EXECUTIVE SUMMARY
This fall the United States Senate will consider reauthorization of the Defense Production Act (DPA).1 First passed during the Korean War so that the US military could replenish its forces quickly, the DPA has been used in hundreds of ways for various purposes—some directly defense-related, and some less so. As reauthorization of the act approaches, policymakers and other experts are debating its appropriate uses.
Over the years, the act has had mixed results in making strategic and sustained improvements to the US defense industrial base. While the DPA has filled gaps in specific emergencies, the range of emergencies has been quite broad—from fire hoses in California to COVID-related ventilators and vaccines, baby formula, and, most recently under the Biden administration, the manufacture of clean energy technologies such as solar panels.
With the Trump team presumably ready to support the DPA’s renewal2, the US has an opportunity to use the act to improve America’s defense industrial base and expand its military capabilities. No comprehensive assessment has studied the DPA’s impacts on the US defense industrial base, and few if any analyses consider how DPA funds have substantially affected or improved certain sectors over time. Absent a clear plan to use the DPA in a targeted and strategic manner, Washington risks turning it into another government program that benefits particular companies without actually strengthening the defense industrial base.
The DPA is complicated. A senior retired congressman with deep defense experience admitted that he thought “virtually no one, including me, really understands the Defense Production Act.”3 Decades ago, former Senator Phil Gramm referred to the act as “the most powerful and potentially dangerous American law.”4 If authorized by the president, seven executive departments and two agencies (the Federal Emergency Management Agency [FEMA] and the Development Finance Corporation [DFC]) use its authorities in numerous ways. It spans various appropriations bills and involves a myriad of contracting organizations across these departments. Further complicating matters is how to use the act in ways that are complementary to other programs designed to improve the defense industrial base (such as the Defense Department’s Office of Strategic Capital [OSC]).
Three fundamental issues are at the heart of current debates concerning the DPA and its reauthorization.
The first relates to the purpose and scope of the act. As Eric Chewning, a former defense official who had oversight over matters related to the DPA, put it, “Are we actually expanding the defense industrial base, or just plugging holes? Are we reshuffling the deck chairs . . . or really expanding capacity?”5 Despite billions spent through DPA authorities, few assessments examine the long-term impact of these funds on the defense industrial base. Individual companies may benefit—an important step in securing domestic supply—but whether DPA grants have strengthened a sector as a whole is far less clear. While numerous studies dissect different sectors (and vulnerabilities) of the industrial base, far fewer track how DPA funding has actually expanded capacity over time. Complicating matters further, the definition of “national security” has steadily broadened.
A second issue is how to use the DPA’s “tools” more effectively—financial instruments like loans, loan guarantees, purchases, and purchase commitments. Despite being written into the law, these tools have been used only sparingly; instead, agencies have relied mostly on grants. Other mechanisms designed to bring in private-sector expertise are also underused. The question is how policymakers can deploy these instruments more strategically.
A third issue concerns jurisdiction over the DPA and its implementation. Tensions persist over whether the Banking and Financial Services Committee—responsible since 1950—should retain jurisdiction, even though the Department of Defense uses the act most frequently and is better positioned to address defense industrial base challenges. Within DoD, however, DPA offices are often understaffed and lack the expertise to evaluate many potential projects. Other agencies with DPA authority face similar problems: contracting offices are scattered, limited in number, and thin on expertise. Meanwhile, FEMA continues to coordinate DPA programs government-wide, a role that seems increasingly misplaced.6 Underlying all of this is the unresolved tension between Congress and the executive branch over how to balance management and oversight of the DPA.
1. BACKGROUND
The United States Congress passed the Defense Production Act (DPA) in 1950, shortly after North Korea invaded South Korea, and President Harry Truman signed it to ensure that the US could procure what American soldiers needed to fight and win. He stated that the new law would “enable the Government to provide special financial help to businessmen . . . to enlarge the production of our mines and factories for defense purposes.” He continued:
This law also will enable the Government to make sure that defense orders have top priority, and that manufacturers get the steel, aluminum, copper, and other materials they need to fill such orders. This law gives the Government the power to prevent the hoarding of raw materials essential to defense. It also enables the Government to cut down the production of non-essential civilian goods that use up critical materials.7
The president declared that military and economic preparedness were “inseparable” and requested legislation to “guarantee the prompt supply of adequate quantities of needed military and civilian goods.”8
President Truman framed the DPA as a continuation of the First and Second War Powers Acts of 1941 and 1942, which the government adapted to the challenges of the Cold War. His administration used the new act to increase the production of steel, aluminum, and military equipment, as well as to prevent excessive economic disruptions.
During these early years, the DPA recognized that national security was inextricably linked to the capacity and resilience of the domestic industrial base as well as to the government’s ability to direct it in a crisis. The original legislation also defined national defense quite clearly as “programs for military and atomic energy production or construction, military assistance to any foreign nation, stockpiling, space, and directly related activity.”9
Key Provisions of the DPA
Skipping the Line
Since the DPA’s earliest days, it has allowed government agencies to prioritize defense needs over civilian economic activity. As President Truman put it in 1952, it allowed him to “accept curtailment in civilian production where necessary to meet defense requirements.”10 Because of the act, the president could give precedence to contracts that “promote the national defense” over other contracts and allocate materials in ways that prioritize national defense.11 The president could direct a company to deliver a product necessary for national security purposes first, and then handle other orders later.12 If an arms manufacturer needed copper, for instance, suppliers would fulfill its needs first—its production would not be delayed by copper orders from commercial companies.
