On April 11, 2020, the US Department of Defense (DoD) announced that it had exercised its authority under Title III of the Defense Production Act (“DPA”), 50 U.S.C. § 4501 et seq., by providing funding to bolster production of N95 respirators in light of the COVID-19 pandemic. On April 21, DoD provided additional detail regarding the use of DPA Title III and the contracts awarded.
The DPA confers on the President “an array of authorities to shape national defense preparedness programs and to take steps to maintain and enhance the domestic industrial base.” 50 U.S.C. § 4502(a)(4).
- Title I, Section 101(a) of the DPA authorizes the President to require persons (including businesses and corporations) to (1) prioritize and accept contracts for materials and services deemed necessary or appropriate to promote the national defense and (2) allocate or control the distribution of materials, services, and facilities to the extent necessary to promote the national defense.
- Title III of the DPA provides the federal government the authority to ensure the timely availability of essential domestic industrial resources to support national defense and homeland security requirements through the use of highly tailored economic incentives (e.g., loans, loan guarantees, direct purchases and purchase commitments) and the authority to procure and install equipment in private industrial facilities.
DoD is the only federal agency with a current capability to execute Title III.
In its April 20 announcement, DoD stated that it had used its Title III authority to award a total of $133 million in funding to three entities: 3M ($76 million); O&M Halyard ($29 million); and Honeywell ($27.4 million). This is the first use of the DPA Title III authority as part of the COVID-19 response.
According to DoD, the $133 million investment will increase US domestic N95 mask production by over 39 million units over the next 90 days. DoD explained how each of the contract recipients would increase production capacity, stating:
- 3M will add 78 million units within 6 months, with an additional 13 million units per month by June 2020. 3M will accelerate production by converting a current equipment supplier into an N95 producer as well as expanding material production in two plants in Wisconsin and Nebraska.
- O&M Halyard will add 25 million units within 6 months, with an additional 12.5 million masks every month thereafter. The funding will cover 5 additional N95 machines as well as other enhancements and will enable the company to complete an order for the Department of Health and Human Services (“HHS”) 6 months faster than otherwise would be feasible.
- Honeywell will add 38 million units within 6 months, with an additional 12 million units per month thereafter. The funding will enable Honeywell to reduce production time for its HHS N95 order by 3 months. Through the funding, Honeywell will accelerate production scale-up, including capital equipment, at a plant in Rhode Island and accelerate a second production line in Arizona to “provide additional domestic capacity for long-term needs,” according to DoD.
This action shows the breadth of the authority under the DPA to increase the nation’s capacity to defend itself.
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