Friday, September 6, 2019

DEFENSE SUPPLIER BASE: Challenges and Policy Considerations Regarding Offshoring and Foreign Investment Risks

The U.S. Department of Defense relies on a global network of suppliers to help meet its mission goals. This can mean contracting with U.S. companies that have accepted foreign investment or sent their operations offshore.

The Government Accountability Office convened a panel of experts who identified some benefits of DOD doing business with these companies—including saving money and increasing access to innovative technologies.

The panelists outlined some of the risks of relying on a globalized supply chain. Specifically:

  • Intellectual property—Foreign investors in U.S. companies can get access to the sensitive technologies those companies develop. When those investors are from the nation’s strategic competitors (such as China or Russia), technology transfer is a concern.
  • Domestic production—If the United States sends too much production abroad, the skills of the nation’s own workforce can erode.
  • Source materials—DOD relies on foreign suppliers for parts and materials such as rare earth metals that are crucial to many weapon systems. Geopolitical conflicts can compromise access to foreign supplies to meet current and future needs.

Read the full report HERE.

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