Contract Management: DOD Needs Measures for Small Business	 
Subcontracting Program and Better Data on Foreign Subcontracts	 
(05-APR-04, GAO-04-381).					 
                                                                 
More small businesses are turning to subcontracting as a way to  
participate in the federal government's $250 billion procurement 
program. DOD, accounting for about two-thirds of federal	 
procurements, has a critical role in providing opportunities to  
small businesses through subcontracting programs such as the Test
Program for Negotiation of Comprehensive Small Business 	 
Subcontracting Plans (Test Program). In addition, Congress raised
concerns about the potential for small businesses to lose	 
opportunities to firms performing work outside of the United	 
States. GAO was asked to review (1) DOD's assessment of the Test 
Program's effectiveness, (2) the performance of contractors	 
participating in the Test Program, (3) the Defense Contract	 
Management Agency's (DCMA) oversight of contractors' small	 
business subcontracting efforts, and (4) the extent and reasons  
contractors are subcontracting with businesses performing outside
the U.S.							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-381 					        
    ACCNO:   A09637						        
  TITLE:     Contract Management: DOD Needs Measures for Small	      
Business Subcontracting Program and Better Data on Foreign	 
Subcontracts							 
     DATE:   04/05/2004 
  SUBJECT:   Data collection					 
	     Data integrity					 
	     Defense procurement				 
	     Department of Defense contractors			 
	     Performance measures				 
	     Procurement records				 
	     Program evaluation 				 
	     Small business contractors 			 
	     Subcontractors					 
	     Contract oversight 				 
	     Contract performance				 
	     DOD Test Program for Negotiation of		 
	     Comprehensive Small Business			 
	     Subcontracting Plans				 
                                                                 

******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO Product.                                                 **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
******************************************************************
GAO-04-381

United States General Accounting Office

GAO

Report to the Committee on Small

                       Business, House of Representatives

April 2004

CONTRACT MANAGEMENT

DOD Needs Measures for Small Business Subcontracting Program and Better Data on
                              Foreign Subcontracts

GAO-04-381

Highlights of GAO-04-381, a report to Committee on Small Business, House
of Representatives

More small businesses are turning to subcontracting as a way to
participate in the federal government's $250 billion procurement program.
DOD, accounting for about two-thirds of federal procurements, has a
critical role in providing opportunities to small businesses through
subcontracting programs such as the Test Program for Negotiation of
Comprehensive Small Business Subcontracting Plans (Test Program). In
addition, Congress raised concerns about the potential for small
businesses to lose opportunities to firms performing work outside of the
United States.

GAO was asked to review (1) DOD's assessment of the Test Program's
effectiveness, (2) the performance of contractors participating in the
Test Program, (3) the Defense Contract Management Agency's (DCMA)
oversight of contractors' small business subcontracting efforts, and (4)
the extent and reasons contractors are subcontracting with businesses
performing outside the U.S.

GAO recommends that the Secretary of Defense (1) establish metrics to
assess the overall effectiveness of the Test Program and (2) establish
procedures to improve the quality of the information in its database of
subcontracts to firms performing outside the U.S. DOD concurred with GAO's
recommendations.

April 2004

CONTRACT MANAGEMENT

DOD Needs Measures for Small Business Subcontracting Program and Better Data on
Foreign Subcontracts

In order to foster small business participation in subcontracting,
government contractors with larger dollar value contracts are required to
have subcontracting plans that establish goals for contractors to award
small businesses a percentage of subcontract dollars. DOD created the Test
Program to provide more small business opportunities and reduce the
administrative burden for contractors in managing their subcontracting
programs. Many of DOD's largest contractors participate in the program.

Although the Test Program was started more than 12 years ago, DOD has yet
to establish metrics to evaluate the program's results and effectiveness.
As a result, there is no systematic way of determining whether the program
is meeting its intended objectives and whether further changes need to be
made. DOD contracted for an assessment of the Test Program in 2002, but
the results of the assessment are considered preliminary and, therefore,
have not been reported. DOD is required to report the results of the Test
Program in 2005, when the program is set to expire.

DOD contractors participating in the Test Program have experienced mixed
success in meeting their various small business subcontracting goals. DOD
and contractor officials noted that a changing acquisition environment has
added to their challenge in meeting small business goals. Two of the major
challenges they identified include (1) the increased breadth, scope, and
complexity of DOD prime contracts that require, among other things,
teaming arrangements with other, typically large contractors and (2) prime
contractors' strategic sourcing decisions to leverage their purchasing
power by reducing the number of their suppliers including small
businesses.

DCMA plays a key role in overseeing the performance of contractors in the
Test Program and has made significant changes to its policy and guidance.
The revised approach is designed to better monitor contractors' efforts,
provide more consistency in assessing contractor performance, and hold
contractors accountable for achieving their subcontracting goals. DCMA is
still in the process of revamping its oversight activities.

GAO could not assess the full extent contractors used firms performing
outside the U.S. because of data reliability concerns. Contractors in
GAO's review reported several reasons for awarding subcontracts to firms
performing outside the U.S., such as fulfilling commitments included in
offset agreements or executing teaming arrangements for major defense
programs. Without accurate and complete information on subcontracts to
firms performing outside the U.S., DOD cannot make informed decisions on
industrial base issues.

www.gao.gov/cgi-bin/getrpt?GAO-04-381.

To view the full product, including the scope and methodology, click on
the link above. For more information, contact David Cooper at (202)
512-4841 or [email protected].

Contents

  Letter

Results in Brief
Background
DOD Has Yet to Assess the Overall Outcome of Its Test Program
DOD Contractors Have Mixed Success in Reaching Small Business

Goals DCMA Is Taking Steps to Improve Oversight of the Subcontracting
Program Extent of Subcontracting Activity with Firms Performing Outside

U.S. Is Unknown, and Reasons for Subcontracting Varied Conclusions
Recommendations for Executive Action Agency Comments and Our Evaluation 1

2 4 8

10

13

15 18 19 19

Appendix I Scope and Methodology

Appendix II Small Business Concern Categories

Appendix III Comments from the Department of Defense

Related GAO Products

  Table

Table 1: Total Subcontract and Small Business Subcontract Awards from DOD
Contracts, Fiscal Years 1993 through 2002

  Figure

Figure 1: Percentage of Total Subcontract Dollars Awarded to Small
Businesses from DOD Contracts, Fiscal Years 1993 through 2002 6

Abbreviations

DCMA Defense Contract Management Agency FAR Federal Acquisition Regulation
HUBZone Historically Underutilized Business Zone LMI Logistics Management
Institute

This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
its entirety without further permission from GAO. However, because this
work may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this material
separately.

