The Government Accountability Office has found that the Department of Defense has limited insights into potential national security risks from mergers and acquisitions in the defense industrial base.
In a report published Tuesday, GAO revealed that DOD’s Industrial Base Policy office assessed an average of 40 defense M&As per year in fiscal years 2018 through 2022, which represents only a small portion of the total company takeovers during the period.
GAO added that most of the Pentagon’s M&A assessments focus on competition rather than other types of risks, such as national security and innovation risks, as there is no clear direction about which M&A should be prioritized for assessment beyond those initiated in response to antitrust reviews.
The agency recommended that DOD provide additional direction on assessing the full range of risks and benefits identified in its M&A policy; ensure that the Industrial Base Policy’s M&A office is adequately resourced; provide clear direction on which M&A needs to be prioritized for assessment; and require monitoring of identified risks.
