Defense Acquisition

GAO reviewed the basis for domestic source restrictions imposed by the Defense Department (DOD) and by one federal law, 10 U.S.C. 2534, which contains restrictions on several types items and permits the Secretary of Defense to procure only from manufacturers in the national technology and industrial base. National security and industrial base concerns form the basis for domestic source restrictions imposed by DOD and, to the extent known, the basis for those imposed under 10 U.S.C. 2534. In response to changes in defense requirements, DOD has reevaluated domestic source restrictions. DOD wants to take advantage of more competitive markets when doing so is consistent with national security needs. In 1995, DOD required the services to provide detailed justifications for maintaining the domestic source restrictions covered by DOD policy. DOD eliminated those restrictions it determined were no longer essential to national security. Of those items currently restricted by 10 U.S.C 2534, all but one were in place at the time of DOD's review. In only one case has DOD performed an industrial base assessment to determine the need for a 10 U.S.C. 2534 restriction.

GAO noted that: (1) national security and industrial base concerns form the basis for domestic source restrictions imposed by DOD and, to the extent known, the basis for those imposed under 10 U.S.C. 2534; (2) DOD guidance specifies the rationale for approving domestic source restrictions; (3) the rationale for congressional restrictions is not always identifiable; (4) in response to changes in defense requirements, DOD has reevaluated domestic source restrictions; (5) with the end of the Cold War, DOD is no longer preparing for large-scale mobilization but is focusing on smaller conflicts that would use readily available defense inventories; (6) at the same time, DOD wants to take advantage of more competitive markets when doing so is consistent with national security needs; (7) in 1995, DOD required the services to provide detailed justification for maintaining the domestic source restrictions covered by DOD policy; (8) DOD eliminated those restrictions it determined were no longer essential to national security; (9) of those items currently restricted by 10 U.S.C. 2534, all but one were in place at the time of DOD's review; and (10) in only one case has DOD performed an industrial base assessment to determine the need for a 10 U.S.C. 2534 restriction.