DOD's Implementation of Section 114 of the Fiscal Year 1980 Military Construction Appropriations Act

GAO was asked to monitor the implementation and effect of section 114 of the fiscal year 1980 Military Construction Appropriation Act. This section requires that American steel producers, fabricators, and manufacturers be given the opportunity to compete for the sale of steel outside the United States when U.S. military construction funds are used.

GAO found that the clause presented no problem for DOD unilateral prime contract awards. However, North Atlantic Treaty Organization (NATO) countries involved in the infrastructure system did not agree that the NATO contracts should contain the language specified by the Department of Defense (DOD) instructions. NATO uses International Competitive Bidding (ICB) procedures, which permit eligible, qualified firms of any nation the right to bid on any direct contract as a prime contractor. Therefore, NATO countries felt that the established ICB procedures already provided all qualified manufacturers an equal basis to compete and that the language in section 114 was already satisfied by complying with ICB procedures. Also, GAO found that each of the countries, in which indirect contracting takes place through the host country for unilateral contracts, has been solicited regarding its policy as it affects the language in section 114. With the exception of Italy, none of the major nations have restrictive laws which bar firms from the guarantees afforded by section 114. Italy, by its own law, requires that prime contractors not registered be barred from competing for business in Italy. Firms wishing to act as subcontractors do not need to be registered.