Summary: Pursuant to a congressional request, GAO reviewed an interagency study on the impact of trade offsets on defense-related exports.
GAO found that: (1) subcontractors, the group most likely to be hurt by trade offsets, were underrepresented in the survey; (2) information from nondefense industries was not gathered, even though nondefense firms can be affected when defense contractors agree to offsets; (3) the interagency survey did not clearly distinguish between the total companies sampled and the lesser number of companies who reported military sale dollar values; (4) there was no mention of the number of companies that did not report any offset activities; and (5) the defense trade offset section of the survey was not properly designed and included nonstandardized response formats and undefined terms. GAO also found that: (1) survey design problems led respondents to base their answers on different considerations and report them in a nonuniform manner; (2) some errors in processing questionnaire responses resulted in the overreporting of sales and the underreporting of offset values; (3) interagency disagreements concerning access to survey data and what should be reported affected the completion of the survey; and (4) survey findings and conclusions were not appropriately qualified.
