The Defense Production Act (DPA) is the primary source of Presidential authorities to expedite and expand the supply of critical resources from the U.S. industrial base to support the national defense and homeland security. In addition to military, energy, and space activities, the DPA definition of "national defense" includes emergency preparedness activities conducted pursuant to title VI of the Stafford Act, protection and restoration of critical infrastructure, and efforts to prevent, reduce vulnerability to, minimize damage from, and recover from acts of terrorism within the U.S. The President's DPA authorities are delegated to the heads of various Federal departments in Executive Order (E.O.) 13603.
Highlights of DPA Provisions
Authority to require acceptance and priority performance of contracts and orders to promote the national defense [priorities and allocations];
Various types of financial incentives and assistance for industry to expedite production and deliveries or services under Government contracts and to provide for creation, maintenance, protection, expansion, and restoration of production capabilities needed for national defense purposes [Title III];
Antitrust protection for actions conducted in accordance with voluntary agreements among business competitors to enable cooperation to plan and coordinate measures to increase the supply of materials and services needed for national defense purposes;
Authority to establish the National Defense Executive Reserve (NDER), a cadre of persons with recognized expertise for employment in executive positions in the Federal Government in the event of an emergency;
Priorities and Allocations
Section 101 of the DPA authorizes the President: (1) to require acceptance and preferential performance of contracts and orders and (2) to allocate materials, services, and facilities, as he deems necessary or appropriate to promote the national defense. Use of the priorities and allocations authority is governed by common standards and procedures provided in regulations issued by the Federal departments to which the President has delegated this authority under E.O. 13603. Combined, these regulations serve as the basis for the Federal Priorities and Allocations System (FPAS).
The Defense Production Act Program Division is responsible for: (1) providing guidance for use of priority ratings by the Department of Homeland Security (DHS) and other Federal departments and agencies; (2) determining which homeland security and other civilian programs (except energy programs) are “necessary or appropriate to promote the national defense” and are, thereby, eligible to be supported using contract priority ratings and allocation orders; and (3) authorizing use of priority ratings in support of Federal Emergency Management Agency (FEMA) and other DHS programs. In addition to developing and updating policy and procedures on the use of priority ratings for DHS and other civilian programs. The DPA Program Division provides support for use of the priority-rating authority by FEMA, other DHS components, other Federal departments and agencies, State and local governments, and private sector owners and operators of critical infrastructure.
Expansion of Productive Capacity and Supply
Title III of the DPA provides various financial measures, such as loans, loan guarantees, purchases, and purchase commitments, to improve, expand, and maintain domestic production capabilities needed to support national defense and homeland security procurement requirements. Title III also authorizes Government procurement and installation of equipment, facilities, processes, or improvements in plants, factories, and other industrial facilities owned by the Federal Government or private persons. A typical Title III project is focused on increasing production capacity and reducing production costs for a new, state-of-the-art technology. The Department of Defense (DOD) is the only Federal agency with an active Title III Program. For more information about the DOD program, go to the Title III Program website.
The DPA Program Division is responsible for providing guidance and coordination for use of the Title III authorities in support of DHS program requirements.
A "voluntary agreement" is an association approved by the Government and entered into freely by two or more representatives of industry, business, financing, agriculture, labor, or other private interests to plan and coordinate actions in support of the national defense, including emergency preparedness and response activities. Participants in a voluntary agreement are granted relief from antitrust laws under the provisions of Section 708 of the DPA. The FEMA regulation regarding implementation of voluntary agreement authorities is provided in 44 CFR 332. E.O 13603 provides that the FEMA regulation may be adopted by other Federal agencies to fulfill the rulemaking requirement provided in section 708(e) of the DPA.
Voluntary agreements enable cooperation among business competitors to plan and coordinate measures to increase the supply of materials and services needed for national defense and homeland security purposes. Such agreements could be effective tools for engaging suppliers of critical materials and services in emergency preparedness, response, recovery, and mitigation activities.
The DPA Program Division is responsible for: (1) promulgating regulations that provide standards and procedures by which voluntary agreements and plans of action may be developed and carried out by FEMA, other DHS Components, and other Federal agencies; and (2) supporting actions by DHS and other Federal agencies to implement the voluntary agreement authority.
Section 304 – Defense Production Act Fund - Establishes in the Treasury of the United States a separate fund of monies to carry out the provisions of DPA Title III. Under E.O. 13603, DOD is designated as the DPA Fund Manager. (The DPA Program Division is not involved in management of the Fund.)
Section 705 – Investigations; Records; Reports; Subpoenas; Right to Counsel – provides authority to obtain information from businesses, as necessary or appropriate, for the administration of the DPA, including information needed for industry studies. (This authority is delegated to the head of each agency who has been delegated DPA authorities and responsibilities under E.O. 13603, including the Secretary of Homeland Security. However, use of this authority has been limited, primarily, to DOC in carrying out surveys of industrial capabilities needed to promote the national defense.)
Section 721 – Committee on Foreign Investment in the United States (CFIUS) – Establishes CFIUS to determine the effects on national security of certain mergers, acquisitions, and takeovers related to foreign investment in the United States. (CFIUS is chaired by the Secretary of the Treasury. The DPA Program Division is not responsible for supporting the CFIUS activities of DHS.)
Section 722 – Defense Production Act Committee (DPAC) – Establishes DPAC to advise the President on effective use of DPA authorities by Federal agencies and to report to Congress on such use. (The President has directed that the DPAC Chair rotate, on an annual basis, between the Secretaries of Homeland Security and Defense. The Secretary of Homeland Security has re-delegated the DHS DPAC functions to the FEMA Administrator. The DPA Program Division supports the Administrator’s DPAC functions.)
Section 723 – Annual Report on Impact of Offsets – Requires an annual report to Congress on the impact of offsets on the defense preparedness, industrial competitiveness, employment, and trade of the United States. (The Secretary of Commerce has primary responsibility for preparing and submitting this report to Congress. The DPA Program Division has no involvement with this report.)