United States General Accounting Office Washington, DC 20548

April 5, 2004

The Honorable Donald A. Manzullo
Chairman
The Honorable Nydia M. Velazquez
Ranking Democratic Member
Committee on Small Business
House of Representatives

Recognizing the importance of creating a dynamic environment where
small businesses-with their innovation and diversity-can flourish, the
federal government has sought to improve small business access to its
$250 billion procurement program. Small businesses more and more are
turning to subcontracting as a way to participate in federal procurements.
Contractors with larger dollar value contracts1 are required to have
subcontracting plans that establish goals for small business' share of
subcontract dollars to be awarded. Some in Congress have raised
concerns about the need to improve access of small businesses to federal
contracting opportunities. In addition, they have raised concerns about
small businesses losing subcontracting opportunities to firms performing
work outside of the United States.

The Department of Defense (DOD) plays a key role in the success of the
federal government's small business programs because it accounts for
about two-thirds of federal procurements. Over the last several years,
information reported by DOD contractors shows that the dollar amount of
subcontracts awarded to small businesses2 has increased and is higher
than it has ever been. On the other hand, the share of DOD's contracting
activity awarded to small businesses as subcontracts has declined steeply

1 Subcontracting plans are required for most contracts over $500,000 or $1
million for construction contracts. FAR 19.702(a)(1); 13 CFR S: 125.3(a).

2 According to DCMA officials, DOD contractors are supposed to report
actual subcontract achievements on the Standard Form 294 or 295. How
contractors report the data depends on their accounting system. For
example, if they are on an accrual basis, they may capture the subcontract
award at any convenient point in time (e.g., when they execute the
subcontract or purchase order). If they operate on a cash basis, they
would capture the transaction when they pay the subcontractor. The
government allows contractors to decide which way as long as they follow
Generally Accepted Accounting Principles (GAAP). One of the principles of
GAAP is that a contractor must apply the same methodology consistently.

in recent years-from about 43 percent in 1995 to about 34 percent in 2002.
DOD created the Test Program for Negotiation of Comprehensive Small
Business Subcontracting Plans (Test Program) to provide more small
business opportunities and reduce the administrative burden for
contractors in managing their subcontracting programs.3 Many of DOD's
largest contractors participate in the Test Program, and the Defense
Contract Management Agency (DCMA) plays a key role in overseeing their
performance.

Due to DOD's critical role in providing opportunities to small business,
we reviewed (1) DOD's assessment of the Test Program's effectiveness, (2)
the performance of contractors participating in the Test Program, (3) DCMA
oversight of contractors' small business subcontracting efforts, and (4)
the extent and reasons contractors are subcontracting with businesses
performing outside the U.S.4

To conduct this work, we interviewed and obtained documentation from the
Office of the Under Secretary of Defense, Office of Small and Disadvantage
Business Utilization, DCMA, DOD's Office of Program Acquisition and
International Contracting, and several contractors. We limited our review
of internal controls to reviewing DCMA's plans, methods, and procedures
used to meet its small business subcontracting program mission, goals, and
objectives. Because of concerns about data reliability of prime contract
data,5 we limited our use of this data to providing background information
and identifying contractors. We did not independently verify subcontract
data obtained from DOD and contractors but, instead, relied on DCMA
reviews of contractors' reporting systems to assure data accuracy and
completeness. We performed our work from March 2003 to March 2004 in
accordance with generally accepted government auditing standards. A more
detailed description of our scope and methodology is found in appendix I.

Although the Test Program was started more than 12 years ago, DOD has yet
to establish metrics to evaluate the program's overall results and

3 National Defense Authorization Act for Fiscal Years 1990 and 1991, P.L.
101-189, S: 834.

4 DOD collects data about businesses performing work outside the U.S., but
not data on whether businesses are domestic or foreign-owned.

5 For more information about data reliability concerns, see U.S. General
Accounting Office, Reliability of Federal Procurement Data, GAO-04-295R
(Washington, D.C.: Dec. 30, 2003).

  Results in Brief

effectiveness. DOD contracted for an assessment of the Test Program in
2002. However, the results of that assessment are considered preliminary,
and the report has not been issued.6 DOD, DCMA, and contractor officials
we interviewed have various views on the strengths and weaknesses of the
program. Some officials believe the Test Program increases high-level
corporate attention, while others thought it reduces accountability at
lower corporate-levels and visibility of contractors meeting their small
business goals for individual contracts. DOD is required to report the
results of the Test Program in 2005 when the program is set to expire.

DOD contractors participating in the Test Program have experienced mixed
success in meeting their various small business subcontracting goals. DOD
and contractor officials noted that a changing acquisition environment has
added to their challenge in meeting small business goals. Two of the major
challenges they identified include (1) the increased breadth, scope, and
complexity of DOD prime contracts that require, among other things,
teaming arrangements with other, typically large contractors and (2) prime
contractors' strategic-sourcing decisions to leverage their purchasing
power by reducing the number of their suppliers including small
businesses. According to DOD and contractor officials, both have the
potential to either restrict subcontracting opportunities for small
businesses or push those opportunities to lower tiers of the supply chain.
Contractor officials also said their ability to meet some small business
goals is influenced by the limited supply of qualified small businesses
that could provide the needed goods and services.

To improve oversight of contractor performance in meeting small business
subcontracting goals, DCMA began changing its approach in 2002. The
revised approach is designed to better monitor contractors' efforts,
provide more consistency in assessing contractor performance, and hold
contractors accountable for achieving their subcontracting goals. While
DCMA has made significant changes to its policy and guidance, it is still
in the process of revamping its oversight activities.

We could not assess the full extent contractors' subcontract with firms
performing outside the U.S. because of data reliability concerns. DOD only
recently took action to improve the information collected on
subcontracting with overseas firms. Contractors in our review reported

6 Logistics Management Institute, Review of the Department of Defense
Comprehensive Subcontracting Plan Test Program, AQ001R2 (Mclean, Va.: July
2002), Draft.

several reasons for awarding subcontracts to firms performing outside the
U.S., such as fulfilling commitments included in offset agreements7 or
executing teaming arrangements for major defense programs.

This report contains two recommendations to the Secretary of Defense to
establish metrics to assess the overall effectiveness of the Test Program
and improve the quality of the information in its database of subcontracts
to firms performing outside the U.S. In written comments on a draft of
this report, DOD concurred with both recommendations.

