Policy Backgrounders

Reauthorization of the Defense Production Act

May 02, 2025

Congress is preparing to consider reauthorization of the Defense Production Act (DPA), which expires on September 30. The DPA provides the President with broad authority to direct certain private sector activities to respond to national security needs. However, use of the DPA has shifted over time, raising policy considerations for Congress regarding its scope, oversight, and impact on the private sector.

• Though originally enacted to respond to national defense needs during the Korean War, Congress has broadened the DPA over time to support not only military operations, but also energy production, emergency preparedness, and other needs.
• In recent years, the DPA has been invoked to respond to a broad set of issues, including COVID-19, an infant formula shortage, and climate change, leading some policymakers to consider limiting its scope.
• However, the DPA’s flexibility also empowers the President to respond to a wide range of emergencies, including those that are difficult to foresee.
• President Trump has recently invoked the DPA to support domestic production of critical minerals, including coal, and boost US maritime capacity, including shipbuilding, port infrastructure, and related supply chains. 

Background

Enacted in 1950, the Defense Production Act (DPA) is a Korean War-era law giving the President broad authority to direct private sector companies to “promote the national defense by meeting . . . the requirements of our national security and foreign policy objectives.” Several of the Act’s original sections were quickly allowed to expire, but the following remain active:

• Title I: Priorities and Allocations allows the President to require that individuals or corporations prioritize and accept certain government contracts or orders,
• Title III: Expansion of Productive Capacity and Supply allows the President to use loans, loan guarantees, direct purchases, and purchase commitments to expand the production and supply of critical materials and goods,
• Title VII: General Provisions, which allows the President to enter into voluntary agreements with industry and grants participating companies legal protections from antitrust and contract law violations for actions taken under those agreements. It also allows the President to block foreign deals that threaten national security and establish a voluntary pool of industry executives who could be brought into government service if needed for national defense.

Over time, Congress has made many amendments to the DPA, notably expanding the Act’s original conception of the “national defense” to include not only military operations, but also “energy production . . . homeland security, stockpiling, space . . . [and] emergency preparedness.” Congress has also dramatically increased appropriations for the DPA Fund, which supports its Title III functions, in recent years. From 2014 to 2020, appropriations typically ranged between $50 and $70 million. However, Congress provided $1 billion in the CARES Act (2020) and $10 billion in the American Rescue Plan (2021). The Inflation Reduction Act (2022) provided an additional $250 million for heat pump manufacturing. DPA Fund appropriations are not limited to any particular fiscal year.

Key Authorities & Traditional Applications

The Department of Defense (DOD) routinely uses DPA’s Title I authorities for prioritizing government contracts, with a DPA clause a standard feature of nearly all eligible DOD contracts. This authority has been invoked to support the production of a variety of defense priorities, including the B-2 Bomber, Air Force One, and Mine Resistant Ambush Protected (MRAP) vehicles. Title I also includes authorities allowing the President to “allocate materials, services, and facilities . . . to promote national defense,” though this authority has not been invoked since the Cold War.

The DPA’s Title III authorities are divided into three sections. Sections 301 and 302 deal with issuing loans and loan guarantees to private businesses to avoid shortfalls in critical materials, products, or services needed for national defense. Section 303 supports similar objectives with a different mechanism, instead authorizing the use of purchases or purchase commitments, subsidies, and other options to support “domestic industrial base capabilities.” However, the DPA imposes certain limitations on these authorities, such as requiring that budget authority be explicitly provided in an appropriations bill and that any loan or loan guarantee represents the most effective means of achieving the intended objective. The DPA also establishes additional requirements for projects involving addressing shortfalls in the domestic industrial base, including requiring that projects exceeding $50 million must be authorized by Congress. Title III authorities are frequently invoked, recently supporting a variety of projects aimed at increasing the domestic production of critical minerals and certain metals. Title III is supported by the DPA Fund, a special Treasury account funded by Congressional appropriations for the purpose of carrying out Title III provisions.

Finally, Title VII includes a variety of additional Presidential authorities, notably the power to direct industrial base assessments to raise awareness of potential declines in domestic manufacturing capabilities and to enter into voluntary agreements that coordinate actions across private companies which might otherwise violate antitrust and contract law. A 2009 reauthorization of the DPA also established the Defense Production Act Committee, an intergovernmental body (including the White House Council of Economic Advisors) to foster coordination of government efforts under the DPA and responsible for producing a report to Congress on Title I DPA activities, with recommendations for better use of DPA authorities.

