Defense Production Act: Information Sharing Needed to Improve Use of Authorities

Fast Facts

The Defense Production Act authorizes the President to invest in industrial production—and more—to ensure the availability of needed goods and services. This Q&A examines how executive agencies have used this authority and others in the act.

Since 2018, agencies have made $3.2 billion in industrial investments under the act. For example, agencies invested in ramping up production of personal protective equipment like gloves and masks during the COVID-19 pandemic.

Agencies across government are using this authority. To do so more effectively going forward, we recommended collecting and sharing lessons learned across agencies.

Highlights

What GAO Found

The Defense Production Act (DPA) is a key tool that delegated federal agencies can use to ensure the supply and timely delivery of products, materials, and services in times of peace as well as during national emergencies. Since the DPA was enacted in 1950, Congress amended it to broaden its applicability beyond military use and include crises resulting from natural disasters or human-caused events. Currently, there are three parts of the DPA, known as Titles, in effect:

• Title I allows agencies delegated authority by the President to place priority ratings on contracts or orders that support national defense. These priority ratings require U.S. companies to meet the government’s delivery needs over unrated orders. Title I also authorizes agencies delegated by the President to allocate materials, services, and facilities as necessary or appropriate to promote the national defense.
• Title III allows agencies delegated authority by the President to provide financial incentives to suppliers to meet national defense goals. These incentives include investments and loans, which can help reduce the risks for suppliers to secure resources required to establish, expand, or preserve production capabilities.
• Title VII provides the President a range of authorities, some of which may be further delegated, including the ability to conduct industrial base assessments, establish voluntary agreements, and create executive reserves to include private sector personnel to assist agencies in times of national emergency.

For this review, GAO selected the seven federal agencies delegated responsibility for implementing DPA authorities: the Departments of Agriculture (USDA), Commerce, Defense (DOD), Energy (DOE), Homeland Security (DHS), Health and Human Services (HHS), and Transportation.

GAO found that the most used DPA authority in fiscal years 2018 to 2024 was the Title I authority for priority ratings. Selected agencies used Title I authorities to ensure timely delivery of goods or services needed to respond to a variety of national security threats including natural disasters and the COVID-19 pandemic.

Selected Agencies’ Estimated Total Number of Priority Ratings Placed, Fiscal Years 2018 to 2024

Agencies used Title III authorities to sustain production capacity during COVID-19, increase domestic manufacturing capacity, and bring new suppliers into the market. DOD, HHS, and DOE provided 222 investments valued at about $3.2 billion to at least 182 U.S. industrial base companies.

Selected Agencies’ Defense Production Act Title III Investments by Area, Fiscal Years 2018 to 2024

Agencies used Title VII authorities to assess the industrial base and to establish or maintain voluntary agreements that allow for the sharing of information to provide needed resources with protection from aspects of antitrust laws.

Selected Agencies’ Use of Defense Production Act Title VII Authorities, Fiscal Years 2018-2024

Agencies experienced various challenges when using DPA authorities. For example, DOD and HHS found that companies receiving rated orders did not always understand their responsibilities for passing the rating along to their suppliers. To address this challenge, both agencies are engaged in educational outreach efforts to their contracting officers and companies receiving rated orders. Additionally, for Title III HHS officials said that, as the first civilian agency to request a presidential determination, the process was time consuming and difficult to navigate. DOD has the most experience using Title III authorities and has developed helpful practices, such as continuing to monitor some investments beyond the contract’s period of performance to maintain visibility into production capacity. However, FEMA—the current government-wide DPA coordinator—has not collected and shared these lessons learned. Doing so would better position agencies to award and monitor the outcomes of future Title III investments.

Why GAO Did This Study

The various DPA authorities enable the domestic industrial base—which are companies within the U.S. and certain allied nations—to maintain or increase production of key defense resources. In 2018, Congress reauthorized the DPA through September 30, 2025, at which point most of the DPA’s provisions will expire.

GAO was asked to review agencies’ use of the DPA authorities since the last reauthorization, including challenges and areas for improvement. This report describes how agencies have used each of the DPA authorities from fiscal years 2018 to 2024 as well as examples of outcomes of its use. It also examines challenges experienced and the extent to which agencies can take actions to more effectively use the DPA authorities.

GAO analyzed information from the seven selected federal agencies on their use of DPA authorities from fiscal years 2018 to 2024; assessed DOD data on outcomes for completed Title III investments; and discussed the effects and challenges of DPA use on the industrial base with relevant agency officials, industry representatives, and one company that received Title III funding.

Recommendations

GAO is recommending that the government-wide DPA coordinator, currently FEMA’s Administrator, work with relevant officials from the federal agencies using DPA Title III authorities to collect and periodically share lessons learned from awarding and managing Title III investments.

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Recommendations

GAO is recommending that the government-wide DPA coordinator, currently FEMA’s Administrator, work with relevant officials from the federal agencies using DPA Title III authorities to collect and periodically share lessons learned from awarding and managing Title III investments.