Over the last 10 years, DOD prime contract and total subcontract dollar
awards have increased. From 1993 to 2002, DOD prime contract dollars
increased almost 15 percent, from $136.8 billion to $157.1 billion.8 As
shown in table 1, total subcontract dollars awarded by DOD contractors9
increased more than 40 percent, from $53.0 billion to $75.5 billion. In
addition, small businesses have generally received increasing dollar
amounts from DOD contractors over a 10-year period-from $19.9 billion in
fiscal year 1993 to $25.8 billion fiscal year 2002.10

Background

7 An agreement between a U.S. supplier of defense articles or services and
a foreign country under which the supplier agrees to purchase goods and
services of the foreign country in consideration for the country's
purchase of the supplier's defense articles or services. 22 U.S.C.
2776(e)(1).

8 The total dollar amounts are for dollars submitted on Individual
Contracting Action Reports, DD Form 350, for actions that obligate or
de-obligate more than $25,000.

9 The annual subcontracting data was obtained from the Office of the Under
Secretary of Defense, Office of Small and Disadvantage Business
Utilization for fiscal years 1993 through 2002. We did not independently
test the reliability of the data received from this office, which relies
on DOD contractors to report this subcontract information semi-annually on
Standard Form 295 (SF 295).

10 The dollars reported in this paragraph are in constant fiscal year 2002
dollars.

Table 1: Total Subcontract and Small Business Subcontract Awards from DOD
Contracts, Fiscal Years 1993 through 2002

                              Dollars in billions

                                                          Subcontract dollars 
                             Total subcontract dollars       awarded to small 
             aFiscal year                      awarded             businesses 
                     1993                        $53.0                  $19.9 
                     1994                         52.4                   20.1 
                     1995                         50.9                   21.7 
                     1996                         52.5                   21.9 
                     1997                         59.1                   24.5 
                     1998                         56.9                   23.9 
                     1999                         55.3                   22.7 
                     2000                         57.0                   22.4 
                     2001                         61.3                   23.8 
                     2002                        $75.5                  $25.8 

Source: GAO analysis of DOD-provided data.

aIn constant fiscal year 2002 dollars.

However, as shown in figure 1, small businesses' share of total
subcontract dollars from DOD contractors has decreased in recent years.
The percent share that small business received has ranged from a high of
about 43 percent ($21.7 billion) in fiscal year 1995 to a low of about 34
percent ($25.8 billion) in fiscal year 2002.11

11 All dollars are in constant fiscal year 2002 dollars.

Figure 1: Percentage of Total Subcontract Dollars Awarded to Small
Businesses from DOD Contracts, Fiscal Years 1993 through 2002

In order to foster the participation of small businesses in
subcontracting, the Federal Acquisition Regulation (FAR) requires DOD
contractors to have subcontracting plans for most contracts of more than
$500,000 ($1 million for construction contracts).12 These plans document
what actions the contractor will take to provide various types of small
businesses with the maximum practicable opportunities to participate in
subcontracting. See appendix II for description of small business
categories. Contractors with DOD are to provide semiannual reports to DCMA
on their small business achievements for each contract that has a
subcontracting plan as well as semiannual summary reports that encompass
all their contracts with a particular agency.

12 FAR 19.702 (a). However, subcontracting plans are not required (1) from
small businesses; (2) for personal service contracts; (3) for contracts or
contract modifications performed outside a state, territory, or possession
of the U.S., the District of Columbia, and the Commonwealth of Puerto
Rico; or (4) for modifications of contracts within the general scope of
the contract that do not contain the clause at FAR 52.219-8, Utilization
of Small Business Concerns. FAR 19.702 (b).

The National Defense Authorization Act for Fiscal Years 1990 and 1991
authorized DOD to establish the Test Program for Negotiation of
Comprehensive Small Business Subcontracting Plans (Test Program), which
allowed the negotiation, administration, and reporting of subcontracting
plans on a plant, division, or companywide basis rather than a plan for
each individual contract. The purpose of the Test Program is to increase
subcontracting opportunities for various types of small businesses while
reducing the administrative burdens on contractors. The companies that
participated in this Test Program in fiscal year 2002 accounted for about
41 percent of DOD's subcontracting activity in that same fiscal year. The
Office of the Under Secretary of Defense, Office of Small and Disadvantage
Business Utilization is responsible for the overall assessment of the Test
Program. Originally scheduled for fiscal years 1991 through 1992, the Test
Program has been extended several times and is scheduled to end September
30, 2005.13 Under the Test Program, small business goals are negotiated
annually, whereas for individual plans, goals are generally negotiated
once for the life of the contract.14

As of fiscal year 2003, 15 contractors have comprehensive plans under the
Test Program. DCMA is responsible for reviewing DOD contractors'
subcontracting plans and monitoring and assessing contractor's performance
to determine how well contractors are implementing their plans and meeting
their small business goals. DCMA is also involved in annually negotiating
goals with contractors participating in the Test Program.

Since 1982, DOD has required prime contractors to report quarterly to
DOD's Office of Program Acquisition and International Contracting on
contracts exceeding $500,000 when the contractor or its first tier
subcontractor will perform any part of the contract that exceeds $100,000
outside the U.S., unless a foreign place of performance (1) is the
principal place of performance and (2) is identified in the firm's
offer.15 First-tier

13 Section 817, P.L. 106-65.

14 Under the Test Program, the comprehensive subcontracting plan is to
target specific industry categories where types of small businesses have
not historically participated. For individual plans, the contractor must
pay liquidated damages if the contracting officer determines the
contractor failed to make a good faith effort to comply with the
subcontracting plan. For both types of plans, the reporting requirement is
semiannually.

15 DFARS 252.225-7004(a)(2). Contracts and subcontracts for commercial
items, military construction, ores, natural gas, utilities, petroleum
products and crudes, timber, and subsistence are not required to be
reported.

  DOD Has Yet to Assess the Overall Outcome of Its Test Program

subcontractors that award subcontracts in excess of $100,000 to be
performed outside the U.S. are also subject to the reporting requirement.
Reported information is to include the type of supply or service provided,
the principal place of subcontract performance, and the dollar value of
the transaction. The information is used as part of DOD's efforts to
monitor foreign procurements and assess matters related to defense trade
balances and domestic industrial base capabilities.16 DOD's Office of
Program Acquisition and International Contracting reports to the Director
of Defense Procurement and Acquisition Policy.

Although the Test Program has been in existence since fiscal year 1991,
DOD does not know if it is achieving its intended objectives to provide
more small business subcontracting opportunities and to reduce
administrative burden for contractors. The Office of the Under Secretary
of Defense, Office of Small and Disadvantage Business Utilization, which
is to report the results of the Test Program in December 2005, shortly
after the program is set to expire, commissioned a preliminary study of
the program in 2002. The data assessing the merits of the program were
never formally released, but the resulting preliminary report had a number
of recommendations. DOD recognizes that it needs to establish metrics and
other criteria for measuring program results in meeting the intended
objectives. We found that DOD and contractor officials have various views
on the strengths and weaknesses of the program.