Expanding Applications

Despite its wartime origins, application of the DPA began to expand in the 1970s as the US responded to energy shocks stemming from conflicts in the Middle East. Its application expanded further in the 1980s to fund research into new technologies (e.g., composite materials and fiber optics), though the focus remained on supporting military needs. More recently, however, use of the DPA to respond to domestic events has increased. For example, the Federal Emergency Management Agency (FEMA) has invoked the DPA in responding to natural disasters, including to prioritize contracts for rebuilding flood control systems in New Orleans after Hurricane Katrina in 2005, hire translators during Super Storm Sandy in 2012, and support the construction of manufactured homes and restore electrical systems during hurricanes in 2017.

Application of the DPA broadened substantially during and after the COVID-19 pandemic, with increased frequency and a wider range of use cases. President Trump invoked the DPA to boost supplies of face masks, testing supplies, and respirators and to accelerate vaccine development. President Biden also invoked the DPA to boost domestic production of critical minerals, semiconductors, and clean energy technologies (e.g., solar panels, heat pumps, and fuel cells). A notable example of the DPA’s impact beyond traditional defense contexts was its use during the 2022 infant formula shortage, which was triggered by the temporary closure of a major Abbott Nutrition facility and compounded by supply chain fragility in a highly concentrated industry. In response, the Biden administration invoked the DPA to prioritize the production and delivery of critical ingredients and materials needed for formula manufacturing – such as oils, proteins, and packaging components – helping to accelerate the restoration of supply. This targeted use of the DPA was paired with Operation Fly Formula, which facilitated emergency imports of formula from overseas. 

President Trump has cited the DPA in a series of recent executive orders related to the production of critical minerals and the domestic maritime sector. Specifically, a March 20 Order delegates DPA Section 303 authorities to the Secretary of Defense, authorizing him to invoke its authorities to boost domestic critical minerals production. It also delegates to the CEO of the US International Development Finance Corporation the authority to use loans and loan guarantees authorized under the DPA to advance mineral production. A separate Order directs the Secretary of the Interior to consider whether coal should be designated as a critical mineral. In addition, an Order issued on April 9 directed agencies to examine the use of DPA Title III authorities to boost investment in US shipbuilding capabilities, port infrastructure, and related supply chains. Finally, an Order issued April 24 directed the Secretaries of Defense and Energy, in consultation with the Secretary of Commerce, to explore options for using the DPA to support domestic processing capabilities for seabed mineral resources.

Considerations for DPA Reauthorization

With some exceptions, the DPA includes sunset provisions, requiring that Congress periodically reauthorize its authorities. The most recent reauthorization in 2018 expires on September 30, 2025, and Congress has begun debating key policy issues. The House Committee on Financial Services and Senate Committee on Banking, Housing, and Urban Affairs retain sole jurisdiction over the DPA.

Scope

As the President has increasingly invoked DPA to address long-term concerns – such as clean energy development and supply chain resilience – some members of Congress have objected to what they see as inappropriate use of the DPA beyond its intended application to national security concerns. However, there has also been bipartisan support for using the DPA to support domestic production of critical minerals. While some policymakers have questioned whether the DPA should be amended to more clearly define its scope and intended uses, others have highlighted that its flexibility to respond to a variety of emergencies is a strength as national security extends beyond conventional military concerns.

Oversight

As the amount of funding and the variety of projects supported under the DPA have grown substantially in recent years, policymakers may also consider reexamining whether current oversight mechanisms are sufficient to ensure transparency, accountability, and strategic alignment. While jurisdiction over the DPA formally resides with the Senate Banking Committee and the House Financial Services Committee, the law’s authorities are now exercised by at least a dozen federal agencies – including the Departments of Defense, Energy, Health and Human Services, and Homeland Security – as well as by interagency task forces and executive offices. This diffuse implementation structure raises important questions about whether 

Congress is adequately positioned to monitor how DPA funds are prioritized, how performance is evaluated, and whether the projects truly serve national security interests. As the DPA increasingly supports initiatives beyond traditional defense – such as semiconductor manufacturing, medical supply chains, and clean energy infrastructure – Congress may consider reforms that broaden committee jurisdiction, strengthen interagency reporting requirements, and enhance independent review of DPA-funded programs.

Public-Private Engagement

Invocation of the DPA has important impacts on private businesses. While DPA funding can help businesses plan and invest in innovative or high-risk areas – such as advanced manufacturing or critical materials – it can also create legal and reputational risks. Companies may face difficult choices when DPA orders conflict with existing commercial contracts, potentially exposing them to liability or straining relationships with long-standing clients. Additionally, the fear of public backlash or reputational harm if they are unable or unwilling to fulfill government directives can extend well beyond the immediate crisis. These risks may be mitigated by more frequent and proactive engagement with private businesses – not just during emergencies – to clarify how the DPA might be used and how roles and expectations would be managed in future crises.

Conclusion

Hearings for DPA reauthorization have not yet been scheduled. However, concerns among some policymakers about uses of the DPA by recent administrations may spark debate on the law’s appropriate scope and have impacts for businesses frequently engaged with DPA-related contracts.