The Defense Production Act of 1950 (DPA)

 
November 6, 2013
The Defense Production Act of 1950 (DPA)
Overview
Key Provisions of the DPA
What is the DPA?
Title I: Priority Contracts
The Defense Production Act of 1950 (DPA, 50 U.S.C.
Priority contract authority (§101(a)) allows delegated
Appx § 2061 et seq.) confers upon the President a broad set
federal agencies to prioritize (or “rate”) contracts for critical
of authorities to influence domestic industry in the interest
materials, equipment, and services produced in the private
of national defense. These authorities are primarily used by
market. Prioritized contracts must be fulfilled before other
the Department of Defense (DOD) to enhance and support
competing interests to ensure timely availability of goods
U.S. military preparedness and capabilities. They are also
for the national defense. In executing a prioritized contract,
used across the federal government to improve domestic
a contractor is not liable for actions taken to comply with
preparedness, response, and recovery from natural hazards,
governing rules, regulations, and orders (e.g., prioritization
terrorist attacks, and other national emergencies.
requirements), including any rules, regulations, or orders
later declared legally invalid.
“...the security of the United States is dependent on
the ability of the domestic industrial base to supply
Title III: Expansion of Productive Capacity
materials and services for the national defense and to
prepare for and respond to military conflicts, natural
Title III authorities can be used to provide financial
or man-caused disasters, or acts of terrorism within
incentives to develop, maintain, modernize, restore, and
the United States.” DPA, 50 U.S.C. Appx. § 2062(a)(1)
expand the production capacity of domestic sources for
critical components, critical technology items, materials,
and industrial resources essential for the national defense.
History of the DPA
These authorities (§303) include, but are not limited to:
 purchasing or making purchase commitments of
The DPA was inspired by the First and Second War Powers
industrial resources or critical technology items;
Acts of 1941 and 1942, which gave the executive branch
broad authority to regulate industry during World War II.
 making subsidized payments for domestically produced
The original DPA contained seven separate titles, but four
materials; and
of the seven titles (Titles II, IV, V, and VI) terminated in
 installing and purchasing equipment for industrial
1953 when Congress allowed them to lapse. These
facilities to expand their productive capacity.
terminated titles related to requisitioning materials and
property, rationing consumer goods, fixing wage and price
Available incentives also include government direct loans
ceilings, settling labor disputes, and controlling consumer
and loan guarantees, though these authorities have not been
credit.
used in recent decades.
Existing DPA authorities are largely tied to the definition of
Title VII: General Provisions
national defense (§702(14)), as the use of any major DPA
authority must be interpreted to promote, support, or
Title VII contains an assortment of provisions that clarify
otherwise be deemed needed or essential for the national
how DPA authorities can be used and set out key
defense. Since original enactment, Congress has gradually
definitions. Title VII also establishes the Defense
expanded the scope of the definition of national defense to
Production Act Committee (DPAC), an interagency body
include homeland security related activities.
created to advise the President regarding the effective use
of DPA authorities. The DPAC is co-chaired by the
Congress has granted most DPA authorities directly to the
Secretaries of Defense and Homeland Security. Title VII
President. The President, in turn, has historically delegated
also provides two important authorities that are
these authorities to department and agency heads through
permanently authorized in statute. They are: §721, the so-
memoranda or Executive Order. Most recently, President
called Exon-Florio Amendment, which gives the President
Obama updated and issued Executive Order 13603,
and the Committee on Foreign Investment in the United
National Defense Resource Preparedness, in 2012.
States (CFIUS) review authority over certain corporate
acquisition activities; and §708, which provides for the
establishment of voluntary agreements in the private sector
in the interest of the national defense.
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The Defense Production Act of 1950 (DPA)
Examples of Use
reauthorized the law for several years while also amending
the other provisions of the law. Reauthorizations typically
Title I: Priority Contracts
are presented as discrete bills, though on occasion the DPA
has been reauthorized through a provision in a larger
In a typical year, DOD will assign a DPA priority to more
legislative vehicle like the National Defense Authorization
than 300,000 contracts, representing more than 20% of the
Act. The last reauthorization of the DPA occurred in 2009
nearly 1.5 million contracts reported by DOD for FY2012.
(P.L. 111-67) as a stand-alone bill that made several
For example, DOD has used it to support the Integrated
changes to existing authorities.
Ballistic Missile Defense System and Mine Resistant
Ambush Protected (MRAP) Vehicles programs. Less
Figure 1. Federal Agencies with Delegated DPA
frequently, the priority authority has been used for
Authority
homeland security issues. Examples of the use of priority
contracts include the FBI Terrorist Screening Center
program, the U.S. Army Corps of Engineers New Orleans
flood protection system, and FEMA language translation
services in the aftermath of Hurricane Sandy.
Title III: Expansion of Productive Capacity
Though Title III authorities may be used by a wide variety
of federal agencies, DOD manages the only active Title III
contracts. Current Title III projects cost an average of
approximately $22 million per project. Examples of
projects include a “Lithium Ion Space Battery Production
Initiative” and a “Lightweight Small Caliber Ammunition
Production Initiative.” More controversially, DOD has also
recently initiated projects to develop advanced drop-in
(useable without modification) biofuels.
Title VII: General Provisions
Voluntary Agreements: The Maritime Administration of
the Department of Transportation manages the only current
such agreements established under the DPA, the Voluntary
Intermodal Sealift Agreement (“VISA”) and the Voluntary
 
Tanker Agreement. These agreements help ensure that the
Source. www.acq.osd.mil/mibp/dpac.html
maritime industry can respond to the mobilization and
transportation requirements of DOD.
If the DPA expires, Title I contracts or Title III projects
created with DPA authorities prior to September 30, 2014
CFIUS Exon-Florio: One example of a potential merger
would still be executed until their completion. In
that prompted CFIUS concern is the proposed 2013
conjunction with or separate from a reauthorization bill,
acquisition of Smithfield Food Inc. by China's Shuanghui
Congress could amend the DPA in order to extend, expand,
International Holdings Ltd. Smithfield Foods is the world's
restrict, or otherwise clarify the powers granted to the
leading vertically integrated pork processor and pork
President in the DPA.
producer. Another example was the proposed 2006
acquisition of six U.S. commercial port operations of the
More Information
British-owned Peninsular and Oriental Steam Navigation
Company (P&O) in six U.S. ports by Dubai Ports World
For comprehensive analysis of the DPA, see CRS Report
(DP World).
R43118, The Defense Production Act of 1950: History,
Future Reauthorization of the DPA
Authorities, and Reauthorization, by Jared T. Brown and
Daniel H. Else. Additional information on CFIUS is
available in CRS Report RL33388, The Committee on
Unless reauthorized by Congress, most DPA authorities
Foreign Investment in the United States (CFIUS), by James
will expire on September 30, 2014 (§717 of the DPA). As
K. Jackson. For more on DOD development of biofuels, see
of November 4, 2013; no legislation has been introduced to
CRS Report R42859, DOD Alternative Fuels: Policy,
reauthorize the DPA, though the committees of jurisdiction
Initiatives and Legislative Activity, by Katherine Blakeley.
in both chambers (House Financial Services and Senate
Banking) have held hearings on the subject.
Jared T. Brown, jbrown@crs.loc.gov, 7-4918
Daniel H. Else, delse@crs.loc.gov, 7-4996
Since original passage in 1950, Congress has reauthorized
the DPA 51 times. Frequently, Congress has reauthorized
IF00004
the DPA for a limited period, such as a year, without
amendment. In other circumstances, Congress has
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