    Past Assessment of the Test Program Was Preliminary

To assess the Test Program, DOD commissioned a preliminary review of the
program by the Logistics Management Institute (LMI). LMI noted in its
draft report that, in terms of achievements for subcontracting to small
businesses, the Test Program results improved impressively between 1991
and 1996-from small businesses receiving 12 percent of total subcontracts
to receiving about 36 percent-but declined to about 29 percent by 2000.
LMI attributed the decline to factors external to the program-some of
which we discuss later. Most of its recommendations dealt with addressing
ways of improving small business achievements, but also included
program-specific recommendations, such as

o  	increasing visibility of subcontracting activity at the corporation's
division and program level, where feasible;

16 10 U.S.C. sec 2505 requires periodic national technology and industrial
base assessments.

o  	deducting directed-source procurements from subcontracting achievement
calculations;

o  	allowing subcontracting plan renegotiations to reflect major contract
awards that occur after negotiations;

o  	establishing annual meetings of program participants and DCMA to allow
exchange of ideas, best practices, and lessons learned;

o  	permitting removal of poor performing participants after appropriate
notice;

o  	requiring participants to track and annually report administrative
savings and costs and results of their outreach activities; and

o  limiting enrollment to 20 participants.

While the final report has not been issued, DOD officials said they have
taken into consideration a number of the recommendations from the study by
LMI. For example, DCMA has taken steps to improve oversight of contractor
performance and hold contractors more accountable for achieving their
subcontracting goals, and DOD has chartered a council to share Test
Program knowledge and experience. In addition, some DOD program offices
require contractors to report on their subcontracting activity at the
program level to increase visibility of subcontracting to small
businesses.

    DOD Lacks Test Program Measurements to Assess Overall Effectiveness

Despite DOD's attempts to assess the program, it still does not know
whether using the Test Program is affecting subcontracting opportunities
for small businesses and reducing administrative burden for the
contractors. DOD, through DCMA, is to report on each participating
contractor's performance by December 15, 2005 by comparing the
contractor's performance under the program with its performance for 3
fiscal years before the acceptance into the program.17 DOD officials told
us they are uncertain how they will measure contractors' performance to
meet their reporting requirement and assess trends over time. This
uncertainty is in part due to not having the original participants in the
program to establish a baseline to evaluate performance and changes in
company compositions. Further, these officials noted that mergers and
acquisitions can greatly change company compositions and business bases
from year to year making trend determinations difficult. DCMA officials
told us they plan on hiring a contractor to help them complete their
review

17 65 FR 7509 (Feb. 15, 2000).

of the overall results of the Test Program and will use the results of the
LMI study as a tool to help develop Test Program metrics.

    Views Varied on Merits of the Test Program

  DOD Contractors Have Mixed Success in Reaching Small Business Goals

DCMA and contractor officials we interviewed gave varied opinions-both
positive and negative-on the Test Program. Some said that while they were
uncertain about its increasing small business opportunities, they thought
participating in the Test Program helped increase the visibility of the
results of small business program companywide or divisionwide. Others said
the comprehensive plan sometimes resulted in lost visibility of individual
contract performance and reduced accountability at the program level. In
fact, one contractor recently stopped participating in the program because
of the lost ability to monitor individual contract performance. DCMA and
contractor officials we interviewed said they were uncertain if there had
been a reduction of administrative burden since, for example, under the
Test Program contractors were required to prepare a detailed plan,
negotiate small business goals each year, and submit performance data
semiannually. Plus, certain large DOD programs requested contractors to
report small business data. Many agreed that, regardless of what type of
plan contractors used, success of the small business program relies on
contractor management's commitment to meeting small business goals. DCMA
and contractor officials also stated that contractor management must have
the ability to monitor company performance on those goals.

Between fiscal years 1999 and 2003, the DOD contractors we reviewed had
varied success in meeting their small business goals. DOD and contractor
officials provided several reasons for the mixed success of the
subcontracting program, but DOD has not formally studied those factors
that may encourage or discourage the participation of small businesses in
DOD subcontracts.

    Contractors Have Met Some Small Business Goals, but Results Are Inconsistent

In the past 5 years, the 15 DOD contractors participating in the Test
Program had varying success in meeting their small business goals
established in their subcontracting plans. Overall, the contractors in the
Test Program were not consistent from year to year in meeting their goals
for the traditional small business categories. For example, in at least 3
of the past 5 years, 11 of the 15 contractors met their overall small
business goals, seven contractors met their goals for small disadvantaged
businesses, and six contractors met their goals for women-owned small
businesses.

    Changing Contracting Environment May Affect Contractors' Ability to Meet
    Small Business Goals

DOD and contractor officials noted that a changing acquisition environment
has added to the challenge in meeting their small business goals. Changes
included (1) the increased breadth, scope, and complexity of DOD prime
contracts that require, among other things, teaming arrangements with
other, typically large contractors and (2) prime contractors' strategic
sourcing decisions to leverage their purchasing power by reducing the
number of their suppliers including small businesses. Contractor officials
also said that the relatively limited supply of qualified small businesses
that could provide the needed goods and services also increases the
difficulty in meeting small business goals. DOD has not studied to what
degree the changing acquisition environment or other factors contribute to
the success or failure of its small business subcontracting program.

Contractor and DCMA officials report that the breadth, scope, and
complexity of DOD prime contracts for weapons systems has increased over
the years. According to officials, this has had several consequences,
which have limited the opportunities for small businesses. First, prime
contractors are increasingly relying on teaming arrangements to win
contracts. Their teaming partners, typically large businesses, receive a
sizable portion of the first-tier subcontracts. For example, under a major
defense contract, the contractor awarded about 56 percent of its total
subcontract dollars to its teaming partners, significantly reducing the
opportunities of small businesses to win first-tier subcontracts. Also,
prime contractors are increasingly serving as systems integrators instead
of systems manufacturers and are buying major assemblies rather than parts
and components. Systems integrators are often responsible for the
development, management, and eventual delivery of a large weapon system.
Consequently, as in the case of teaming arrangements, systems integrators
often use large businesses as first-tier subcontractors. Contractor
officials said that although small businesses may still be receiving
contract dollars through second- or lower-tier subcontracts, contractors
could only count their first-tier subcontract awards towards their small
business goals.

