Defense Production Act Amendments of 1988

Defense Production Act Amendments of 1988 - Amends the Defense Production Act of 1950 to restate the defense mobilization preparedness policy of the United States. Places the Federal Emergency Management Agency (FEMA) in charge of coordinating the efforts to maintain geographical dispersion of defense facilities. (Currently, the Office of Defense Mobilization is in charge of such effort.)

Requires executive agencies and departments responsible for defense acquisition to continuously assess the capability of the defense industrial base to satisfy near-term and mobilization production requirements. States that plans and programs to carry out the policy stated above shall duly consider the promotion of efficiency and competition. Repeals as inconsistent with changes made under this Act the National Commission on Supplies and Shortages Act of 1974.

Expresses certain congressional findings disapproving the growing U.S. dependency on foreign sources for parts and materials used to manufacture major weapons systems for our national defense, and requests the strengthening of the industrial capability of the United States to independently produce its major weapons systems.

Directs the President, in exercising his industrial defense preparedness authority, to limit the production of existing and new weapons to domestic manufacturing and assembly sources: (1) within five years following the enactment of this Act; and (2) until domestic sources can meet defense production needs for six months following any declaration of war. Authorizes the President to waive such domestic-production requirement only after considering in each case an economic and defense production impact assessment. Authorizes the President to use certain existing incentives to implement these provisions, subject to specified limitations.

Directs the President to designate those industries deemed to be critical to the U.S. defense industrial base, to be given first priority for assistance under this Act for the modernization of manufacturing facilities and equipment and the production of materials. Directs the President to seek to develop the domestic production of materials, services, and skills affecting a critical industry that are in short supply. Authorizes assistance to be provided only to small and medium-sized businesses, unless the President otherwise formally notifies the Congress that the interests of national defense require an exception to such limitation.