Defense Industrial Base

The defense technical and industrial base refers to the people, technical know-how, and facilities used to produce the weapons and equipment needed to defend the United States. This base has three main components: research and development, production, and maintenance and repair, each of which involves government and the private sector. During the current military downsizing, the Pentagon's requirements for new weapons and support equipment will likely be reduced dramatically and the ongoing restructuring of the defense industrial base is expected to intensify. The Defense Department (DOD) has taken the position that free market forces will guide the restructuring of the defense industrial base. GAO has concerns about this strategy because defense contractors tend to be more concerned with maximizing returns for investors rather than with how long-term changes in the defense industrial base might affect national security. In addition, DOD has not been aggressive in assessing U.S. reliance on foreign sources and foreign investment in the defense industrial base.

GAO found that: (1) the Department of Defense's (DOD) strategy to rely on free market forces to restructure the defense industrial base is not realistic, since DOD is responsible for developing and implementing defense policy and industrial base requirements; (2) many defense contractors do not have the experience needed to shift between commercial and military production; (3) DOD has greater expertise and access to defense industry related information to assess factors affecting the industrial base, such as international political developments, emerging military threats, and future development of defense-related technology and military doctrine; (4) although DOD is implementing guidance to ensure that critical defense capabilities will not be lost, it has not taken a proactive role in ensuring access to critical items and capabilities or assessed U.S. reliance on foreign sources for its defense needs; and (5) DOD systematic reviews did not maintain data on lower production firms that provide specialized technology, lacked information and criteria for determining acceptable levels of foreign dependence, and failed to address present and future U.S. competitiveness in critical technological areas.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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