Assessing Production Capabilities and Constraints in the Defense Industrial Base

In response to a congressional request, GAO: (1) reviewed the defense industrial base (DIB) to examine data on production delays, inferior quality, and cost increases; and (2) developed a methodology for understanding the origin and incidence of the problems. The DIB consists of private firms and government facilities that produce weapon systems and other items for the Department of Defense (DOD). During the last 5 years, concern has increased about the problems the DIB is having in meeting the national defense requirements.

GAO found that current DOD methods could not produce the consistent and accurate data industrial preparedness planners and weapon system managers need. GAO developed a methodical system of supply arranged in cascading levels of procurement through primary and subsidiary contractors. To identify critical procurement items, GAO vertically traced subsystems, components, and raw materials of six weapons systems from the prime contractor to the lower tiers of the subcontractors. Through horizontal analysis, GAO looked at other products from the same contractor that could pull production resources away from critical items, and future production analysis permitted assessment of the ability to produce weapons in the future. GAO found that among the constraints identified were shortages of production machinery, raw materials, testing equipment, and skilled labor. Most of the current and potential production constraints were found at a level below the prime contractor. GAO believes that the portion of the DIB involved in producing the six case study weapon systems will be able to maintain the present production levels; but that increased demand could cause problems.