In addition, many contractors have made the strategic-sourcing decision to
reduce the number of suppliers in their supplier base. Contractors report
reducing their supplier bases by as much as 50 percent over the past 5
years in a move to leverage their purchases, cut costs, and improve

performance to remain competitive in the world market.18 Contractors also
noted that by reducing the number of contractors, they often relied on
larger corporatewide contracts, which could also affect their small
business suppliers. For example, officials of one contractor noted that
when it went to a single information systems contractor, it no longer
contracted with a number of small firms.

Finally, contractors report difficulty in finding qualified small
businesses to provide the goods and services needed. Contractor officials
said this is particularly true for small business programs with
certification requirements-such as the programs for small disadvantaged
businesses and Historically Underutilized Business Zone (HUBZone)
businesses-and for very recent programs, such as the service-disabled
veterans program. The Small Business Administration has certified
significantly fewer small disadvantaged businesses and HUBZone firms than
hoped. Consequently, contractors often have difficulty meeting small
disadvantaged business goals, and few have met their HUBZone goals.19
Further, according to DCMA officials responsible for on site monitoring of
subcontracting plans, qualified businesses in different small business
categories usually compete for the same type of work. Consequently,
according to these DCMA officials, contractors have difficulty meeting
goals for all small business types and often report wide fluctuations in
subcontracting achievements among the groups, depending on which ones win
contracts in a given year. The categories of small business that DOD uses
include small businesses, small disadvantaged businesses, women-owned
small businesses, veteran-owned and service-disabled veteran-owned small
businesses, HUBZone businesses, Historically Black Colleges and
Universities, and Minority

20

Institutions.

18 For more information on supplier base management, see U.S. General
Accounting Office, Best Practices: Taking a Strategic Approach Could
Improve DOD's Acquisition of Services, GAO-02-230 (Washington D.C.: Jan.
18, 2002).

19 For more information on the small disadvantaged business and HUBZone
programs, see U.S. General Accounting Office, Small Business: Status of
Small Disadvantaged Business Certifications, GAO-01-273 (Washington, D.C.:
Jan. 19, 2001) and Small Business: HUBZone Program Suffers From Reporting
and Implementation Difficulties, GAO-02-57 (Washington, D.C.: Oct. 26,
2001).

20 See appendix II for more information on the various small business
concerns.

DCMA Is Taking Steps Since 2002, DCMA has taken steps to help improve its
oversight of DOD's

small business program. These steps include issuing an updated policy for
to Improve Oversight monitoring contractors' small business subcontracting
programs, issuing of the Subcontracting new guidance to help DCMA
personnel in implementing small business

program requirements, and developing new criteria for rating contractor
Program performance.

    DCMA Role Encompassed a Broad Range of Responsibilities

Previously, DCMA, through its small business specialists, carried out its
small business subcontracting program responsibilities through (1)
contractor orientation and training, (2) small business outreach and
"matchmaking," (3) Test Program review and negotiation, and (4) contractor
performance evaluations. Training primarily involved informing the
contractors and other DCMA personnel of contractor responsibilities and
small business program requirements. Outreach and "matchmaking" activities
included attending or arranging small business conferences and open houses
and identifying qualified small businesses to contractors.

DCMA policies and procedures also required small business specialists to
review contractors' subcontracting performance and perform two kinds of
reviews: annual reviews of Test Program participants and reviews of
contractor subcontract performance.21

o  	Test Program plan reviews-annually assess each contractor
participating in the Test Program. The review includes determining how
well the contractor is performing under the plan, including whether it met
its goals for the year. However, these reviews do not result in an overall
rating.

o  	Contractors' subcontract-performance reviews-assess all DOD contractor
facilities with subcontracting plans, whether comprehensive or
individual.22 In general, DCMA reviews the DOD contractors it is
responsible for monitoring on an annual basis.23 The review assesses
contractor policies and procedures, outreach activities, record keeping
and reporting procedures, training that contractor personnel received to

21 These are often referred to as "640 Reviews" because of the form used.

22 For more discussion on DCMA's reviews, see U.S. General Accounting
Office. Small Business Subcontracting Report Validation Can be Improved,
GAO-02-166R (Washington, D.C.: Dec. 13, 2001).

23 DCMA officials said they review almost all of the contractors included
in their reviews annually.

implement their small business subcontracting program, and contractor
performance on meeting small business goals. DCMA assigned ratings on a
5-point scale from "outstanding" to "unsatisfactory." DCMA small business
specialists said that because the rating criteria were loosely defined,
contractors could receive different ratings depending on the
interpretation of the small business specialist. For example, in fiscal
year 2001, one company's performance received a "highly successful" rating
even though it had not met any of its three long-standing small business
goals24 for that

period of the review. In fiscal year 2002, DCMA rated another company's
performance as "unacceptable" although it had demonstrated similar
performance on its goals.

    DCMA Has Increased Focus on Oversight

DCMA's new policy and guidance emphasizes the agency's oversight function.
In July 2003, DCMA published an updated policy for monitoring contractors'
small business subcontracting programs. While DCMA continues to conduct
its reviews under its revised policy, it created more specific criteria
for determining contractor performance. The criteria particularly
emphasize contractors' small business goal achievements and contractor
accountability, including the contractors participating in the Test
Program. For example, under DCMA's new rating criteria, to receive a
"highly successful" performance rating, the contractor must meet three
long-standing small business goals and at least one of the newer goals
(e.g. veteran-owned small business) as well as demonstrating significant
success in other initiatives identified in its subcontracting plan.

In September 2003, DCMA published a new procedural guide to assist DCMA
Small Business Specialists in implementing the small business program. For
example, the guidance provides factors, such as a contractor's past
performance, that should be considered when negotiating goals with Test
Program participants. DCMA continues to assess the oversight of the Test
Program and whether further changes need to be made.

Other steps DCMA has taken that allow the more efficient use of its
resources include establishing a risk-based approach to its reviews of
contractors and limiting its training and outreach functions. The
risk-based approach allows DCMA to skip a review of a contractor for 1
year if the contractor's previous year's rating was "outstanding," there
were no

24 DOD considers the long-standing small business goals to include the
overall small business, small disadvantaged business, and woman-owned
small business.

  Extent of Subcontracting Activity with Firms Performing Outside U.S. Is
  Unknown, and Reasons for Subcontracting Varied

significant changes in their contracting activity, and there were no
significant personnel changes affecting the contractor's small business
program. In addition, according to DCMA officials, DCMA is significantly
limiting its training and outreach functions on the basis that other
organizations, such as the Small Business Administration and Procurement
Technical Assistance Centers,25 already provide these services.

