President Donald Trump announced at a press conference Wednesday that he will invoke the Defense Production Act to allow private industry to increase manufacturing and distribution of emergency medical supplies and equipment to fight the COVID-19 virus.
"It can do a lot of good things if we need it," he said at a White House press conference. "We'll have it all completed, signing it in just a little while.”
The move gives the president the authority to increase the production of masks, ventilators and respirators, as well as expand hospital capacity to combat the new coronavirus.
The act basically allows Trump “to incentivize a company who already makes (emergency medical supplies) to make more of them,” Jeff Bialos, who served as deputy undersecretary of defense for industrial affairs in the Clinton White House, told Yahoo News.
In general, the act:
- Authorizes the president to require businesses to sign contracts or fulfill orders deemed necessary for national defense.
- Authorizes the president to establish mechanisms (such as regulations, orders or agencies) to allocate materials, services and facilities to promote national defense.
- Authorizes the president to control the civilian economy so that scarce and/or critical materials necessary to the national defense effort are available for defense needs.
According to “Inside Government Contracts” from Covington’s Government Contracts Practice Group, the DPA allows the president these specific powers:
- The president can assign a priority rating to government contracts, which would require them to be prioritized over any competing business contract, including prior commitments to commercial contracts.
- The president may, in an effort to promote the national defense, control materials, services and facilities in any manner necessary.
- The president may create, maintain, protect, expand or restore domestic industrial base capabilities by:
- Purchasing industrial resources or critical technology items
- Making subsidy payments for domestically produced materials
- Purchasing and installing equipment for government and privately owned industrial facilities to expand their productive capacity.
- The president may issue loan guarantees and direct loans to reduce current or projected shortfalls of industrial resources, critical technology items or essential materials needed for national defense purposes.
- The Defense Production Act Fund is used to carry out the above activities and is capped at $750 million a year. The money for direct loans and guarantees must be included in an appropriations act passed by Congress.
DPA authorities are time-limited, meaning after a certain period of time the president’s authority to conduct such acts ends.
The DPA may be invoked under these circumstances:
- Efforts to fight terrorism within the United States;
- Emergency preparedness activities conducted pursuant to title VI of the Stafford Act;
- Protection and restoration of critical infrastructure; and
- Continuity of government.
The president’s DPA authorities may be delegated to the heads of various federal departments and agencies under Executive Order (E.O.) 13603.
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