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Report | May 20, 2021

Audit of the DoD Coronavirus Aid, Relief, and Economic Security Act Awards to the Defense Industrial Base (DODIG-2021-081)

Audit

Publicly Released: May 24, 2021

 

Objective

The objective of this audit was to determine whether the DoD awarded Coronavirus Aid, Relief, and Economic Security (CARES) Act funding to sustain or increase the Defense Industrial Base (DIB) in accordance with Federal regulations and Defense Production Act (DPA) authorities.

 

Background

The Defense Production Act (DPA), grants the President authorities to influence domestic industry in the interest of national defense. These authorities are used to support military preparedness and capability, but are also used for recovery from national emergencies, such as the coronavirus disease–2019 (COVID-19) pandemic. The DPA consists of multiple sections, including the DPA Title III authority, which is used to “create, maintain, protect, expand, or restore DIB capabilities essential for the national defense.”

The CARES Act, enacted on March 27, 2020, provided the DoD $10.5 billion to prevent, prepare for, and respond to COVID-19, domestically and internationally. The CARES Act also included $1 billion for DPA Title III actions. The DoD allocated $687 million of the $1 billion DPA Title III funds to the DIB to offset financial distress caused by COVID-19 and provide investments to sustain essential domestic industrial base capabilities. The DIB consists of major sectors such as aircraft, electronics, materials and hypersonics, shipbuilding, soldier systems and ground systems, and space.

The DIB includes the resources, industrial capability, production capacity, and supply chain that enable the United States to fulfill the materiel and sustainment requirements of the National Defense Strategy.

 

Finding

The DoD awarded CARES Act funding to sustain or increase the DIB in accordance with Federal regulations and DPA authorities for the six awards we reviewed. This occurred because DoD officials implemented processes to identify appropriate DPA Title III projects to receive CARES Act funding. In addition, DoD officials complied with the Federal Acquisition Regulation and the Code of Federal Regulations when awarding the CARES Act funding to existing contracts and new technology investment agreements. As a result, the six DIB companies we reviewed will receive $206.8 million in CARES Act funding to help them overcome the financial distress caused by the COVID-19 pandemic and sustain projects that are critical to national defense.

 

This report is the result of Proj. No. D2021-D000AT-0020.000.