Defense Production Act of 1950

Background

The Defense Production Act of 1950 (Pub.L. 81–774) is a United States federal law enacted on September 8, 1950 in response to the start of the Korean War.[1] It was part of a broad civil defense and war mobilization effort in the context of the Cold War. Its implementing regulations, the Defense Priorities and Allocation System (DPAS), are located at 15 CFR §§700 to 700.93. Since 1950, the Act has been reauthorized over 50 times.[1] It has been periodically amended and remains in force.

Purpose

An Act to establish a system of priorities and allocations for materials and facilities, authorize the requisitioning thereof, provide financial assistance for expansion of productive capacity and supply, provide for price and wage stabilization, provide for the settlement of labor disputes, strengthen controls over credit, and by these measures facilitate the production of goods and services necessary for the national security, and for other purposes

Provisions

The Act contains three major sections.

The first authorizes the president to require businesses to accept and prioritize contracts for materials deemed necessary for national defense, regardless of a loss incurred on business. The law also allows the president to designate materials to be prohibited from hoarding or price gouging. The law does not state what would occur if a business refuses or is unable to complete a request on time. However, any person who performs any act prohibited or willfully fails to perform any act required by the Defense Production Act may be charged with a felony that results in a fine up to $10,000 or imprisonment for up to one year or both.

The second section authorizes the president to establish mechanisms (such as regulations, orders or agencies) to allocate materials, services and facilities to promote national defense.

The third section authorizes the president to control the civilian economy so that scarce and critical materials necessary to the national defense effort are available for defense needs.

The Act also authorizes the President to requisition property, force industry to expand production and the supply of basic resources, settle labor disputes, control consumer and real estate credit, establish contractual priorities, and allocate raw materials towards national defense.

The president's designation of products under the jurisdiction of the DPA is the authority of the Act most often used by the Department of Defense (DOD) since the 1970s. Most of the other functions of the Act are administered by the Office of Strategic Industries and Economic Security (SIES) in the Bureau of Industry and Security in the Department of Commerce.

The Defense Priorities and Allocations System institutes a rating system for contracts and purchase orders.[9] The highest priority is DX, which must be approved by the Secretary of Defense. The next level down is DO, and below that are unrated contracts.

Technological Innovation

Beginning in the 1980s, the DOD began using the contracting and spending provisions of the DPA to provide seed money to develop new technologies.[14] The DOD has used the act to help develop a number of new technologies and materials, including silicon carbide ceramics, indium phosphide and gallium arsenide semiconductors, microwave power tubes, radiation-hardened microelectronics, superconducting wire, metal composites and the mining and processing of rare earth minerals.[11][15]

21st Century

In 2011, President Barack Obama invoked the law to force telecommunications companies, under criminal penalties, to provide detailed information to the Commerce Department's Bureau of Industry and Security on the use of foreign-manufactured hardware and software in the companies' networks, as part of efforts to combat Chinese cyberespionage.[12]

On June 13, 2017, President Donald Trump invoked the law to classify two sets of products as "critical to national defense". The first referenced "items affecting aerospace structures and fibers, radiation-hardened microelectronics, radiation test and qualification facilities, and satellite components and assemblies".[16][17] The second referenced "items affecting adenovirus vaccine production capability; high strength, inherently fire and ballistic resistant, co-polymer aramid fibers industrial capability; secure hybrid composite shipping container industrial capability; and three-dimensional ultra-high density microelectronics for information protection industrial capability".[18][19]