Industrial Base: Impact of Defense Downsizing on Selected Abrams Tank Subcontractors

Abstract : In response to a request from the former Chairman, GAO compiled some information on the following: (1) the effect of declining defense budgets on some second- and third-tier defense suppliers, and (2) the willingness or ability of companies that shift from defense to commercial work to shift back to defense production when required. The number of such suppliers is very large, and the time and effort to obtain data on each company would be substantial. Therefore, as agreed with your staff, GAO obtained the information in this report, without verification, through a series of structured interviews with 14 of the second- and third-tier contractors considered critical to the production of the Abrams M1A1 tank. Since little is known about defense contractors below the second-tier level or of the financial health of firms that comprise the defense industrial base below the prime contractor level, GAO's work provides some perspectives on how companies supplying critical tank components at lower tiers are adjusting to defense downsizing. Appendix I contains more details on GAO's scope and methodology.