How to Actually Use the Defense Production Act

There is no magic in the DPA’s mere invocation. The question is what that invocation makes possible and whether it serves the country’s complex supply needs.

An illustration of a production worker
Stocksnapper / Katie Martin / The Atlantic

As nurses sew their own face masks, hospitals ration tests and split ventilators, and ventilator drugs dwindle nationwide, a desperate America has zeroed in on the promises of the Defense Production Act, the Korean War–era statute that empowers the federal government to ramp up the manufacturing and distribution of badly needed medical supplies. Deploying the DPA to combat COVID-19 is a no-brainer, but using it effectively is not a matter of turning it “on,” like a faucet or a light switch. The nature and scale of the crisis dictate otherwise. Reliance on all of the DPA’s authorities to implement a comprehensive national strategy for pandemic response is both a necessary and an unprecedented use of the statute. Getting this right will require immediate cooperation between President Donald Trump and Congress on the question of funding, extensive interagency coordination, and extraordinary innovation at the intersection of government and private industry.

But none of this can happen while confusion about the DPA reigns and the government resists meaningfully deploying the statute. Over the past month, Trump has characterized the law as a weapon of last resort, to be used only if the private industry refuses to act on its own. Although FEMA’s administrator, Pete Gaynor, announced on CNN last week that the DPA would be used to procure testing kits, the agency retracted the statement after Trump tweeted that he hadn’t had to use it “because no one has said NO!” In the face of mounting pressure from the national-security community and both Republican and Democratic lawmakers, Trump has nominally embraced the statute, but for the limited purpose of singling out companies for undefined deficiencies.

Trump began late last month by criticizing GM for “wasting time” and issuing a memorandum directing the secretary of health and human services to require GM to prioritize the government’s requests for ventilators under the statute. According to GM, however, the memorandum had no effect on its already-announced plans to make ventilators at one of its Indiana plants, and the administration has provided no details to the contrary. Last Friday, Trump issued another memorandum empowering the HHS secretary to procure N95 masks from 3M Company, but the administration’s biggest move has been to block the company from fulfilling overseas contracts, prompting 3M to issue a press release warning that international retaliation would result in a net loss of masks available in the United States.

One key takeaway from this ongoing saga is that there is no magic in the DPA’s mere invocation. The question is not whether the administration is invoking the statute, but precisely what that invocation makes possible and whether it serves the country’s complex supply needs. The DPA is a multipart law—not a big stick that forces results from otherwise uncooperative manufacturers, but a set of assorted authorities that enable the executive branch to take on the central-strategist role that no other entity has the information, resources, or mandate to execute.

This might not be obvious when the DPA is viewed through the lens of recent prior use. The New York Times recently highlighted the Trump administration’s reliance on the statute hundreds of thousands of times to prioritize Department of Defense procurements. Indeed, since the law’s passage in 1950, it has been invoked by every administration to prioritize federal contracts or to shore up vulnerabilities in domestic production that threaten the defense industrial base—to secure the supply of titanium sponge, for example, as Trump did by executive order on February 27. These are textbook DPA scenarios, in which the timely delivery of supplies is crucial for military operations, or low return on investment prevents the domestic private sector from developing and maintaining the infrastructure to reliably supply the country with a key industrial resource.

A pandemic that pushes domestic and global production capacity to its limits is an extraordinary circumstance, one that calls for rapid, outside-the-box deployment of all components of the statute, including those that are rarely or narrowly used. Most of these authorities—in particular, the ones outlined in Titles III and VII—were conspicuously missing from Trump’s initial March 13 executive order authorizing the HHS secretary to prioritize and allocate certain resources in the civilian market. As commentators quickly and correctly noted, the order did not actually trigger any concrete federal action; it only declared that health and medical resources needed to respond to the spread of COVID-19 meet the criteria of the DPA. But the order was limited in other major respects as well.

The order directly addressed only Section 101 of the DPA, which permits the president to compel businesses to prioritize federal government contracts, and to allocate materials deemed necessary to combat the coronavirus. The limitations of relying solely on the DPA’s priorities authority are clear at a time when the federal government is competing with states that are desperate for personal protective gear and ventilators. The statute’s lesser-used allocations authority provides a basis for more decisive federal action, such as the government using its unique vantage point to direct medical supplies to wherever they are most needed. But the attempt to block 3M exports appears to be the closest the administration has come to tapping this authority, and the company’s extraordinary press release—which walks the line between praising the administration and seeking to avert a global supply-chain breakdown—raises the specter of an American smash-and-grab instead of a sustainable production and procurement strategy that maximizes private-sector capacity and cooperation.

Medical-supply companies inundated with orders are reportedly seeking guidance from the government. Their plea is a reminder that, although the Trump administration maintains that it doesn’t need the DPA as long as companies voluntarily pitch in, triggering the law does not mean turning away from industry cooperation in favor of imposing draconian mandates. Manufacturers who want to assist the country at a time of crisis may lack the means, guidance, and coordination to pitch in or optimize their contributions.

The DPA offers a blueprint for bridging those gaps. Title III of the statute authorizes the president to design an array of financial incentives that, with the right appropriations from Congress, would enable private industry to assist in the national defense effort, including loans, loan guarantees, direct purchases, and purchase commitments. The point is to expand domestic production capacity “to avert an industrial resource or critical technology item shortfall that would severely impair national defense capability.”

Another part of the statute that went unaddressed in the executive order, Title VII, empowers Trump to turn relevant portions of the competitive market into a cooperative one, which is crucial for stimulating production in the face of complicated supply bottlenecks. Specifically, he can bring together industry heads and consult with “persons of outstanding experience and ability” to devise strategies for addressing shortages; approve “voluntary agreements and plans of action” that allow coordination among members of the private industry; and provide businesses entering into these agreements protection from antitrust liability. Late last month, Medtronic and Elon Musk tweeted about their recent “group effort” to “work across industries to solve problems and get patients and hospitals the tools they need to continue saving lives.” Title VII of the DPA is designed to mobilize such activities swiftly and at scale, with leadership and support from the highest levels of the federal government.

All of this requires the administration to dramatically revise its understanding of the statute. In a March 22 press briefing, Trump equated its use to “nationalizing” U.S. businesses. He was promptly echoed by Peter Navarro, his director of trade and manufacturing policy, since named the national DPA policy coordinator, who rebuffed the idea of “putting the heavy hand of government down” based on the theory that “we’re seeing on a purely voluntary basis … the greatest mobilization in the industrial base since World War II.”

This take on the DPA explains Trump’s late and now-patchy use of the statute. But the administration has it exactly backward. The DPA is not an authoritarian alternative to good corporate citizenship. It empowers the government to spur and synchronize what would otherwise amount to inadequate, piecemeal efforts to equip the country to fight the pandemic. Using the statute does not mean giving up on American ingenuity in an emergency but competently maximizing it—and recognizing that the energy must come from the top.