An Act to establish a system of priorities and allocations for materials and facilities, authorize the requisitioning thereof, provide financial assistance for expansion of productive capacity and supply, provide for price and wage stabilization, provide for the settlement of labor disputes, strengthen controls over credit, and by these measures facilitate the production of goods and services necessary for the national security, and for other purposes
The Act contains three major sections. The first authorizes the president to require businesses to accept and prioritize contracts for materials deemed necessary for national defense, regardless of a loss incurred on business. The law also allows the president to designate materials to be prohibited from hoarding or price gouging. The law does not state what would occur if a business refuses or is unable to complete a request on time. However, any person who performs any act prohibited or willfully fails to perform any act required by the Defense Production Act may be charged with a felony that results in a fine up to $10,000 or imprisonment for up to one year or both. The second section authorizes the president to establish mechanisms (such as regulations, orders or agencies) to allocate materials, services and facilities to promote national defense. The third section authorizes the president to control the civilian economy so that scarce and critical materials necessary to the national defense effort are available for defense needs.
The Act also authorizes the President to requisition property, force industry to expand production and the supply of basic resources, settle labor disputes, control consumer and real estate credit, establish contractual priorities, and allocate raw materials towards national defense.
The Defense Priorities and Allocations System institutes a rating system for contracts and purchase orders. The highest priority is DX, which must be approved by the Secretary of Defense. The next level down is DO, and below that are unrated contracts.
The DPA, passed by the U.S. Congress in September 1950, was first used during the Korean War to establish a large defense mobilization infrastructure and bureaucracy. Under the authority of the Act, President Harry S. Truman eventually established the Office of Defense Mobilization, instituted wage and price controls, strictly regulated production in heavy industries such as steel and mining, prioritized and allocated industrial materials in short supply, and ordered the dispersal of wartime manufacturing plants across the nation.
The Act also played a vital role in the establishment of the domestic aluminum and titanium industries in the 1950s. Using the Act, DOD provided capital and interest-free loans, and directed mining and manufacturing resources as well as skilled laborers to these two processing industries. The DPA was also used in the 1950s to ensure that government-funded industries were geographically dispersed across the United States to prevent the industrial base from being destroyed by a single nuclear attack. During the late 1960s and early 1970s, the DPA increasingly was used to diversify the US energy mix by funding the trans-Alaskan pipeline, the US synthetic fuels corporation, and research into liquefied natural gas.
In 2011, President Barack Obama invoked the law to force telecommunications companies, under criminal penalties, to provide detailed information to the Commerce Department's Bureau of Industry and Security on the use of foreign-manufactured hardware and software in the companies' networks, as part of efforts to combat Chinese cyberespionage.
On June 13, 2017, President Donald Trump invoked the law to classify two sets of products as "critical to national defense". The first referenced "items affecting aerospace structures and fibers, radiation-hardened microelectronics, radiation test and qualification facilities, and satellite components and assemblies". The second referenced "items affecting adenovirus vaccine production capability; high strength, inherently fire and ballistic resistant, co-polymer aramid fibers industrial capability; secure hybrid composite shipping container industrial capability; and three-dimensional ultra-high density microelectronics for information protection industrial capability".
On March 18, 2020, in response to the COVID-19 outbreak, President Trump issued an executive order that defined ventilators and protective equipment as "essential to the national defense", the standard required by the DPA. Later that day, he indicated that he would not make immediate use of DPA authority, writing, "Hopefully there will be no need"; he indicated that he would do so in a "worst-case scenario".Speaker of the HouseNancy Pelosi called upon Trump to "immediately use the powers of the DPA" to produce and distribute critically needed hospital equipment. On March 20, Trump said that he will use the DPA. The next day General Motors (GM) CEO Mary Barra spoke to Trump administration officials about how GM could support production of ventilators without the use of DPA.
On March 23, Trump issued an executive order classifying "health and medical resources necessary to respond to the spread of COVID-19" as subject to the authority granted by DPA to prohibit hoarding and price gouging.
Trump's initial reluctance to use the act's authorities prompted criticism. On March 27, 2020, after negotiations with GM had broken down over costs, estimated at over $1 billion, but primarily due to GM's inability to commit delivering the number of ventilators required speedily, Trump ordered HHS Secretary Alex Azar to use the DPA to require GM to accept and prioritize contracts for as many ventilators as Azar determines to be appropriate. Trump also named Peter Navarro national policy coordinator for the DPA.
On April 28, Trump announced that he intended to issue an executive order under the Defense Production Act mandating that plants producing beef, pork, poultry and eggs stay open, a move which also prompted criticism. White House General Counsel Pat Cipollone consulted with various companies "to design a federal mandate to keep the plants open and to provide them additional virus testing capacity as well as protective gear," according to Bloomberg News. Trump mentioned to the press that the order is intended to "solve any liability problems" by workers and local authorities to close meat-processing plants for cleaning. The order gave USDA extraordinary powers to have firms maintain production. The order does not allow companies to ignore safety rules (except for keeping the plants opened), however, and OSHA / CDC guidance remains in force. In September 2020, OSHA fined Smithfield and JBS for failing to take the necessary actions to prevent the spread of coronavirus.
On December 8, 2020, more than a month after losing the 2020 presidential election, then-president Trump said that he would invoke the Defense Production Act to produce vaccine doses, but he did not do so before the end of his term.
On January 21, 2021, President Joe Biden invoked the Defense Production act on his second day in office to increase production of supplies related to the pandemic, such as protective equipment. On March 2, President Biden invoked the DPA again to supply equipment to Merck facilities needed to safely manufacture Johnson & Johnson vaccines.