Industrial Base

Congress has raised concerns that the Pentagon has not established criteria for determining acceptable levels of dependence on foreign sources. In response, this report proposes a framework for evaluating the national security risk of buying military goods and technology from foreign sources. GAO answers the following four questions: What basic factors determine the national security risks of buying from foreign sources? How can these factors be measured and evaluated? Is appropriate data for assessing foreign sourcing being collected? What are some U.S. policy options for dealing with the risks of buying goods and technology from foreign sources?

GAO found that: (1) critical factors surrounding foreign sourcing include the necessity of the item for meeting specific military needs, the likelihood that the United States will not have access to the item or the technology needed to manufacture it when needed, and the time frame being considered; (2) screening for criticality requires reliable and measurable indicators; (3) one such measure that has been proposed is supplier concentration, or the number and market shares of the suppliers of a given item; (4) the Department of Defense is not collecting data necessary to assess the risk of foreign dependence; (5) experts believe that the cost of collecting such data would not be prohibitive; (6) stockpiling is one option to ensure the availability of critical items; and (7) experts also believe that the overall economic and business environment is important to sustain the U.S. technology base and innovative domestic industries.