We could not determine the extent of subcontracting to firms performing
outside the U.S. because of inconsistent reporting of subcontracting
activities by contractors and poor database management by DOD. According
to the contractors in our review, most subcontracts to firms performing
outside the U.S. accounted for a small percentage of their total
subcontract dollars. Further, the contractors stated that most of the
dollars to firms performing outside the U.S. were awarded on a
noncompetitive basis. These contractors reported several reasons for
awarding subcontracts to firms performing outside the U.S in fiscal year
2002.

    Concerns Remain about Reliability of Data on Subcontracts Performed Outside
    U.S.

We could not assess the full extent that defense contractors' subcontract
with firms performing outside the U.S. In November 1998, we reported that
DOD's Office of Program Acquisition and International Contracting did not
have safeguards for ensuring the completeness and accuracy of its database
of subcontracts to firms performing outside the U.S.26 At that time, we
found instances in which DOD contractors did not report their subcontracts
to firms performing outside the U.S. in accordance with DOD's reporting
requirements because they were unaware of the reporting requirements or
misunderstood the criteria for reporting this type of subcontract. Plus,
we identified that DOD lacked standards and procedures for managing this
database.

In October 2003, during our review, the Director of Defense Procurement
and Acquisition Policy-through the Office of Program Acquisition and

25 States, colleges and universities, tribal organizations, and non-profit
organizations under contract with DOD typically run these centers. They
are to provide assistance in contracting with federal, state, and local
governments.

26 U.S. General Accounting Office, Defense Trade: Weaknesses Exist in DOD
Foreign Subcontract Data, GAO/NSIAD-99-8 (Washington, D.C.: Nov. 1998).

International Contracting-began to take the following actions to address
contractor compliance

o  	sent letters to the top 100 parent companies of DOD contractors to
remind them about DOD reporting requirements for subcontracts to firms
performing outside the U.S. and requested they ensure all their
subsidiaries also comply with this reporting requirement,

o  	sent a memorandum to the Senior Acquisition Executives of the Military
Department and the Defense Agencies requesting they remind their
contracting officers of the reporting requirement,

o  	engaged in outreach efforts with government and industry personnel to
help ensure this effort to improve contractor compliance was fully
communicated,

o  	sent a memorandum to DCMA requesting its assistance in periodically
verifying that contractors are complying with the reporting requirements,
and

o  	clarified reporting requirements for subcontracts to firms performing
outside the U.S.

The Office of Program Acquisition and International Contracting intends to
perform periodic verification of reporting of subcontracts to firms
performing outside the U.S. and is in the process of establishing those
procedures. Because no action had been taken to improve data reliability
until recently, we could not rely on the data available to determine the
extent that DOD contractors were subcontracting with firms outside the
U.S.

    Contractors Report Awarding a Small Percentage of Subcontract Dollars to
    Firms Performing Outside the U.S.

Contractors at four of the five locations we visited spent between
approximately 2 and 6 percent of their total DOD subcontracting dollars in
fiscal year 2002 on subcontracts to firms performing outside the U.S.27
The fifth contractor subcontracted about 18 percent of its subcontracting
dollars with firms performing outside the U.S. in fiscal year 2002 due to
a teaming arrangement for a large defense contract it was awarded.
According to a contractor official, this percentage would more typically
be around 10 percent. At the five contractor locations, the total
subcontract

27 The five contractor locations we visited are: Raytheon Company, Space
and Airborne Systems, El Segundo, Calif.; The Boeing Company, Integrated
Defense Systems, El Segundo, Calif.; Northrop Grumman Corp., Air Combat
Systems, El Segundo, Calif.; Northrop Grumman Corp., Space and Technology
(formerly TRW Space and Electronics), Redondo Beach, Calif.; and Lockheed
Martin Aeronautics Company, Ft. Worth, Tex.

dollars to firms performing outside the U.S. ranged between approximately
$29 million and $1.9 billion in fiscal year 2002. These subcontracts were
for items such as parts for military systems, communication equipment for
satellites, components for military aircraft, and sensors for satellite
weather forecasting.

While one contractor reported awarding most of its subcontract dollars to
firms performing outside the U.S. on a competitive basis in fiscal year
2002, four contractors reported awarding the majority of their subcontract
dollars non-competitively. Consequently, small businesses generally did
not have the opportunity to compete for these types of subcontracts.
Contractor officials said that even when their subcontracts with firms
performing outside the U.S. were competed, they were not necessarily for
the type of products that small businesses had the expertise or technology
to provide. For example, one contractor competitively awarded a contract
for an amplifier used in communication equipment to a firm outside the
U.S. The contractor did not identify or solicit small businesses in the
competition because of the unique technology and expertise required for
that particular amplifier.

    Subcontracts Awarded for Various Reasons

Contractor officials said the reasons for the awards to firms performing
outside the U.S. in fiscal year 2002 include:

o  	Directed source-Contractor officials stated some subcontracts were
awarded to companies outside the U.S. because DOD directed them to
subcontract with a certain supplier. For example, a prime contractor was
directed by DOD to award a subcontract to a company outside the U.S. to
produce a sensor for a weather forecasting satellite because the company
previously had a contract directly with the U.S. Government.

o  	Offset agreements28-The contractors said that to sell military goods
and services to other countries, they often have to form agreements with
foreign countries that necessitate subcontracting with foreign firms to
some degree. For example, one U.S. prime contractor awarded a subcontract
to a firm in a foreign country because a prior offset agreement required
the contractor to purchase about $1 billion in goods and services from
firms in that country. The $32.3 million subcontract was for a

28 An agreement between a U.S. supplier of defense articles or services
and a foreign country under which the supplier agrees to purchase goods
and services of the foreign country in consideration for the country's
purchase of the supplier's defense articles or services. 22 U.S.C.
2776(e)(1).

structural frame for the troop ramp and an air deflector for the C-17

transport aircraft.  o  International agreements-Sometimes subcontracts
are awarded to companies outside the U.S. because of international
agreements between the U.S. and foreign countries. For instance, a
contractor awarded a series of subcontracts to firms performing outside
the U.S. based on an international agreement in which a 13-nation
consortium contributed to the development of components for a missile to
be used by these nations.29 Some of the components produced by the various
countries included control systems, rocket motors, and guidance systems.

o  	Team Arrangements-This is an arrangement where two or more contractors
form a partnership or joint venture to act as a potential prime contractor
or a potential prime contractor agrees with one or more other contractors
to have them act as its subcontractors under a specified Government
contract or acquisition program.30

o  Product specialization-Contractor officials said it was very expensive

Conclusions

to develop and change suppliers of specialized parts; therefore, DOD
contractors typically continue to award contracts to the same supplier
that originally supplied the products. That supplier may be located
outside the U.S. For instance, one contractor awarded a subcontract to
such a supplier because it was the only one that had a specification
drawing for the production of pedestals for a radar system. In another
case, a DOD contractor awarded a subcontract to a company outside the U.S.
because it was the only supplier that already had the tools and the
expertise to manufacture and produce a horizontal stabilizer for the F-5
aircraft.

