A Guide to the Defense Production Act (DPA)

A man in an orange hard hat and safety vest in an industrial factory, overseeing the manufacture of a large piece of metal equipment.

The Defense Production Act (DPA) was enacted by Congress in 1950, but was inspired by events that occurred as early as 1942. It allows the President of the United States to demand that domestic companies produce specific items to assist the country as it deals with a crisis. In 1942, these principals were first used during World War II. The President requested that Ford Motor Company quickly produce 300,000 vehicles for use in the war.

While the DPA wasn’t quite formal legislation at this point, Ford abided and supplied the army with the vehicles it needed. Now that the DPA is an official law, it’s been activated throughout history in times of war, crisis, or emergency.

When the DPA is in effect, manufacturers and companies work together to produce supplies to help the country defend itself or recover from a disaster. The President’s orders change the supply chain and require businesses to react quickly to efficiently produce the items and meet the country’s needs.

What Does the DPA Do?

The President may choose to enact the DPA for defense or to assist with an emergency. This compels businesses to accept or prioritize orders for materials regardless of potential losses, and without respect to market demand forces that might inflate prices. Under the DPA, entire supply chains can be commanded to shift toward providing essential supplies and coordinating their distribution to high-need areas.

COUNTER-TERRORISM

The President may enact his power under the DPA to request that domestic manufacturers and companies assist in creating counter-terrorism equipment. If the country is under attack, consumer weapons manufacturing companies may be asked to halt current production and begin to manufacture weapons that may be used by the country’s armed forces.

Manufacturing inventory management systems are crucial to the organization of new processes and procedures these companies must implement. When called upon, manufacturers must know their current stock levels and the materials they need to meet the President’s request.

EMERGENCY PREPAREDNESS

National emergencies, such as a public health crisis or weather event, may cause the President to activate the DPA. In these situations, the President may ask domestic companies to focus on manufacturing supplies, such as retaining walls to help with beach erosion or generators for power outages.

Companies enlisted to assist with emergency preparedness must first create an inventory optimization solution to utilize what they have in stock efficiently before ordering additional supplies. They may also need to adopt more efficient and reliable shipping procedures to ensure these items get to their destinations quickly.

PROTECTION AND RESTORATION OF CRITICAL INFRASTRUCTURES

Failing infrastructures may also be the cause to enact the DPA. Roads, bridges, or railroad tracks that don’t function properly are dangerous to the general public and transportation issues may cause economic problems throughout the nation.

When the DPA is enacted for infrastructure issues, domestic companies may need to begin manufacturing components to help fix the damage. These companies must be able to effectively manage their warehouse inventory so they can compare what they have to the materials they need.

CONTINUITY OF GOVERNMENT

If the continuity of government is in jeopardy, the President may put the DPA into effect to demand that domestic companies manufacture weapons of defense for the armed forces. Companies enlisted to assist with this production need to ensure they follow regulations for defense equipment production.

Sections of the Act

The DPA is divided into sections that outline how companies are chosen for production and how plans of action are implemented. These sections also address government financial assistance provided to companies as they produce necessary goods.

Priorities and Allocations

When the President identifies an issue and must activate the DPA, a division of the government is provided with the authority to organize the campaign. The division allocated to the cause depends on the crisis or emergency and the product that needs to be manufactured. Power may be allocated to the Department of Commerce (DOC) if a financial issue arises or the Health and Human Services department if a public health crisis occurs.

This section of the DPA also ensures that the President or department in charge gives priority to a domestic company or manufacturer. This allows our domestic companies to profit and employ workers to meet the order’s needs. Delivery times on emergency goods are usually faster when they’re produced domestically.

EXPANSION OF PRODUCTIVE CAPACITY AND SUPPLY

This section of the DPA allows the President or another department to provide loans or purchase commitments for companies enlisted to assist with manufacturing mandatory supplies. These companies may purchase equipment or hire employees to ramp up production.

GENERAL PROVISIONS

The General Provisions sections of the DPA allows the President to consult with experienced professionals in a manufacturing field related to the needed supplies. These business owners or managers may also be called to assist the President and U.S. government for national defense matters at any time. This section also allows the President to enact voluntary agreements with domestic companies to produce necessary items.

Examples of the DPA Being Enacted

Throughout history, the President has elected to enact the DPA several times in both wartime and emergency situations.

THE KOREAN WAR

The DPA was first enacted into law during the Korean War in 1950. It was used by President Harry S. Truman to create a mobilized infrastructure for the U.S. defense system. Steel and iron manufacturers were enlisted to help create vehicles and other war equipment for the military.

THE COLD WAR

Mining and manufacturing businesses were enlisted during the Cold War to ramp up production of aluminum and titanium. The government provided interest-free loans that allowed these industries to hire more skilled workers so production would increase as needed.

CHINESE CYBER ESPIONAGE

In 2011, the DPA was activated to force domestic technology companies to probe for information on suspected Chinese cyber espionage. Telecommunications companies were required to provide requested records and information to the Commerce Department's Bureau of Industry or executives would face criminal charges.

CORONAVIRUS PANDEMIC

On March 18, 2020, President Trump implemented the DPA in response to the COVID-19 pandemic. Hospitals were in short supply of ventilators, face masks, and face shields. Large companies and manufacturing facilities, such as General Electric, offered to begin manufacturing this hospital equipment.

These companies faced a unique challenge to keep up with government orders and current stock. Workers must learn about these new systems quickly so they may streamline production and provide healthcare workers with these necessary supplies.

The DPA is a crucial piece of legislation because it allows the President to order domestic companies to assist in the manufacturing of products to combat nationwide crises. When companies are enlisted to assist with defense or human health emergencies, they may need to re-structure inventory practices and manufacturing processes.

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