Government leaders were serious about using the DPA to grow the industrial base. In 1950, US aluminum production increased from 720 thousand tons per year to 1.5 million tons by 1954. Nitrogen plants were built as well, raising US capacity from 1.6 million tons per year in 1950 to 2.9 million tons in 1955.13
Although the DPA was a product of the Korean War, it also included a comprehensive economic stabilization package, giving the executive branch the power to impose wage and price controls, regulate consumer and real estate credit, and offer loans and loan guarantees to industry.
The act’s original seven titles demonstrate how national security and economic control are intertwined (see text box below). Four out of these seven original provisions have expired, and today’s debates focus on Titles I, III, and VII.
The DPA’s Seven Titles
Title I: Priorities and Allocations. This authority allows the president to require businesses to accept and prioritize government contracts for national defense and to allocate scarce materials and services as necessary.
Title II: Authority to Requisition. This authority allowed the president to requisition private property for government use when he deemed the use of the property necessary for the national defense. (This title was allowed to expire in 1953.)
Title III: Expansion of Productive Capacity and Supply. This authority allows the president to administer loans and loan guarantees, and to direct government purchases to encourage private industry to expand its production of critical goods.
Title IV: Price and Wage Stabilization. This authority allowed the president to establish ceilings on prices and wages throughout the economy to combat inflation, prevent hoarding, and prevent economic disturbances. (This title was allowed to expire in 1953.)
Title V: Settlement of Labor Disputes. To prevent strikes and work stoppages from crippling the war effort, this authority allowed the president to intervene and force settlements in some labor disputes. (This title was allowed to expire in 1953.)
Title VI: Control of Consumer and Real Estate Credit. This authority allowed the Federal Reserve to impose controls on consumer and real estate loans. (This title was allowed to expire in 1953.)
Title VII: General Provisions. This catchall title provides various administrative authorities and definitions.
Source: Defense Production Act of 1950, Pub. L. No. 81-744, 64 Stat. 798 (Sept. 8, 1950), https://www.fema.gov/sites/default/files/2020-03/Defense_Production_Act….
Committee Jurisdiction
Since the DPA gave the president broad economic control over prices, wages, labor contracts, and labor disputes, the act was initially under the jurisdiction of the House and Senate Committees on Banking and Currency (which today are known as the House Committee on Financial Services and the Senate Committee on Banking, Housing, and Urban Affairs).14 Despite the expiration of the titles concerning requisition of private property, wage and price controls, and labor management, these committees have maintained their jurisdiction over the DPA since its enactment.
Currently, policymakers are debating whether the House and Senate Armed Services Committees should have jurisdiction over the DPA, given that only Titles I, III, and VII remain in effect and are strongly linked to national defense–related issues. Title III in particular focuses on defense industrial capacity, and the DoD has traditionally administered programs under Title III.
The congressional record from 1950 reflects no objection from House and Senate members of the Armed Services Committees on the jurisdiction of the act. Shortly after President Truman’s address to Congress calling for “legislation authorizing the government to establish priorities and allocate materials,” the chairmen of the respective banking committees introduced parallel bills in the House and Senate. Congressman Carl Vinson, chair of the House Armed Services Committee, threw his support behind the bill with seemingly no concern for the Banking Committee’s jurisdiction.15 Other members followed suit, recognizing that while the DPA would be critical for military readiness, it was in many respects an economic policy act. There was also a historical precedent for assigning the act to the Banking and Currency Committees. The Stabilization Act of 1942—which similarly focused on economic tools to support war efforts—fell within the Banking Committees’ purview during World War II.16
Evolution of the DPA
In the past 75 years, Congress has reauthorized the DPA dozens of times. In addition to increasing the number of agencies that can use the act, these reauthorizations expanded the definition of what constitutes national defense. Originally, the DPA defined national defense as:
The operations and activities of the armed forces, the Atomic Energy Commission, or any other Government department or agency directly or indirectly concerned with the national defense, or operations or activities in connection with the Mutual Defense Assistance Act of 1949, as amended.17
In 1988, Congress passed the Exon–Florio Amendment, granting the president authority to review certain corporate mergers, acquisitions, and takeovers, as well as to investigate the potential impact of such actions on national security.18 This amendment codified the Committee on Foreign Investment in the United States (CFIUS) review process.19
By 1992, the definition for national defense expanded to include “programs for military and energy production or construction, military assistance to any foreign nation, stockpiling, space, and any directly related activity.”20 The definition changed further to include “emergency preparedness” in 1994;21 “critical infrastructure protection and restoration” in 2003;22 “critical infrastructure assistance to any foreign nation,” and “homeland security” in 2009.23
President Barack Obama’s Executive Order (EO) 13603 expanded the definition of national defense further in 2012:
The term “national defense” means programs for military and energy production or construction, military or critical infrastructure assistance to any foreign nation, homeland security, stockpiling, space, and any directly related activity. Such term includes emergency preparedness activities conducted pursuant to title VI of the Robert T. Stafford Disaster Relief and Emergency Assistance Act and critical infrastructure protection and restoration.24
This EO formalized the seven federal agencies that can use the DPA, if the president delegates the authority to them.25 These seven departments are the Departments of Agriculture (USDA), Commerce (DOC), Defense, Energy (DOE), Homeland Security (DHS), Health and Human Services (HHS), and Transportation (DOT). Obama also included the Federal Emergency Management Agency (FEMA) in the EO. More recently, President Donald Trump signed an EO granting DPA authority to the US Development Finance Corporation (DFC) in March 2025 to stimulate domestic mineral production.26
The 2024 National Defense Authorization Act (NDAA) expanded Title III, enabling the Department of Defense to enter agreements with companies in Canada, the United Kingdom, and Australia to secure critical materials essential to defense.27
Broader definitions of national security allow the president to authorize agencies to use DPA authorities more quickly and flexibly in response to emerging threats. For example, during the COVID-19 pandemic, the executive branch invoked the DPA for everything from purchasing nasal swabs and respirators to funding vaccine production. In many cases, funds flowed directly to HHS, which could then bypass standard contracting processes by relying on the act’s expedited authorities.
