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Highlights

The Department of Defense (DOD) relies on thousands of suppliers to provide weapons, equipment, and raw materials to meet U.S. national security objectives. Yet, increased globalization in the defense industry and consolidation of the defense supplier base into a few prime contractors has reduced competition and single-source suppliers have become more common for components and subsystems. For this report, GAO (1) assessed DOD's efforts to monitor the health of its defense supplier base, and (2) determined how DOD identifies and addresses gaps that might exist in its supplier base. To conduct its work, GAO reviewed supplier-base-related laws, regulations, and guidelines; met with officials from DOD's Office of Industrial Policy, defense contractors, and other DOD officials; and surveyed 20 major DOD weapon acquisition program officials on potential supplier-base gaps.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense 1. The Secretary of Defense should direct Industrial Policy, in coordination with the military services and other relevant DOD components to identify and monitor the supplier base to leverage existing DOD efforts to identify criteria of supplier-base problems and fully apply these criteria to guide the identification and monitoring of supplier-base concerns throughout DOD.
Closed - Implemented
DOD believes there is merit in having formal, published criteria for making judgments regarding suppliers and components that are important to DOD. DOD has included these criteria in the July 2009 update to the Defense Acquisition Guidebook.
Department of Defense 2. The Secretary of Defense should direct Industrial Policy, in coordination with the military services and other relevant DOD components to identify and monitor the supplier base to create and disseminate DOD-wide written requirements for reporting potential concerns about supplier-base gaps. These requirements should delineate when, and to what level, supplier-base concerns should be elevated and should take into account the two levels of reporting--prime contractors to program offices and program offices to higher levels in DOD.
Closed - Implemented
DOD believes there is merit in having formal, published criteria for making judgments when program offices should report/elevate supplier issues to DUSD (IP). DUSD (IP) submitted new language which is included in the July 2009 Defense Acquisition Guidebook that would meet the requirement of when, and to what level program offices should elevate supplier base concerns. The guidance will encourage program offices and the Services to continue to resolve identified industrial capability issues at the lowest level. However, in cases when issues may impact more than a single program of Service, or when an industrial capability matter meets certain criteria, the proposed language would instruct the program office to elevate the matter via their Program Executive Officer to DUSD (IP).

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