Because of its large contracting operations, DOD is critical to the
success of federal programs designed to provide opportunities for small
businesses. DOD has recognized the importance of its role in federal
contracting; has taken limited steps to help improve opportunities for
small businesses, such as the Test Program; and has revised DCMA guidance
to hold contractors more accountable for their small business goals.
However, after 12 years of implementing the Test Program, DOD does not
know whether these initiatives are effective. While DOD has collected data
over the years, it has not established metrics to evaluate the
effectiveness of the Test Program. As a result, there is no systematic way

29According to a contractor official at this firm, the number of countries
involved in the program can change from year to year depending on various
circumstances. In fiscal year 2002, 10 countries, including the U.S., were
in the program.

30 For additional information on contractor team arrangements, see FAR
9.6.

  Recommendations for Executive Action

Agency Comments and Our Evaluation

of determining whether the program is meeting its intended objectives and
whether further changes need to be made.

In addition, the reliability of the data submitted by contractors on their
subcontracts to firms performing outside the U.S. remains a concern. DOD
has only recently started to take action on improving its data collection
and has yet to establish procedures for validating the information.
Without accurate and complete information on subcontracts to firms
performing outside the U.S., DOD cannot make informed decisions on
industrial base issues.

We are making the following two recommendations to the Secretary of
Defense:

In order to evaluate the effectiveness of the Test Program, we recommend
the Secretary of Defense direct the Office of the Under Secretary of
Defense, Office of Small and Disadvantage Business Utilization, to develop
metrics to assess the overall results of its Test Program.

Also, to ensure DOD has the information it needs to accurately determine
the number and dollar amount of subcontracts to firms performing outside
the U.S., we recommend the Secretary of Defense direct DOD's Office of
Program Acquisition and International Contracting to establish procedures
to improve the quality of the information in its database of subcontracts
performed outside the U.S.

DOD provided us with written comments on a draft of this report. DOD
concurred with our findings and recommendations and noted some additional
actions it took or is taking to address our recommendations. We
incorporated these actions in this report where appropriate. DOD's
comments appear in appendix III.

As requested by your office, unless you publicly announce the contents of
this report earlier, we plan no further distribution of it until 30 days
from the date of this letter.

At that point, copies of this report will be sent to interested
congressional committees and the Secretary of Defense. We will also make
copies available to others upon request. In addition, the report will be
available at no charge on the GAO Web site at http://www.gao.gov.

Please contact me at (202) 512-4841, or Hilary Sullivan at (214) 777-5652,
if
you have any questions regarding this report. Major contributors to this
report were Vijay Barnabas, David Bennett, Frederick Day, Michael Gorin,
Gary Middleton, Pauline Reaves, Sylvia Schatz, and Suzanne Sterling.

David E. Cooper
Director
Acquisition and Sourcing Management

                       Appendix I: Scope and Methodology

To determine DOD's assessment of the Test Program's effectiveness, we
reviewed legislation, regulations, directives, and policies regarding this
program. We also reviewed a July 2002 study conducted by LMI for DOD that
looked at the overall results of the Test Program. In addition, we met
with officials at DCMA headquarters, district, and field locations as well
as officials at selected contractor locations to discuss their views on
the advantages and disadvantages of the Test Program.

To determine the performance of contractors participating in the Test
Program, we collected data on the 15 DOD contractors (i.e., parent
companies or their subsidiaries) participating in the Test Program. More
specifically, we obtained 5 years of small business goal and performance
data, fiscal years 1999 to 2003, on the extent that the contractors were
meeting their small business goals from DCMA headquarters and district
officials as well as contractor officials. The contractors in the Test
Program as of fiscal year 2003 are the following

o  The Boeing Company;

o  General Electric Aircraft Engines;

o  Harris Corporation, Government Communications Systems Division;

o  Lockheed Martin Aeronautics Company;

o  	Lockheed Martin Simulation, Training & Support (formerly Information
Systems);

o  Lockheed Martin Missiles & Fire Control;

o  Lockheed Martin Space Systems Company;

o  Northrop Grumman Air Combat Systems;

o  Northrop Grumman Electronic Systems and Sensors;

o  Raytheon Company;

o  Textron Systems, a Textron Company;

o  Bell Helicopter Textron Inc.;

o  United Technologies Corp, Hamilton Sundstrand Division;

o  United Technologies Corp, Pratt & Whitney Government Division; and

o  United Technologies Corp, Sikorsky Aircraft Division.

To determine DCMA's oversight of contractors' small business
subcontracting efforts, we met with officials at DCMA headquarters,
district, and field locations as well as officials at selected contractor
locations to identify and discuss DCMA's role. We also gathered
information on updated policy and guides for monitoring contractors' small
business subcontracting programs and new criteria for rating contractor
performance. We limited our review of internal controls to

Appendix I: Scope and Methodology

reviewing DCMA's plans, methods, and procedures used to meet its small
business subcontracting program mission, goals, and objectives.

To determine the reasons and extent contractors are subcontracting with
businesses performing outside the U.S.1 we identified the contractors'
rationale with officials at the five selected contractor locations. We
also gathered information for the most current year that data was
available, fiscal year 2002, from contractor officials at same five
locations. We did not independently verify this data. In addition, we
reviewed the steps DOD had taken to address past database deficiencies and
discussed recent changes at DOD's Office of Program Acquisition and
International Contracting on their management of the database of
subcontracts performed by contractors outside the U.S.

We conducted our review between March 2003 and March 2004 in accordance
with generally accepted government auditing standards.

1 DOD collects data about businesses performing work outside the U.S. but
does not request information if the business is domestic or foreign-owned.

Appendix II: Small Business Concern Categories

                              Program Description

Small business concern 	A small business concern is one that is
independently owned and operated and is not dominant in its field of
operation. 15 U.S.C. 632(a)(1). A small business concern is further
defined as (1) a business entity that is organized for profit; (2) with a
place of business located in the U.S.; and (3) which operates primarily
within the U.S. or which makes a significant contribution to the U. S.
economy through tax payments or use of American products, materials, or
labor; and (4) meets the size standard for its primary business activity
or industry as designated by the applicable North American Industry
Classification System (NAICS) codes. 13 C.F.R. 121.101(a); 121.105(a); FAR
19.001.