Funding
Funding for the DPA is complex and somewhat confusing. The federal government can allocate money for DPA uses to the DPA Fund. This is a statutory account that sits at Treasury and is available to one of the seven agencies that, if authorized by the president, can undertake Title III projects.28 Since President Obama issued EO 13603 in 2012, the fund manager—who carries out general accounting functions for the fund—has been the secretary of defense. As fund manager, the secretary of defense (or the DoD official to whom the authority is delegated) is responsible for the financial accounting of the fund, but this official does not necessarily have decision-making authority over the fund’s use.29
From FY2010 through FY2019, Congress appropriated approximately $952 million to the DPA Fund, which paid for Title III activities.30 From FY2020 through FY2025, this figure increased to at least $4.4 billion.31
Sometimes the government appropriates funding through a specific appropriations act, and an agency can spend those funds using its DPA authorities. For example, the American Rescue Plan Act of 2021 (ARPA, P.L. 117-2) provided $10 billion to pay for DPA Title I, Title III, and Title VII activities, specifically for the “purchase, production . . . or distribution of medical supplies and equipment . . . related to combating the COVID-19 pandemic.”32
In other cases funds were provided through annual defense appropriations acts as well as through other legislation, including the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 ($1 billion),33 the Additional Ukraine Supplemental Appropriations Act of 2022 ($600 million),34 and the Inflation Reduction Act of 2022 ($500 million).35
The use of supplemental appropriations to fund the DPA is a change from congressional practices in FY2010 through FY2019, when DPA funds were provided through annual defense appropriations acts.
The government makes appropriations to the DPA Fund as “no-year money,” meaning that they are available until expended.36 This is unusual for government funding—most of which must usually be spent in a fiscal year. For the DPA Fund, the unobligated balance remaining at the end of a fiscal year cannot exceed $750 million.37 While a flexible form of funding, Congress can place deadlines on spending those funds. For example, the Inflation Reduction Act of 2022 specified that its DPA appropriations were to remain available only until September 30, 2024. Similarly, the funds appropriated for DPA use in ARPA were to remain available only until September 30, 2025.
Traditionally, only a few contracting vehicles throughout the US government complete DPA-related contracts. At the DoD, the Air Force Research Laboratory (AFRL) in Ohio manages the DPA Title III Program.38 According to one DoD official, over the past few years, additional contracting authorities are now in place.
Other agencies that use DPA authorities often lack contracting expertise and have to rely on the DoD to help execute contracts. During COVID, for example, HHS encountered many implementation problems when it came to using its DPA authorities.39
Uses of the DPA
Historically, agencies have used the DPA in a wide range of ways. In 2001, Senator Phil Gramm, then chairman of the Banking, Housing, and Urban Affairs Committee, called it the “most powerful and potentially dangerous American law.”40 He warned that actors—including states—might invoke national security as a pretext to address problems rooted in policy failures. As noted below, California sought to use the DPA in 2001 to deal with its energy shortfalls.
It is difficult to find a comprehensive record of how often the DPA has been used. There does not seem to be a single list. Instead, most accounts focus on individual titles—Title I, III, or VII. For instance, a Government Accountability Office (GAO) report found that between 1985 and 1994, Title III supported seven DoD projects. Another report noted that the DoD reported four Title III projects in 1994, 37 in 2013, and 56 in 2024. A 2025 GAO study estimated that between FY2018 and FY2024, DoD used Title III to make about 208 investments in defense suppliers. Separately, other reports cite more than 100 uses of the DPA for COVID-related efforts.
In short, reporting about the act is confusing and fragmented.
A Selective List of DPA Uses
Though a comprehensive list of DPA uses does not exist, the following examples offer a very selective overview of the diverse uses of the act.
Energy. In response to the 1973 oil embargo, US officials declared energy essential to national defense. Congress expanded Section 101 of the DPA—originally limited to defense programs—to allow President Richard Nixon to prioritize contracts that maximized domestic energy supplies.42 The White House tasked DOE with determining whether materials were critical to energy projects; if so, they could be prioritized to boost production.
In 1974, President Nixon invoked the DPA to give the Trans-Alaska Pipeline priority access to key materials.42 Critics contended this effectively forced sellers to supply the pipeline “at any price,” arguing they would not have sold to the federal government otherwise.43 In 1979, following the Iranian Revolution, President Jimmy Carter used the act to fund research into producing synthetic fuels from coal and natural gas. The next year, Congress amended the DPA to establish a direct link between national defense and energy security—explicitly expanding the definition of national defense to include energy programs.44
In 2001, DPA authorities were used to supply natural gas to California during the 2001 energy crisis. The arguments were heated, however, with critics pointing out (rightly) that the problems in California were due to bad management and bad policies and that the DPA should not come to the rescue.45
Iraq War. In 2007, Secretary of Defense Robert Gates invoked the DPA to secure supplies of reinforced steel to build mine-resistant ambush protected vehicles (MRAPs) in response to improvised explosive devices killing American troops in Iraq.46 The secretary approved a special designation for an MRAP—a DX rating—that required contracts to be accepted and performed on a priority basis over other contracts, ensuring that MRAPs were first in line for critical components such as steel.
