Industrial Base

In response to a congressional request, GAO provided information on industries that are critical to the defense industrial base, specifically: (1) what the Department of Defense (DOD) and other agencies are doing to maintain the defense industrial base and strengthen industries critical to national security; (2) the methodology that a federally funded research and development center used to define and evaluate the strength of the defense industrial base; and (3) information on DOD prime contract awards to foreign sources.

GAO found that: (1) DOD began an initiative in 1987 to improve the competitiveness of U.S. industries critical to the defense industrial base, including a study to determine whether the industrial base's overall strength masked weaknesses in defense-critical industries; (2) of the federal agencies involved with the defense industrial base, DOD and the Department of Commerce had the most important roles in maintaining the viability of defense-critical industries and developing policies relating to national security; (3) some agencies expressed concern that DOD did not accurately represent the problems of defense-critical industries, prioritize the critical industries and minerals, or consider the effects of military coproduction agreements on U.S. industries' competitiveness; (4) although the research center's methodology was basically sound, it defined some industries as defense critical that were not clearly critical to national defense; and (5) DOD did not know the extent to which foreign-sourced components were incorporated in its acquisitions, although extensive dependence in a national emergency could have extreme consequences.