The Pentagon continues to award the overwhelming preponderance of its prime contracts, both in percentage and dollar terms, to domestic contractors, according to the latest report on the subject by the Defense Department’s industrial policy office.
In FY ’06 DoD awarded $76.6 billion, or 97.6 percent, in contracts to firms based in the United States, states the report, Foreign Sources of Supply: FY 2006 Report. Foreign suppliers received $1.9 billion, or 2.4 percent, of prime contracts from DoD that year, the report says. Excluded from the prime contract tally are contracts for subsistence, fuel, construction services and other miscellaneous items.
The FY ’06 dollars to foreign suppliers are less than those companies received the previous year (Defense Daily, May 11, 2006).
“The Department is not acquiring military materiel produced overseas to the detriment of national security or the U.S. defense industrial base,” the report says. “Focused analyses have shown that the Department employs a small number of non-U.S. suppliers and that the use of those suppliers does not negatively impact the long-term economic viability of the national technological and industrial base. The record indicates there has been no difference in reliability between the Department’s U.S. and non-U.S. suppliers.” The report continues that “The Department of Defense is not aware of any foreign vulnerabilities within its supply chains.”
Two countries, the United Kingdom and Canada, by far received the most prime contract dollars from DoD. Firms in the United Kingdom received $469.2 million in defense prime contracts while Canadian companies were awarded $451.4 million in prime contract dollars, the report says. Only firms in Germany, $141.8 million, Sweden, $105.8 million, and in France, $102.2 million, also exceeded $100 million in defense prime contracts from the United States.