Baby formula: What is the Defense Production Act and how will it help the shortage?

The Biden administration invoked the Defense Production Act to pump up production of baby formula, the White House announced Wednesday.

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Under the act that was created during the Korean War, President Joe Biden is requiring companies that supply elements of baby formula to prioritize resources to U.S. formula manufacturers.

In addition to invoking the Defense Production Act (DPA), a new program called Operation Fly Formula will direct the Department of Defense to use contracts with commercial air-cargo lines to pick up formula from other countries. The formula must meet U.S. health and safety standards. The White House didn’t specify which countries would be involved in the program.

What is the Defense Production Act and why did Biden invoke it? Here is what we know now.

What is the DPA?

The Defense Production Act was enacted in 1950 and was at first aimed to build up arms supplies following North Korea’s invasion of South Korea.

The act is “the primary source of presidential authorities to expedite and expand the supply of resources from the U.S. industrial base to support military, energy, space, and homeland security programs,” according to the Federal Emergency Management Agency.

The move gives the president the authority to increase the production of baby formula and the elements used to make baby formula.

It allows Biden “to incentivize a company who already makes supplies make more of them.

In general, the act:

  • Authorizes the president to require businesses to sign contracts or fulfill orders deemed necessary for national defense.
  • Authorizes the president to establish mechanisms (such as regulations, orders or agencies) to allocate materials, services and facilities to promote national defense.
  • Authorizes the president to control the civilian economy so that scarce and/or critical materials necessary to the national defense effort are available for defense needs.

What is covered by the act?

According to “Inside Government Contracts” from Covington’s Government Contracts Practice Group, the DPA allows the president these specific powers:

  • The president can assign a priority rating to government contracts, which would require them to be prioritized over any competing business contract.
  • The president may control materials, services and facilities in any manner necessary.
  • The president may create, maintain, protect, expand or restore domestic industrial base capabilities.
  • The president may issue loan guarantees and direct loans to reduce current or projected shortfalls of industrial resources, critical technology items or essential materials needed for national defense purposes.
  • The Defense Production Act Fund is used to carry out the above activities and is capped at $750 million a year. The money for direct loans and guarantees must be included in an appropriations act passed by Congress.

· The authority conferred by the DPA is time-limited, meaning that after a certain period of time, the president’s authority to conduct such acts ends.

When can it be used?

The DPA may be invoked under these circumstances:

  • Efforts to fight terrorism within the United States;
  • Emergency preparedness activities conducted pursuant to title VI of the Stafford Act;
  • Protection and restoration of critical infrastructure; and
  • Continuity of government.

The president’s DPA authorities may be delegated to the heads of various federal departments and agencies under Executive Order (E.O.) 13603.