Summary: GAO testified on its reasons for believing that titles I and III of the Defense Production Act should be extended beyond the September 30, 1983, expiration date. The loss of titles I and III would not have an immediate impact on existing Department of Defense (DOD) programs but would affect the way DOD satisfies its procurement and readiness responsibilities. GAO determined that the 5-year extension being considered by the Senate Committee on Banking, Housing, and Urban Affairs appears reasonable because it provides the time necessary for both the administration and Congress to determine the best uses of title III. To implement a title III program, DOD and the Office of Management and Budget developed criteria for selecting title III projects. The criteria can be divided into two broad objectives: national security benefits and economic costs. GAO reviewed the criteria and found them to be reasonable. However, it also determined that the short period of time the Services have to submit proposed projects, coupled with the lack of review within the executive branch, contributed to the DOD inability to meet its own justification criteria for the projects considered to be high priority for title III funding. In addition, GAO found that, while instances may exist where the use of title III is needed to expand or establish domestic productive capacity and supply, the title may not always be the most cost-effective alternative for promoting long-term national security. Therefore, GAO supported DOD efforts to establish a steering committee to review title III project justifications and suggested that the development of a viable title III program should receive close congressional attention.
