and definitions for reporting foreign subcontracts.

    Agency Affected: Department of Defense

  2. Status: Closed - Not Implemented

    Comments: DOD states that the cost to develop and implement controls and procedures for periodically verifying compliance with the reporting requirement may outweigh the benefit of verification. Officials believe they have the most complete database on foreign subcontracts.

    Recommendation: The Under Secretary of Defense for Acquisition and Technology should direct the Director, Office of Defense Procurement, to develop and implement controls and procedures for periodically verifying compliance with the foreign subcontract reporting requirement and specify how to transmit the information to the Office of Foreign Contracting as a means of improving the completeness and consistency of its data.

    Agency Affected: Department of Defense: Office of the Under Secretary of Defense for Acquisition, Technology and Logistics

  3. Status: Closed - Implemented

    Comments: DOD reviewed and redesigned the foreign subcontractor database for fiscal year 1999 and eliminated several unnecessary data fields.

    Recommendation: The Under Secretary of Defense for Acquisition and Technology should direct the Director, Office of Defense Procurement, to develop and implement procedures for entering data, verifying critical fields, documenting database programs, and querying the database to improve the Office's database management practices.

    Agency Affected: Department of Defense: Office of the Under Secretary of Defense for Acquisition, Technology and Logistics

 

Explore the full database of GAO's Open Recommendations »

Sep 22, 2016

Sep 21, 2016

Sep 19, 2016

Sep 12, 2016

Sep 8, 2016

Sep 7, 2016

Sep 6, 2016

Aug 25, 2016

Looking for more? Browse all our products here