In 1990, Congress reduced the Air Force's fiscal year 1991 budget request for the C-17 program because of congressional concern that the C-17's prime contractor- the Douglas Aircraft Company-was behind schedule and was not ready to increase production. As a result, the Air Force and Douglas were concerned that significant budget reductions would damage the program's subcontractor base and cause many suppliers to leave the program. Also in 1990, the Defense Plant Representative Office disapproved Douglas' supplier management purchasing system because of problems or weaknesses in six areas and required Douglas to implement corrective action plans to address these areas. As part of our continuing oversight of the program, we examined the impact of congressional reductions in the C-17's fiscal year 1991 budget on the subcontract base. We also reviewed the actions taken by the Air Force and Douglas to correct supplier management problems.