Green Initiatives. The Obama administration used the DPA to help launch an advanced biofuel industry through the Navy’s “Great Green Fleet,” aiming to reduce reliance on foreign oil.47 In partnership with USDA and DOE, the Navy committed $30 million to commercialize drop-in biofuel substitutes for diesel and jet fuel.48 At the time, Senator John McCain criticized the effort as an “alarming departure from the traditional use of this authority.”49
In 2022, President Joe Biden issued determinations authorizing DOE to use the DPA to expand domestic production of solar panels, transformers, and other grid and green energy components. DOE argued the move would “lower energy costs for families, strengthen national security, and achieve lasting American energy independence.” A top DoD official praised the effort to reduce “America’s dependence on gas and oil [as] critical to US national security.”50Climate advocates saw it as a positive step toward “aggressively accelerat[ing] manufacturing and deployment of renewable energy technologies.”51
Cybersecurity. In 2011, with Chinese cyber-espionage becoming a larger threat, President Obama invoked Section 705 of the DPA to obtain information from telecom companies about their networks. That section of the act allows the government to request information to enforce the DPA.52 The DOC also asked for a detailed accounting of foreign-made hardware and software on companies’ networks.53
In 2023, the DoD used DPA Title III funds to strengthen domestic production of printed circuit boards and related microelectronics. These components are critical to cybersecurity and data integrity, and this effort sought to reduce reliance on foreign-made hardware that could contain hidden vulnerabilities or backdoors.54 Three companies were awarded grants worth around $96 million in total.55
COVID-19. From March 2020 to September 2021, federal agencies used the DPA to help address COVID-19 medical supply needs. Agencies used DPA authorities to prioritize contracts, fund projects to expand domestic production of supplies, and enter into partnerships with private companies.56 The CARES Act and other appropriations provided at least $11 billion for DPA purchases and other actions related to the pandemic or “other public health emergencies through September 2025.”57
As part of its DPA responsibilities, HHS was directed to identify ways to boost domestic production of medical supplies “going forward” under President Trump’s August 2020 Executive Order 13944, which sought to reduce reliance on foreign manufacturers.58 It remains unclear whether HHS ever implemented this plan. The Biden administration later issued Executive Orders 13987 and 14001, authorizing agencies to use the DPA to address supply chain shortfalls for critical medical supplies.
2. CURRENT CONSIDERATIONS
Discussions of the DPA often center on its three key titles: I, III, and VII. Title I allows agencies to prioritize contracts and materials for national defense, giving priority-rated orders precedence over others. Title III provides financial incentives to expand domestic industrial capacity and is the Defense Department’s most frequently used authority. Title VII enables surveys and assessments of the industrial base, facilitates collaboration with private industry, and authorizes a private sector “executive reserve” to assist in national emergencies.59
However, embedded in these discussions are three fundamental debates. Therefore, the following sections highlight three central issues: (1) scope, impact, and transparency; (2) tools and instruments; and (3) jurisdiction and management.
Scope, Impact, and Transparency
Scope
There is disagreement over the DPA’s scope. Some view it primarily as an emergency tool, empowering the president to direct agencies to act quickly—whether to replenish aircraft bolts, personal protective equipment during COVID, or baby formula.
Others see it as a means to strengthen the long-term capacity of the US industrial base, covering not only defense-related sectors like munitions or rocket motors but also energy and pharmaceuticals. Title III supports this long-term vision by authorizing incentives to “develop, maintain, modernize, restore, and expand” domestic sources critical to national security.60
Recent debates over the act’s scope also center on what qualifies as national security. In March 2025, the Trump administration issued an EO rescinding Biden-era actions that labeled green energy materials “essential to national defense.”61 The White House called this use of the DPA to produce solar panels and other products an abuse of power.62 Presumably, the Trump EO seeks to refocus the DPA on core national security needs, whereas Obama’s 2012 EO significantly expanded the scope of national security.63
The DPA could be a combination of the two: a tool to strengthen the US defense industrial base in a sustainable way and a stopgap measure to respond to a crisis. As one former Trump administration official, Jeb Nadaner, put it, “The DPA, if properly employed, remains an important tool to fill gaps in supply chains. And those gaps can stop the production of crucial military systems, they can fix weaknesses in defense infrastructure, and they can mobilize the country in the face of a broader national crisis as was the case with COVID-19.”64
But in practice, the DPA has functioned much more as a stopgap measure in crises.
Impact and Transparency
Because agencies do not provide enough transparency on the use of the DPA, it remains unclear to what extent the act has produced sustained improvements in the US defense industrial base or in related sectors such as pharmaceuticals. As Eric Chewning, a former defense official who had oversight over matters related to the DPA, put it, “Are we actually expanding the defense industrial base, or just plugging holes? Are we reshuffling the deck chairs . . . or really expanding capacity?”65
The fact that the United States now faces crises in shipbuilding, microchip production, and critical minerals suggests the DPA has not been used to build capacity in a lasting way. For years, the act has funded studies that catalog vulnerabilities, but there are few, if any, follow-up assessments showing that DPA spending translated into real improvements. Money spent and reports completed are not outcomes achieved.
