The Defense Production Act (DPA) authorizes the President to require acceptance and preferential performance of contracts and orders deemed necessary or appropriate to promote the national defense. This page provides a quick reference guide for contractors, who have received a DPA priority-rated contract or order (“rated order”).
What must a business do when it receives a rated order?
When a rated order is placed with a business, the business must:
- Accept the rated order, if: (1) the ordered material or service is normally sold by that business; and (2) the business can satisfy the delivery terms;
- Provide priority treatment to fulfill the order, when necessary to meet the delivery or performance date(s) specified in the order;
- Reschedule unrated orders, if fulfilling the unrated orders would prevent on-time performance of the rated order; and
- Place rated orders with subcontractors and suppliers to ensure on-time delivery of the materials and services needed to support the rated order.
When must a business reject a rated order?
A business must reject a rated order if unable to fulfill the delivery requirements, even with priority treatment. However, the business must inform the customer of the earliest date on which delivery can be made and offer to accept the order for that date. See additional information on mandatory acceptance or rejection of a rated order under the Defense Priorities and Allocations System.
Are there other reasons a business may reject a rated order?
A business may reject a rated order:
- If the person placing the order is unwilling or unable to meet regularly established terms of sale or payment;
- If the order is for an item not supplied or for a service not performed;
- If the order is for an item produced, acquired, or provided only for the supplier’s own use for which no orders have been filled for two years prior to the date of receipt of the rated order;
- If the person placing the rated order, other than the U.S. Government, makes the item or performs the service being ordered; or
- If acceptance of a rated order or performance against a rated order would violate any other regulation, official action, or order issued under the authority of the Defense Production Act or the Selective Service Act or related statutes.
What is a rated order?
A rated order is a contract or order placed in support of a national defense program, pursuant to section 101(a) of the DPA. A rated order takes precedence over all unrated orders, when necessary to meet delivery dates specified in the rated order. To be a rated order, a contract or order must include four elements:
- A priority rating;
- Specific delivery quantities and dates;
- A statement that identifies the governing federal regulation; and
- The signature of a contracting officer, certifying the rated order.
What is a priority rating?
A priority rating consists of a rating – either “DO” or “DX” – and an alpha numeric program identification symbol (PIS), such as “N3.” Between priority ratings, a DX rated order takes precedence over all DO rated orders. DX ratings require senior-level approval (e.g. DHS Secretary). Most rated orders carry the DO priority rating. All DO rated orders carry equal priority status, regardless of their PISs. The PIS indicates the type of national or homeland security program supported by the rated order. For example, a “DO-N3” rating indicates that the rated order supports a program involving border and transportation security. The program identification symbol does not affect an order’s priority level.
What is the purpose of a rated order?
A rated order is placed to ensure on-time delivery of items and services, in accordance with the delivery requirements specified in the order.
How does a business place a rated order with a subcontractor or supplier?
A business must use rated orders with suppliers to obtain items needed to fill a rated order. The business must use the priority rating indicated in the customer’s rated order. For example, if a business is in receipt of a DO-N3 rated order for an intelligence or warning system and needs to purchase semiconductors for the manufacture of this system, the business must use a DO-N3 rated order (with the four required elements) to obtain the needed semiconductors.
The priority rating must be included in each successive order placed to obtain items needed to fill a customer’s rated order. This continues from contractor to subcontractor to supplier throughout the entire procurement chain.
How are problems with rated orders handled?
Federal Priorities and Allocations System (FPAS) regulations provide for special priorities assistance (SPA) procedures to deal with problems involving use of rated orders. SPA may be requested for a wide variety of purposes, such as:
- Identifying potential supply chain vendors for needed materials and services;
- Resolving conflicts between/among competing orders;
- Resolving other production or delivery problems, anywhere in an order’s supply chain, that could prevent on-time performance of a rated order;
- Obtaining priorities authority for resources not covered under existing delegations of FPAS authority; and
- Obtaining information from a contractor or businesses in the contractor’s supply chain regarding issues that could delay on-time performance of a rated order.
Who may request special priorities assistance?
Anyone involved in use or proposed use of the priorities authority may request SPA. A request for SPA can originate from a program official, a contracting officer, a FPAS Officer, or a contractor, subcontractor, or lower-tier supplier.
How does a contractor request special priorities assistance?
A request for special priorities assistance is submitted on a form specified in the governing FPAS regulation, cited in the rated order received by the contractor. In most cases, this will be the Defense Priorities and Allocations System (DPAS) regulation, and the appropriate form will be Form BIS-999. The contractor may also request assistance from the customer’s contracting officer responsible for the rated order in identifying the appropriate form, filling out the form, and submitting the form for action. Additional information regarding special priorities assistance is provided in the DPAS regulation and other FPAS regulations.
Do contractors receive any liability protection when fulfilling rated orders?
Contractors are provided liability protection under Section 707 of the DPA [50 U.S.C. § 4557], when fulfilling the requirements of a rated order. Section 707 provides, in part:
“No person shall be held liable for damages or penalties for any act or failure to act resulting directly or indirectly from compliance with a rule, regulation, or order issued pursuant to [the DPA], notwithstanding that any such rule, regulation, or order shall thereafter be declared by judicial or other competent authority to be invalid.”
What are the penalties for not complying with a rated order?
Section 103 of the DPA [50 U.S.C. § 4513] provides:
“Any person who willfully performs any act prohibited, or willfully fails to perform any act required, by the provisions of this title [sections 4511 to 4518 of 50 U.S.C.] or any rule, regulation, or order thereunder, shall, upon conviction, be fined not more than $10,000 or imprisoned for not more than one year, or both.”