GAO: Pentagon doesn't know where components of its critical systems come from

The Pentagon doesn't know where components of its critical systems come from, and it's doing a poor job of finding out, say government auditors. 

The Government Accountability Office (GAO) published a report Thursday blaming the Defense Department's procurement software for doing a poor job identifying the country of origin of parts in the gear it buys. 

That's not to say the DoD is buying things from questionable foreign markets, mind you – it buys from American companies 95 percent of the time. As for where all the bits, bobs, and raw materials those US-based companies use to manufacture their goods? That's where the visibility trail ends, said auditors. 

Neither of the two fields in the Federal Procurement Data System (FPDS) that track country of origin include space for recording component origins. Given that FPDS is the one-stop shop to see contract information, if it isn't in those fields, then it's not part of the process. The GAO looked through the records and suggests the data in there right now is a bit suspect. 

Take microelectronics, for example. According to an analysis of FPDS records of DoD microcircuit purchases between 2020 and 2024, "nearly 100 percent" of the contracts list the US as the place of manufacture and country of origin. But there's no way that's the case, since most microcircuits are manufactured overseas and DoD leadership expressed concern over that data.

"According to DoD estimates, 88 percent of the production and 98 percent of the assembly, packaging, and testing of all microelectronics are performed overseas—primarily in Taiwan, South Korea, and China," the GAO wrote. 

In other words, there are probably microcircuits in US military equipment that were manufactured overseas, and because no one is tracking these things properly, it's impossible to tell where. 

The embattled F-35 fighter jet has suffered from bad supply chain tracking too, the GAO says. According to its audit of F-35 purchases in FPDS, 114 of 115 contracts for the jet identify the US as the country of origin, but the DoD readily admitted it doesn't know where subcontractors are sourcing the parts. 

That uncertainty came home to roost in 2022 when the Pentagon suspended F-35 deliveries after manufacturer Lockheed Martin discovered Chinese-made alloy in magnets used in the aircraft's engine. That's a risk if China restricts exports of rare earth minerals – exactly as it's doing now.

Still not trying hard enough

While the GAO acknowledged the Pentagon has taken steps to improve the supply chain origin tracking, it also said that those efforts haven't been very successful. 

In one case, the DoD asked suppliers to voluntarily report the country of origin for all of their parts, but only 10 percent responded. The other initiative successfully catalogued supply chain data for weapons systems, but the GAO noted that it gave the DoD no way to ensure that future contracts would include origin information. 

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The DoD's own Defense Business Board, an advisory body, provided 12 recommendations [PDF] for supply chain risk tracking back in January. The GAO said that, while the DoD built an office to implement those recommendations, nothing's happened since. 

"DoD officials stated that they have not identified resources, priorities, and time frames for the office to complete relevant actions," the GAO noted. "In addition, according to DoD officials, the department has not identified the responsible organization for determining the actions DoD plans to take to implement the Defense Business Board recommendations." 

The DoD is waiting on the Secretary of Defense's okay to act, it told the GAO. One would think that a Defense Secretary so focused on rooting out waste would jump to give his okay for such an improvement – we reached out to the DoD with questions, but didn't hear back.

More excuses

The GAO pointed out that the DoD has one very useful tool at its disposal: It could contractually require country-of-origin information from suppliers. 

The GAO obviously floated this idea to the DoD, and the report suggests that excuses were plentiful.

"Some DoD officials assert the information is readily available, others stated this approach may be too costly or that suppliers may not be willing to provide information," the GAO said. That didn't fly with the agency. 

"Unless DOD tests the costs and challenges of requiring suppliers to provide foreign dependency information, it could be missing an opportunity to address a mounting challenge to the security of its supply chains," the auditors said. 

The GAO made three recommendations, asking the DoD to build appropriate tracking systems, figure out how to implement those Business Board recommendations, and start demanding suppliers provide necessary information. ®