Section 705 of the DPA allows the president to request information from private companies to analyze US industrial capabilities. The Commerce Department’s Bureau of Industry and Security (BIS) usually leads these efforts.66 Its industrial base assessments “monitor trends, benchmark industry performance, and raise awareness of diminishing manufacturing capabilities.”67 Since 1986, BIS has conducted over 75 assessments.68 Many of these reports identified vulnerabilities, such as in rare earth element supply chains (2016); US telecommunications (2012); the space industry (2007); shipbuilding (2001); carbon fiber composites (2015), and more recently, the state of the US microelectronics industrial base (2023). Yet connecting these assessments to subsequent strategic uses of the DPA to address identified vulnerabilities is difficult.
The same problem of tracking how specific grants are then linked back to a sector exists when it comes to efforts to improve DPA planning. For example, in 2020 the DoD’s Manufacturing Capability Expansion and Investment Prioritization (MCEIP) office released a five-year investment plan for critical chemicals and hypersonics.69 What progress has the plan made in improving these sectors?
Similarly, for years, Congress and the executive branch have tried to strengthen the defense industrial base workforce. In 2019, for example, the NDAA authorized $80 million to assist more than 2,200 defense businesses.70 Has this money made an impact? The DoD’s IBAS office, which has worked hand-in-hand with the DPA program office, has listed improving the workforce as a core focus area and has funded numerous training programs. What have these efforts achieved? In 2021, President Biden invoked the DPA to expand the production of Virginia-class submarines, partly through workforce training.71 Has this initiative delivered results? These are only a few examples out of countless initiatives that go unexamined.
More recently, a 2025 Defense Science Board report noted that DPA Title III authority “has been extensively used to finance the expansion of manufacturing capacity in the defense industrial base.” But there are few ways to find out how much that expansion has meaningfully increased.
According to the GAO, from 2018 to 2024, agencies made 222 Title III investments valued at approximately $3.2 billion to “bolster the industrial base.” The DoD made 208 of these investments to respond to COVID-19 and increase production of strategic and critical materials used in weapon systems.72 But it is unclear if vulnerabilities have been significantly reduced.
The DoD issued over two million “priority” contracts from 2018 to 2024,73 but it is hard to assess whether these priority actions led to sustainable impacts. For example, according to one DoD presentation,74 $200 million (four grants of $50 million each) was provided to companies for munitions-related projects in 2018 and 2019.75Linking the impact of these efforts to current munitions production enterprise is difficult.
Understanding how the DPA has affected the medical supply chains is also difficult. Using DPA authorities, the government has spent tens of millions of dollars over the years to purportedly improve America’s medical “industrial base.” For years before the COVID-19 pandemic, government reports cited vulnerabilities in US medical supply chains.76 But aside from Operational Warp Speed—which produced specific vaccines—it is unclear the degree to which the use of DPA authorities has reduced vulnerabilities across medical supply chains. After the pandemic, the GAO continued to cite these vulnerabilities, as did the Biden administration’s 100-day supply chain review, which continued to describe US reliance on foreign sources for key drug inputs and a lack of domestic production.77
Transparency challenges are longstanding. A 1994 GAO report urged the DoD to better monitor “supply and demand of materials on a continuing basis.”78 A 2002 DoD directive echoed this,79 and nearly 15 years ago President Obama’s EO 13603 directed agencies to use the DPA to assess and strengthen the industrial base. Successive reauthorizations and executive orders have repeated these points, yet progress remains limited.
More recently, GAO recommended that OMB promote transparency in DPA use.80 The government reportedly created a website to track COVID-related Title I awards, but its scope and current status are unclear.
The bottom line is, it remains difficult to assess whether DPA funding has produced lasting improvements in the defense industrial base. Policymakers should prioritize transparency on how funds are spent and the degree to which they strengthen the industrial base.
3. TOOLS AND INSTRUMENTS
The DPA authorizes four main types of financial incentives under Title III in Sections 302 and 303: loans, loan guarantees, purchases, and purchase commitments. Yet, despite this broad toolkit, the DoD has largely defaulted to using grants.
Over time, policymakers have interpreted Title III to allow a “broad set of financial incentives,” which has come to include grants and subsidy payments.81 A snapshot of DPA funding in FY2025 shows the result: 28 grants, with none of the other financial incentives being used.82
Agencies often channel these through other transaction agreements (OTAs) or cooperative agreements.83
This narrow use of Title III tools is a problem. Grants can fill a gap at a moment in time (and can be important to a specific company), but they do not necessarily attract private capital or create resilient supply chains. One grant does not a supply chain make. Other tools like loan guarantees or purchase commitments—explicitly authorized by Title III—are designed to leverage private investment at scale. Their absence leaves industrial base growth fundamentally limited.
Underused Title III Tools
Loans, loan guarantees, purchases, and purchase commitments are underused for several reasons. First, as usual, bureaucratic processes are a problem. As one congressman observed, “From 2018 to 2024, only one direct loan and zero guarantees were issued—not for lack of need but due to cumbersome processes.”84
Second, unlike agencies such as USDA, the DoD has historically lacked the systems to operate a credit program.85 (This is changing with the 2022 creation of the Office of Strategic Capital [OSC],86 which is discussed below.) As one former DoD official observed, “Loan guarantees reduce the cost of credit rather than having the government pick winners and losers.” For capital-intensive industries—which are typical of defense manufacturing—this can be decisive. Guarantees can lower financing costs, de-risk private investment, and catalyze new capacity at relatively low taxpayer expense.87
DPA purchase guarantees are one of the most powerful yet least used tools. Commitments were central to Operation Warp Speed, where they incentivized firms to build vaccine capacity before final approvals. Yet beyond this case, GAO has long noted their scarcity, describing them as “rarely employed” as early as 1987.88 More recently, a DoD official explained that although commitments are inherently multiyear, “no one is letting us use it.”89
What is puzzling is that over the years, there seems to be a perception that purchase commitments are an active part of the DPA tool kit. In 2013, for example, Under Secretary Frank Kendall claimed that “purchase and purchase commitment authorities provide the foundation for virtually all Title III actions.”90 The rhetoric has rarely matched reality.