Small disadvantaged business concern 	A small disadvantaged business is a
small business concern that is 51% or more owned by one or more socially
and economically disadvantaged persons who manage and operate the concern.
15 U.S.C. 637(d)(3)(C). Black Americans, Hispanic Americans, Asian Pacific
Americans, Subcontinent Asian Americans, and Native Americans are presumed
by regulation to be socially disadvantaged. 13 C.F.R. 124.103(b). Other
individuals can qualify if they show by a "preponderance of the evidence"
that they are socially disadvantaged. 13 C.F.R. 124.103(c). A small
disadvantaged must also (1) meet SBA's established size standard for its
main industry; and (2) have principals who have a net worth, excluding the
value of the business and personal home, of less than $750,000. 13 C.F.R.
124.1002(b) (c).

Woman-owned small business concern 	A woman-owned business is a small
business concern that is 51% owned by one or more women who manage and
operate the concern. 15 U.S.C. 637(d)(3)(D); FAR 2.101.

Veteran-owned small business concern 	A veteran-owned business is a small
business concern that is 51% owned by one or more veterans who manage and
operate the concern. 15 U.S.C. 637(d)(3)(E); FAR 2.101.

Service-disabled veteran-owned small A service-disabled veteran-owned
business is a small business concern that is 51%

business concern 	owned by one or more service-disabled veterans who
manage and operate the concern. 15 U.S.C. 632(q)(2); FAR 2.101.

HUBZone small business concern 	A HUBZone is a small business concern that
(1) meets SBA's size standards for its primary industry classification;
(2) is owned and controlled by one or more U.S. citizens; (2) has a
principal office located in a HUBZone (a historically underutilized
business zone, which is in an area located within one or more qualified
census tracts, qualified non-metropolitan counties, or lands within the
external boundaries of an Indian reservation); and (3) has at least 35
percent of its employees residing in a HUBZone. 15 U.S.C. 632(p)(3) (5);
13 C.F.R. 126.103; 126.203.

Historically black college or university	A historically black college or
university means an institution determined by the Secretary of Education
to meet the requirements of 34 C.F.R. 608.2. FAR 2.101.

Minority institution 	A minority institution is an institution of higher
education whose enrollment of a single minority or a combination of
minorities (American Indian, Alaskan Native, Black, and Hispanic-Mexican,
Puerto Rican, Cuban, and Central or South American) exceeds 50 percent of
the total enrollment. FAR 2.101; 20 U.S.C. 1067k(2) (3).

                  Source: GAO review of laws and regulations.

Appendix III: Comments from the Department of Defense

             Appendix III: Comments from the Department of Defense

Note: Page numbers in the draft report may differ from those in this
report.

  Appendix III: Comments from the Department of Defense Appendix III: Comments
  from the Department of Defense Appendix III: Comments from the Department of
                                    Defense

Related GAO Products

Joint Strike Fighter Acquisition: Cooperative Program Needs Greater
Oversight to Ensure Goals Are Met. GAO-03-775. Washington D.C.: July 21,
2003.

Sourcing And Acquisition: Challenges Facing the Department of Defense.
GAO-03-574T Washington D.C.: March 19, 2003.

Small Business Contracting: Concerns About the Administration's Plan to
Address Contract Bundling Issues. GAO-03-559T. Washington D.C.: March 18,
2003.

Small Business Administration: The Commercial Marketing Representative
Role Needs to Be Strategically Planned and Assessed. GAO-03-54. Washington
D.C.: November 1, 2002.

Best Practices: Taking a Strategic Approach Could Improve DOD's
Acquisition of Services. GAO-02-230. Washington D.C.: January 18, 2002.

Small Business Subcontracting Report Validation Can Be Improved.
GAO-02-166R. Washington D.C.: December 13, 2001.

Small Business: More Transparency Needed in Prime Contract Goal Program.
GAO-01-551. Washington D.C.: August 1, 2001.

Small Business: Status of Small Disadvantaged Business Certifications.
GAO-01-273. Washington D.C.: January 19, 2001.

Small Business: Trends in Federal Procurement in the 1990s. GAO-01-119.
Washington D.C.: January 18, 2001.

Defense Trade: Observations on Issues Concerning Offsets. GAO-01-278T.
Washington D.C.: December 15, 2000.

Defense Trade: Weaknesses Exist in DOD Foreign Subcontract Data.
GAO/NSIAD-99-8. Washington D.C.: November 13, 1998.

  GAO's Mission

Obtaining Copies of GAO Reports and Testimony

The General Accounting Office, the audit, evaluation and investigative arm
of Congress, exists to support Congress in meeting its constitutional
responsibilities and to help improve the performance and accountability of
the federal government for the American people. GAO examines the use of
public funds; evaluates federal programs and policies; and provides
analyses, recommendations, and other assistance to help Congress make
informed oversight, policy, and funding decisions. GAO's commitment to
good government is reflected in its core values of accountability,
integrity, and reliability.

The fastest and easiest way to obtain copies of GAO documents at no cost
is through the Internet. GAO's Web site (www.gao.gov) contains abstracts
and full-text files of current reports and testimony and an expanding
archive of older products. The Web site features a search engine to help
you locate documents using key words and phrases. You can print these
documents in their entirety, including charts and other graphics.

Each day, GAO issues a list of newly released reports, testimony, and
correspondence. GAO posts this list, known as "Today's Reports," on its
Web site daily. The list contains links to the full-text document files.
To have GAO e-mail this list to you every afternoon, go to www.gao.gov and
select "Subscribe to e-mail alerts" under the "Order GAO Products"
heading.

Order by Mail or Phone 	The first copy of each printed report is free.
Additional copies are $2 each. A check or money order should be made out
to the Superintendent of Documents. GAO also accepts VISA and Mastercard.
Orders for 100 or more copies mailed to a single address are discounted 25
percent. Orders should be sent to:

U.S. General Accounting Office 441 G Street NW, Room LM Washington, D.C.
20548

To order by Phone: 	Voice: (202) 512-6000 TDD: (202) 512-2537 Fax: (202)
512-6061

To Report Fraud,	Contact: Web site: www.gao.gov/fraudnet/fraudnet.htm

  Waste, and Abuse in E-mail: [email protected]

Federal Programs Automated answering system: (800) 424-5454 or (202)
512-7470

Jeff Nelligan, Managing Director, [email protected] (202) 512-4800

Public Affairs 	U.S. General Accounting Office, 441 G Street NW, Room 7149
Washington, D.C. 20548
*** End of document. ***