President Trump announced on Wednesday that he will be invoking the Defense Production Act in an effort to help the private sector ramp-up manufacturing and distribution of emergency medical supplies and equipment amid the coronavirus pandemic.
The act, which was first enacted in 1950 as a response to the Korean War and has since been re-invoked more than 50 times since, will streamline production of medical supplies to help the country battle the coronavirus pandemic and require businesses to sign contracts or fulfill orders deemed necessary for national defense.
“If we need to use it we’ll be using it,” Trump said. “It’s full speed ahead.”
The act was periodically used during both the Korean War and throughout the Cold War, and was last invoked in June 2017 by Trump to provide technology in the space industrial base.
Trump was not specific on the details of what the act would be used for – besides mentioning ventilators and masks – but below is a look at what the three main sections of the Defense Production Act:
- Companies are required to accept and prioritize contracts from the government and to prioritize “materials, services, and facilities to promote the national defense or to maximize domestic energy supplies.” While this provision has historically been used to ramp up military production, in the midst of the COVID19 pandemic the act will be used for medical supplies.
- The second provision in the act provides financial measures, such as loans, loan guarantees, purchases, and purchase commitments, to speed up the production of materials “needed to support national defense and homeland security procurement requirements.”
- The act also addresses voluntary agreements – or what the government says is “an association of private interests, approved by the Government to plan and coordinate actions in support of the national defense.” The proviso permits business competitors to work together to plan and coordinate measures to increase the supply of materials.
Along with the three main provisions, the act also provides the government with the authority to obtain information from businesses, authorizes establishment of the National Defense Executive Reserve, and a Committee on Foreign Investment in the United States – which works on the effects on national security of certain mergers, acquisitions, and takeovers related to foreign investment in the U.S.
When the act is invoked it requires the administration to file an annual report to Congress on the impact of offsets on the defense preparedness, industrial competitiveness, employment, and trade from the act.
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