The structure of appropriations complicates the use of purchase commitments. These commitments require funding available across multiple years, since companies often need time to move from prototypes to full-scale production. While traditional DPA appropriations do not expire, funds are frequently routed through procurement accounts that do.90
While traditional DPA appropriations do not expire, funds are often provided through procurement accounts, which do.91 This mismatch complicates execution but does not fully explain the long-standing neglect.
Permitting Reform and Alignment with Other Programs
Even if the DoD and other agencies fully utilized loans, guarantees, purchases, and commitments, additional reforms would be necessary to expand industrial capacity. Two stand out.
One is permitting reform. As is well known now, modernizing industrial base infrastructure often requires years of approvals. Experts have urged agencies such as the Army Corps of Engineers and the Environmental Protection Agency to expedite permits for DPA projects.92
A second is better alignment with other DoD incentive programs, such as the IBAS program and the newer OSC. IBAS, which the Office of the Assistant Secretary of Defense for Industrial Base Policy runs, tends to support earlier-stage R&D, but in practice it overlaps with DPA authorities. There are differences between DPA funding and IBAS funding. An important one is that DPA spending timelines are more flexible, while IBAS funds have shorter timeframe requirements. But many experts and officials seem confused too. One expert with years of experience and who was close to the IBAS program described it as being focused on earlier R&D stages of a program and as needing to be “responsive to specific requirements from a service.”93 Yet the DoD director of IBAS recently explained that IBAS had “very broad authorities” that could be used to expand and create opportunities across the industrial base. Similar to the DPA’s ability to prioritize, she explained that IBAS can address “urgent operational needs.”94
So there does not seem to be a widely understood differentiation between how the two programs can be used—other than the difference in spending timelines. At a minimum, alignment should be improved. But even this is complicated. One expert explained that DPA funds are often “appropriated with procurement dollars, which expire, as opposed to traditional DPA appropriations, which do not expire.”95
Unsurprisingly, new entrants to the DoD often view these programs as opaque or duplicative. A congressional staffer once dismissed both DPA and IBAS as “slush funds” with weak links to strategic outcomes.96
Ironically, the DoD’s failure to use DPA loan guarantees helped prompt the creation of OSC in 2022. This office is tasked with attracting private investment into critical component technologies with broad commercial applications (e.g., electronic systems for both pacemakers and missile guidance). Unlike grants, loans and loan guarantees require repayment, reducing federal outlays while crowding in private capital.97 Today, most defense experts view OSC as the entity that will focus on loan guarantees—as opposed to the DPA. Again, alignment will be important.
DPA Agreements with Close Allies
Additional tools under the DPA include the authority to enter into agreements with Canada, Australia, and the United Kingdom (the UK was added in 2024). In theory, these arrangements can speed joint efforts. For example, Canada and Australia have deep expertise in critical minerals, and in 2024 the DoD awarded two grants totaling about $15 million to Canadian firms Fortune and Lomiko to improve cobalt and graphite supply chains—though it should be noted the funds were primarily for feasibility studies.98
Title I and Prioritizing Contracts
As mentioned earlier, Title I of the DPA provides authority to prioritize contracts, meaning the president can require private companies to accept and fill certain contracts ahead of others, and, if needed, to allocate materials, services, or facilities to a particular emergency or sector. Allocations—directing resources outright, rather than simply sequencing them—are rare. (One example was during the COVID-19 pandemic when FEMA used allocation authority to prevent the export of critical PPE.99)
Over the years, the government has expanded these authorities. For example, in 1980, energy was designated a strategic and critical material under Title I authorities.100 And as described earlier, President Obama’s EO 13603 gave federal agencies and departments Title I authority, including the DoD, DOE, DHS, and DOT. Under this authority, agencies can prioritize contracts between private parties—for example, a subcontractor filling an order for a prime contractor.
The process, however, is complex. The Federal Priorities and Allocations System (FPAS) governs prioritization, and within this framework is the Defense Priorities and Allocations System (DPAS), which DOC’s BIS administers.101 Thus, the Commerce Department serves as the lead federal agency setting and managing DPAS rules, but it delegates authority to agencies such as the Department of Defense. The DoD, in turn, is the largest user of priority-rated contracts (“rated orders”), employing them routinely to support military programs.102
In addition, the Defense Production Act Committee (DPAC) provides interagency oversight of Title I priorities and allocations.103 Although DPA Title I authority is formally delegated to just seven federal departments, the DPAC itself includes representatives from 12 departments and four agencies. It is chaired by the DHS, which has in turn delegated the responsibility to FEMA.104 The structure is complex enough to recall General Stanley McChrystal’s famous quip during the war in Afghanistan, made while staring at a bewildering PowerPoint slide: “When we understand that slide, we’ll have won the war.”105
Title VII and Strategic Uses of the DPA
Title VII of the DPA could play a larger role in shaping strategic uses of the act. It authorizes agencies to survey the industrial base for vulnerabilities, form voluntary agreements with industry, and create an executive reserve of private sector experts to assist in national emergencies. As Jerry McGinn notes, such agreements are valuable because they provide antitrust protections for companies working with the government.106
In the 1980s, FEMA referred to these voluntary agreements as standby agreements. They were a way of allowing the private sector to augment government resources through advance contractual commitments that could be used during emergencies.107 These voluntary agreements with industry remain underutilized. From 2018 to 2024, only the Department of Transportation and FEMA established three such agreements, and the FEMA one (which focused on medical supplies) is no longer active.108
Congress should simplify the voluntary agreement process, which is overly complex. Current rules require the involvement of a department lead, the attorney general, the FEMA administrator, the Federal Trade Commission chairman, Congress, and the Federal Register.109 Their participation is required even before detailed drafting of the content of an agreement can begin. In addition, policymakers should also reconsider why FEMA retains overall responsibility for these agreements.110
4. IMPLEMENTATION AND JURISDICTION
A third broad area of debate revolves around implementation and jurisdiction over the act.
