This week, President Donald Trump announced that he was invoking the Defense Production Act (DPA) to leverage domestic private industry to generate much-needed medical equipment and supplies that are essential to an effective national COVID-19 response. Unfortunately, he walked it back on Twitter fewer than 24 hours later. Trump is now emphasizing that states need to figure out how to find these supplies on their own. This is a mistake. The Trump administration needs to implement the DPA immediately to avoid the worst-case scenario of massive shortages of critical medical supplies across the country.
Below are six steps that President Trump should be taking now on the DPA:
- Stand up a management structure for effective and efficient DPA implementation. This structure will need to bring together state, federal, and other authorities involved in dealing with the coronavirus crisis to ensure that the movement and distribution of needed supplies and equipment can be expedited to those areas most in need. The Federal Emergency Management Agency’s National Response Coordination Center (NRCC), which has representatives from all federal departments and agencies, should take the lead, working in close coordination with the Defense Logistics Agency on logistics and national distribution.
- Invoke Title I of the DPA to require domestic manufactures to ramp up current production to meet government needs for essential equipment. This will allow the president to require private manufacturers to fill government orders for essential goods ahead of fulfilling other contracts or orders the supplier may have. To exercise this authority, the president or his delegates must make a finding 1) that such material is a scarce and critical material essential to the national defense; and 2) that the needs of the national defense for such material cannot otherwise be met. Executive Order 13603 establishes the president’s delegates as being able to exercise this authority and requires a written determination of need from either the secretary of defense, the secretary of energy, or the secretary of homeland security.
- Invoke Title III of the DPA to increase domestic production of essential equipment by providing purchase guarantees, subsidies, or other incentives to domestic manufacturers. Under Title III, the president can purchase, subsidize, and even install equipment at privately owned industrial facilities in order to expand their productive capacity; in short, he can transform production to meet a national need. To invoke Title III of the DPA, the president—and only the president; this cannot be delegated—must determine that there is a “domestic industrial base shortfall” that “threatens the national defense.” According to the Congressional Research Service, “This determination includes finding that the industry of the United States cannot reasonably be expected to provide the capability for the good in a timely manner, and that purchases, purchase commitments, or other actions are the most cost effective, expedient, and practical alternative method for meeting the need.” This provision allows the government to fund innovative manufacturing initiatives that would expand capacity outside of normal suppliers. In the case of ventilators, initiatives such as this have already been suggested by the automotive industry.
- Assess demand for the near and long terms. The Trump administration needs to assess demand for ventilators, personal protective equipment, and other material, as well as assess current capacity combined with current, easy-to-execute supply. Ideally, an assessment would consider demand within and outside the U.S. government, although an internal U.S. government assessment may be able to more rapidly secure accurate numbers, and the Centers for Disease Control and Prevention should be the best source of future-demand scenarios.
- Generate immediate manufacturing orders. The Trump administration should place immediate national orders for ventilators, medical protective equipment, and any other needed supplies, drawing initial funds from the Defense Production Act Fund. The private sector cannot be expected to act until the Trump administration places actual orders for equipment. In addition, the Trump administration needs to direct expedited contracting methods and expansion of the organizations currently used for DPA-related contracting.
- Supplement funding for the Defense Production Act Fund. Title III of the DPA establishes a Treasury account, the Defense Production Act Fund, that can be used to carry out all of the provisions and purposes of Title III. For projects that cumulatively cost less than $50 million to address the industrial base shortfall, the president can act alone, using the funds available in the Defense Production Act Fund. Projects that exceed the $50 million threshold must first be authorized by an act of Congress. However, all of these provisions can be waived in periods of national emergency or in situations where the president determines that the industrial base shortfall would “severely impair” the national defense. The fiscal year 2020 allocation for the Defense Production Act Fund is only $65 million. If additional resources are needed, Congress should supplement funding to the Defense Production Action Fund.
The president needs to act now to implement the DPA to avoid a worsening of the current crisis. He has the authority to act. In fact, Trump already used the DPA in 2017 to deal with a shortfall in the space industry, so there is precedent even under circumstances that are far less dire. There is no excuse for not taking these steps immediately.
Kelly Magsamen is the vice president for National Security and international Policy at the Center for American Progress. Katrina Mulligan is the managing director for National Security and International Policy at the Center and former director for preparedness and response in the National Security Division at the U.S. Department of Justice. Frank Kendall is a senior fellow at the Center and former undersecretary of defense for acquisition, technology, and logistics.
To find the latest CAP resources on the coronavirus, visit our coronavirus resource page.