Defense Production Act Must Remain Committed To National Security

By Emma Watkins

Photo: Defense Dept.

The Defense Production Act lies at a unique nexus between private industry and federal investment for the purposes of national security. In many respects, the act is well suited to address key vulnerabilities in the industrial base. However, it currently wades into waters beyond the scope of national security. The act must maintain a narrow focus on national defense and avoid intervention in areas that do not fall within a strict concept of national security.

Glaring weaknesses in the current defense industrial base are highlighted in the Trump administration’s recent report, “Assessing and Strengthening the Manufacturing and Defense Industrial Base and Supply Chain Resiliency of the United States.” This report points to the severity of the issues and demonstrates the weakening of the U.S. strategic advantage when it comes to the industrial base. Commissioned by Executive Order 13806, the report lays out five macro forces currently undermining the strength of the industrial base, to include the “decline of U.S. manufacturing base capabilities and capacity” and “industrial policies of competitor nations.” Each of these macro-level forces are driving risk in the domestic industrial base, and therefore to national security, and can be at least partially addressed by ensuring that the Defense Production Act upholds a strict understanding of national defense.

In its current form, the act can be used for a number of things not pertinent to national defense. These non-defense related efforts detract from the value of the authority and potentially misdirect defense funding.

The definition of national defense, according to the act, permits the use of its authorities to be used to support domestic preparedness for emergencies and recovery from natural disasters. Conflating humanitarian disasters with national security issues and implying that they merit similar government responses hinders the free market’s ability to act where it can be of best use. Moreover, use of the act’s funding for these kind of emergencies hinders the military rebuilding that is necessary for the U.S. to remain strong on the world stage by detouring resources away from its intended target.

Following the destructive 2017 natural disaster season, the Federal Emergency Management Agency invoked Title I of the DPA — which authorizes the prioritization of defense programs, contracts and orders and the allocation of resources accordingly — to provide food and water assistance and restore power grids. This action was rooted in the notion that the act could be used as an all-purpose tool in times of crisis, when in reality, the word “crisis” appears nowhere in the act’s language. The Defense Production Act was not structured to be a rescue tool in times of humanitarian need. Rather, it is best employed to support the industrial base to support national defense.

Additionally, the Defense Production Act can and has been used to stimulate domestic energy production for commercial uses, an overstep currently allowed by the law.

According to the 2013 Annual Industrial Capabilities report to Congress, in fiscal year 2013, the U.S. government contributed $3.61 million of the act’s funding to a project that aimed to “establish a domestic, large-scale, commercial, feedstock flexible, manufacturing capacity” of bio-synthetic paraffinic kerosene. The report described the reasoning behind this program, which stressed the importance of energy diversification for the purposes of “energy security and environmental stewardship.” While this may be a worthwhile goal, this investment was not relevant to national security to the degree that it justified government investment with dollars appropriated for national defense.

Another example of an inappropriate use of Title III funding was the Obama administration’s 2012 initiative to advance the production of biofuel. Similar to the aforementioned project, the administration touted the need for energy security and environmental consciousness in its announcement of the initiative. In total, the Advanced Drop-In Biofuel Production Project — as it was titled in the 2014 Annual Industrial Capabilities report — was allotted a whopping $230.5 million of Title III funding. This project was marketed to support naval operations by providing a diverse production of domestic energy. However, President Barack Obama’s use of the Defense Production Act to further this non-defense project diverted defense funding away from the defense industrial base. The overly broad definition of national defense allowed Obama to advance an environmental agenda by packaging it as a national security issue.

The issue of exploiting the Defense Production Act for non-defense reasons transcends administrations as reports surfaced in mid-2018 that the Trump administration was considering invoking the act to keep domestic coal mines online. A White House memo claimed that “federal action is necessary to stop the further premature retirements of fuel-secure generation capacity.” While President Donald Trump ultimately did not follow through with his proposal, this move represents how easy it is to misuse the powers of the act in order to promote a non-defense related agenda. The Defense Production Act should not be used to further any form of a “Buy American” agenda; that is not the goal of the act. Rather, its authorities are there to step in where there is a domestic capacity shortfall for a national security requirement.

These inappropriate uses of the Defense Production Act do not mitigate its utility, but rather should be curbed in order to protect its utilization for defense-related programs. In fact, the act has indeed seen success over the years. Recent investments enhancing the strength and resiliency of essential sectors such as microelectronics and the space industrial base highlight its productiveness.

Title I has been successfully employed to prioritize contracts for “ballistic material used in body armor both [for] the Army and Marine Corps” to ensure a timely delivery, as mentioned in a 2008 report by the U.S. Government Accountability Office. During an increase in production of mine-resistant ambush protected vehicles, the Defense Department used Title I authorities to help prevent a shortage of armor plates. The act’s priorities and allocations authorities can be of particular use during production surges and when additional capabilities are necessary for deterrence.

An example of how Title III can properly support the defense industrial base is the Steel Plate Production Project. Beginning in fiscal year 2014, $17.6 million of Title III funding was given to this project, discussed in the 2014 Annual Industrial Capabilities report, in order to compensate for the lack of “widespread commercial application” for Navy-grade steel plates. The project summary notes the lack of return on investment for the domestic industry to establish the capacity to produce these steel plates. The Defense Production Act was able to step in to support this industry, thereby reducing the threat of delays in its production line. Because weapons systems feature such intricate supply chains, it is critical that they are protected against sudden breakages and able to continue their course.

The Executive Order 13806 report provides target areas for potential Defense Production Act attention based on research-based analysis of the industrial base. The report identifies industries currently plagued by single sources, fragile suppliers, foreign dependency and other such risks. To date, 14 presidential determinations have been issued that focus on addressing strategic industrial base risks identified in the report. These determinations have indicated that materials such as sonobuoys, lithium seawater batteries, and critical chemicals for missiles and munitions are in need of Title III project funding to help mitigate the risks in those industries.

Title III projects should have clear ties to identified shortfalls of domestic capacity, such as those identified in the Executive Order 13806 report. Infusion of federal investment into the private sector on behalf of the Defense Production Act must be accompanied by a narrow focus and a fact-based analysis of how it will contribute to national defense.

The Defense Production Act has proven to be a successful tool to support national security by eliminating vulnerabilities in the defense industrial base. These vulnerabilities — whether they be single sources, fragile suppliers, material shortages or foreign dependency — have the potential to be detrimental to military operations and objectives. It is important that we recognize both the strengths and the weaknesses of the DPA in order to improve its effectiveness. This act was never intended to influence areas of the private sector with a purely commercial base. Rather, it was intended to support national defense industry partners.

The time to pay attention to the gaps in the domestic industrial base is not after the need becomes acute enough that proper weapons systems are not being delivered to the warfighter. There is no better time than the present to take proactive steps to enhance the effectiveness of the Defense Production Act and ensure its goals are being met. The industrial base is fundamental to U.S. military strength. The nation cannot afford to let it erode. 

Emma Watkins is a research assistant at the Heritage Foundation.

Topics: Defense Department

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