Implementation: Specialized Expertise
Departments and agencies using the DPA often lack specialized expertise in technical areas. For example, the DoD office responsible for administering the act is understaffed and lacks the expertise necessary to evaluate DPA projects effectively. As one expert observed, the office requires a “significant overhaul.”111
Many argue that the DoD needs more subject-matter experts to evaluate projects and grants—especially in areas like energetics, critical minerals, castings and forgings, and shipbuilding.112 For them, the question is how to best bring that expertise into the DPA process.
Title VII authorizes the creation of a National Defense Executive Reserve (NDER), which the DPA established in 1950 as an expert civilian reserve corps. The NDER, however, has been dormant for decades. This may be due to an interpretation of the DPA that says this reserve of experts should only be used for “a catastrophic incident of sufficient magnitude to warrant its use.”113 But this view seems at odds with others who say that this expertise should be provided for specific defense sectors. Current efforts to revive the NDER should begin with a look at why Washington has not used it over the years.
Some argue that DoD may not need a reserve at all, since mechanisms like special government employee (SGE) appointments or the Intergovernmental Personnel Act (IPA) provide access to outside expertise.114
Others point out that one pool of knowledge exists at the Air Force Research Laboratory’s contracting office, which manages DPA Title III projects. With more than 60 full and part-time staff covering fields from critical chemicals to hypersonics and microelectronics, it represents a potential resource.115 Yet how or when the DoD integrates this expertise into decision-making remains unclear.
Going forward, policymakers need to decide how to apply specialized expertise and use it to develop cohesive sectoral plans that are both technically sound and integrated across the defense industrial base.
Implementation: Contracting
The processes for contracting under the DPA are opaque and complex, further slowing DPA implementation. Reform efforts have not been successful. As one Hill staffer said, “We tried but failed to fix DPA contracting for four years.”cx116i
Until recently, only one office—the aforementioned Air Force Research Laboratory in Dayton, Ohio, which is the DoD executive agent for the DPA—was authorized to execute DPA contracts. In the past two years, a few additional contracting offices have been designated, but progress remains sluggish.117 With Dayton still in the lead, one expert argued that it is “time to close the distance between decision-makers and information.”118Another noted that it made “no sense” for DPA shipbuilding programs should go through the Air Force Research Laboratory.119
Slow execution of DPA funds impacts outcomes.120 In one snapshot of DPA funding for FY 2025, only about 18 percent of funds had been obligated, out of a total of $2 billion.121 Time matters. It is directly relevant to the “valley of death” for many companies. One expert recommended that DoD adopt three months as the standard deadline for most award decisions and that notices of award declines should be comprehensible and informative.122
Some point out that it is possible to move more quickly if other contracting methods are used. For example, OTAs can be used. But like so much else in acquisition reform, much comes down to leadership.
DPA contracting faces several other problems besides its slowness. For example, many contracting cells are not comfortable using DPA funds because they do not expire in traditional ways.123
Apart from the DoD, when other agencies such as DHS, HHS, and FEMA invoke their DPA authorities, they often lack the expertise to use them effectively. For example, in the past agencies struggled with Title I priority-rated contracts, frequently failing to understand “how to pass ratings through the supply chain.”124 This shortage of knowledgeable personnel has been a problem for at least 15 years.100 In addition, companies themselves struggle with how to prioritize one product over another when directed to do so.
Jurisdiction
Tensions around jurisdiction over the act create further challenges. As one former congressman said, “There is no fight on the Hill as vicious as a jurisdictional fight. And even if you don’t exercise [jurisdiction], you don’t want to be known as the chairman who loses it.”126
While the Senate Banking Committee has long had this legal jurisdiction, many argue that since DoD uses its DPA authorities most frequently, the Armed Services Committee should play a larger role.
Unsurprisingly, there is ongoing jurisdictional tension over which committee “owns” the DPA. The divide is between the Senate Banking, Housing, and Urban Affairs Committee and the Senate Armed Services Committee. The Banking Committee has formal jurisdiction since the DPA was originally enacted in 1950 as an economic mobilization law during the Korean War, with a focus on credit, loans, and finance.
In practice, however, the Armed Services Committee wields significant influence because the DoD is the largest user of DPA authorities.127 Some defense Hill staffers believe that the Banking Committee is “not really interested in Title III–related matters” since most funding for DPA Title III programs flows through the NDAA.128
The result is a persistent tug-of-war between statutory jurisdiction and practical control. The Banking Committee has tended to applaud the DPA’s broad government-wide scope,129 while the Armed Services Committee views it more as a tool for sustaining the defense industrial base. Over the years, Armed Services leaders have inserted language directing DPA funds to expand specific sectors, including rare earth elements and critical minerals, shipbuilding suppliers, and microelectronics.
