Opportunities for the Defense Production Act Title III for COVID-19 Response
The Defense Production Act (DPA), a little known, but powerful presidential authority, has been the focus of a lot of media attention over the past few weeks. Some outlets have indicated that the DPA has not been used since its inception in 1950, while others have said its use brings the United States one step closer to martial law. As the leading consulting firm for DPA, SMI is certain that neither are factually accurate, and that the appropriation of $1 billion to the DPA Fund as part of the CARES Act provides a significant opportunity for government and industry to effectively partner on a response to the COVID-19 public health emergency, while also strengthening the defense industrial base over the long term. SMI released a memo discussing this opportunity which can be found here.
The COVID-19 crisis has unveiled the US’ lack of manufacturing capacity and reliance on foreign suppliers for critical personal protection equipment, ventilators, and tests. Over the coming weeks, a combination of the DPA’s Title I (Priorities and Allocations) along with its Title III (Expansion of Productive Capacity) authorities will be used to fulfill the demand for these items as quickly as possible. It is yet to be seen how much of the appropriated $1 billion will be spent on addressing these immediate shortages, but it would be prudent for the government to also consider the underlying supply chain issues and next generation capabilities that have resulted in significant shortages for these essential items. Title III has been doing this very thing for many years, as evidenced by projects such as the “Steel Plate Production Project” and the Gallium Nitride on Silicon Carbide Production Capacity Program.”
To keep in line with its long history of successful public-private partnerships that balance preserving critical supply chains with advanced capabilities, the Air Force Research Laboratories 2019 Funding Opportunity Announcement has three focus areas: 1) Sustain Critical Production, 2) Commercialize R&D Investments, and 3) Scale Emerging Technologies. As the Department of Defense (DoD) and the civilian government agencies map out their strategy to respond to this crisis, it will also likely use its own established criteria to consider building out manufacturing capacity for novel products that could be used to better prepare the country for future pandemic response. Furthermore, by investing in state-of-the-art technology, the government will be promoting the availability of products that are not produced elsewhere, thus insuring domestic capacity while also achieving global competitiveness without additional policy protections.
This unprecedented challenge presents an opportunity for the DoD and industry to better understand the vulnerabilities that the globalization of manufacturing essential products has on national security. These lessons are not unique to pandemics, as the defense industrial base as a whole is in need of secure, domestically sourced products. Planned DPA Title III investments such as the “Rare Earth Permanent Magnet Production Capability” represent steps in the right direction. Hopefully, decision makers will apply lessons learned from current events and continue to seek out opportunities to use DPA Title III authorities to prevent a situation like the one we’re in now instead of reacting to it after the fact. As leaders in the Administration and Congress have recently embraced, the DPA can be a powerful tool, but its true strength can be realized when it is used to support manufacturing for national security needs before a national emergency.