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The Defense Production Act of 1950 (DPA, codified at 50 U.S.C. §§ 4501 et seq.) is a Korean War-era-enacted United States federal law designed to mobilize resources from the U.S. industrial base in support of national defense. The DPA has been amended and reauthorized periodically since its adoption on September 8, 1950 and remains good law. Beyond war efforts, the DPA has been invoked in federal government responses to other emergencies, including natural disasters and the Covid-19 pandemic.
Access our In Focus: Coronavirus (Covid-19) for additional Covid-19-related content.
In conjunction with this law, supplemental implementing regulations known as the Defense Priorities and Allocation System (DPAS) were created. DPAS is one of the five regulations composing the Federal Priorities and Allocations System (FPAS). Those five regulations are separately administered by five different federal departments but each of those regulations sets forth standards and procedures under Section 101(a) of the DPA for implementing the President's priorities authority.
The authorities created by the DPA and its amendments can be, and sometimes have been, delegated by executive order, such as to the Secretary of Homeland Security via Executive Order 13603, and may be re-delegated, as some authority was from the Homeland Security Secretary to the Administrator of the Federal Emergency Management Agency (FEMA) via DHS Delegation Number 09052, January 3, 2017. FEMA has sometimes issued temporary rules to manage emergencies, as it did from April 7, 2020 to August 10, 2020 (later extended to December 31, 2020) when it took action to allocate scarce personal protective equipment (PPE) urgently needed by health care providers responding to the Covid-19 pandemic.
The DPA contains three principal sections for accomplishing its goals: Title I, Title III, and Title VII.
• Title I addresses priorities and allocations. It may be used by the federal government to mandate that companies accept and give preference to certain contracts and orders the government issues pursuant to the DPA. Provisions give the federal government power to allocate goods, services or materials in short supply. The goals, as stated in Section 101 of the DPA, would be either to promote the national defense (defined broadly) or to maximize domestic energy supplies. Section 102 prevents hoarding. Section 103 imposes penalties for violations of the DPA, including its rules and regulations.
• Title III concerns the expansion of productive capacity and supply.
• Title VIII provides definitions and general provisions of the DPA.
The DPA affords the President emergency authority to exert control over domestic industries in ways that would be anathema under normal conditions. Priority-rated contracts and orders (“rated orders”) between the federal government and businesses are intended to support on-time delivery of critical items and services. The steps businesses must take to comply with rated order requirements may reverberate throughout the supply chain with substantial impacts because the business with the priority contract must place rated orders with subcontractors and suppliers, and those businesses must do the same with their vendors and so on, all the way down the supply chain.
There is currently no case law meaningfully interpreting the anti-hoarding provisions of the DPA. Price gouging is not explicitly part of the DPA but sales or attempted sales of covered goods, materials, or services have been criminally prosecuted. Use this Docket Search to keep track of new cases that invoke the statute, and this Smart Code® link to see opinions interpreting or discussing the law as they are released.
The DPA does not contain statutory reporting requirements for actions taken under its authorities.
The Trump Administration has only selectively used the power of the DPA to respond to the Covid-19 pandemic, occasionally singling out individual companies such as preventing 3M from exporting N95 respirators or seizing supplies that were being hoarded. The pandemic has caused worldwide shortages of PPE (e.g., protective gear, including N95 respirators, surgical masks, gloves, face shields), disinfectants, and certain medications. President Trump has largely relied on referring to the coercive power of the DPA to exhort the private sector to expand production and relieve shortages, calling the DPA a “tremendous hammer” to further those ends.
President-elect Joe Biden has indicated his administration intends to make much greater use of the DPA to increase domestic production of PPE and testing materials, and to relieve shortages. Under the DPA, a president is not only able to compel companies to produce the equipment and materials it desires but a president can also guarantee the federal government will pay for those items. The expanded use of these DPA powers applied to private sector companies is likely to impact an increasing number of existing commercial agreements and will, as well, affect the inclusion and drafting of DPA provisions in new commercial contracts.