Beyond committee jurisdictional disputes, Congress and the executive branch have sparred over the proper balance of power over the DPA. Some lawmakers argue that the act grants the executive branch excessive authority. Such clashes often reflect policy differences and concerns about executive overreach. For example, after the Biden administration used the DPA to provide grants for solar equipment and other green energy components, some lawmakers pushed back. One congressman insisted that “the DPA is intended for urgent national defense needs, not environmental fantasies.”130 Another senator cautioned that if the administration “keeps misusing the DPA for non-defense purposes, Congress must curtail it.”131
A third jurisdictional issue arises from the fact that, at the president’s direction, seven departments and two agencies may exercise DPA authorities. This has fueled policy disputes over the use of the act: for example, to procure baby food or solar panels—rather than for purposes more directly tied to national defense.132
In addition, questions persist about FEMA’s role as the lead executive branch agency for coordinating and advising the president on DPA matters.133 Given that the DoD is the primary user of the DPA with the most experience, and that FEMA lacks the necessary expertise and resources, FEMA’s lead role appears to be a bureaucratic relic rather than a sensible choice.
In emergencies that involve specific sectors, an advisory or decision board can be stood up as needed to overcome jurisdictional fights. During Operation Warp Speed, for instance, decisions were taken by such a board with specific expertise. It was chaired by the secretary of HHS and the secretary of defense with the White House and other relevant agencies participating.134
5. CONCLUSION
Reauthorizing the Defense Production Act should not be an exercise in muscle memory. It is a chance to turn an emergency tool that too often patches holes into a disciplined instrument that expands capacity, reduces fragility, and measurably strengthens the US defense industrial base. The DPA’s record is mixed: it has helped in crises—from MRAP steel to COVID vaccines—but outside a few successes, it has rarely delivered durable, sector-level gains. Repeating that outcome is not inevitable. With clear scope, the right financial instruments, and competent governance, the DPA can move from filling gaps to sustaining industrial mobilization.
First, Congress should center the statute on core national defense outcomes while preserving narrow, clearly defined emergency flexibility. The guiding test for any project should be simple: Does it expand domestic capacity that the joint force actually needs, or harden a critical node whose loss would impair warfighting or deterrence? If the answer is no, the DPA is the wrong vehicle. Legislation should tighten statutory language around the definition of national defense, and require determinations to map to a published sector plan or validated requirement.
Second, the executive branch should use the tools Congress has already written into law. The default to using grants reflects administrative convenience, not strategic logic. Title III’s comparative advantage is leverage: loan guarantees that pull private capital into capital-intensive manufacturing, as well as purchases and purchase commitments that close demand risk and propel firms from prototype to production. Today, given the new authorities of the Office of Strategic Capital, the reality is that the DPA will use loans less, since OSC is specifically designed for this type of credit program. But these two organizations need to align. The DoD should use purchase commitments and the DPA’s (relative) multiyear spending authorities to make a difference.
Third, related to the issue of alignment, the DPA should make strategic sense. Today’s alphabet soup—DPA Title III, IBAS, OSC, and service-level initiatives—confuses industry (as well as many in government) and dilutes the act’s impact. DoD should lead an effort to create integrated sector playbooks (e.g., on energetics, castings/forgings, naval shipbuilding suppliers, microelectronics, critical minerals) that explain the demand signal, the bottlenecks, the regulatory path, and the combined use of Title I, III, and VII authorities plus non-DPA tools. Where permitting is a constraint, dollars should be paired with permitting timelines and agency accountability.
Fourth, improve transparency and accountability into DPA funding decisions. The Trump team at DoD can start by commissioning an assessment of the past decade of DPA funding. Instead of asking agencies to conduct yet another sectoral assessment, resources should be used to assess the impact of at least one sector where DPA grants funded programs to understand outcomes. And going forward, DoD should create a template for future assessments, starting with an easy-to-understand public DPA Dashboard that tracks milestones and outputs. Money out the door is not a metric: wafers, motors, hulls, skilled workers, and cycle-time reductions are.
Fifth, speed up DPA processes since time is a capability. Slow contracting and processes strand promising suppliers in the “valley of death.” Reauthorization should put speed on the clock. Agencies using DPA authorities need to publicize commercial-friendly deadlines and decision targets. DoD and other agencies using DPA authorities need to use transparent declination letters so that firms can course-correct, and create a small cadre of roving “tiger team” contracting officers who can surge when needed.
Sixth, Congress and the executive branch need to fix the DPA’s governance. FEMA’s legacy coordination role does not make sense. Policymakers should consider how to reinvigorate a board—perhaps co-chaired by DoD and OMB, and that includes Commerce/BIS, DOE, DHS, and Treasury—to set priorities, adjudicate conflicts, and publish quarterly scorecards. During World War II, this Defense Industrial Mobilization Board existed. Today the DPA authorized a Defense Production Act Committee—but this DHS-chaired interagency body is essentially moribund and does not provide the necessary strategic focus. We can do better.
The United States has had the benefits of a focused DPA before. Reauthorization can restore that discipline. If Congress and the executive branch focus the mission, use the right tools, move faster, demand transparency, align programs, inject expertise, and rationalize governance, the DPA will once again be worthy of its name—a durable engine of American strategic depth.