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Bill Greenwalt, Visiting Fellow at the American Enterprise Institute, explains why the government could face problems working to procure items through the DPA as quickly as it is

President Donald Trump has used the Defense Production Act (DPA) to procure roughly $3.2 billion worth of supplies since the start of the coronavirus.  The speed of these acquisitions could spell problems later if the systems in place are not prepared to handle the increased spending.

Defense Production Act spending typically only adds up to about $40 million to $50 million in a given year, Greenwalt said. The FY 2020 budget initially appropriated $64.4 million for DPA spending. In previous years, the Defense Production Act was used largely for hurricane and disaster relief. Now it is invoked for everything from masks to ventilators to vaccine ingredients.

The most recent use of the act was for a $765 million loan to Kodak for drug ingredients, which has since been put on hold. “The issue is, should you move this quickly on something like [the Kodak loan], and without having kind of a complete competition or vetting of this?” Greenwalt asked. He says DPA loans haven’t been done recently.

The Defense Production Act was created in 1950 to secure materials and rations for the Korean War. Similar authorities were granted earlier in World War II for the emergency production of supplies.

“The issue is, do we always need to react so fast?” Greenwalt said. “We should have been prepared and started thinking about this years ago.”

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January 2021
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