Evaluating the Defense Production Act

House Subcommittee on National Security, Illicit Finance, and International Financial Institutions

2025-06-12

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Source: Congress.gov

Summary

This hearing focused on evaluating the Defense Production Act (DPA) ahead of its reauthorization, which is scheduled for September 2025 [ 00:13:17 ] . Initially enacted in 1950 to bolster national security during the Korean War, the DPA is now being reviewed to ensure its authorities are effectively reformed and deployed to meet contemporary challenges and vulnerabilities in the U.S. industrial base [ 00:13:29-00:13:47 ] .

Themes

Purpose and Expanding Scope of the DPA

The DPA was created to bolster the resilience of the U.S. industrial base in times of crisis, promoting domestic production for national security needs . Over the years, its definition of "national defense" has expanded to include emergency preparedness, energy production, critical infrastructure protection, and homeland security . This broad interpretation allowed its use during the COVID-19 pandemic for items like ventilators and vaccines, and to accelerate domestic manufacturing of clean energy technologies such as heat pumps and solar panels . While some argue that uses for infant formula or residential heat pumps may constitute misuse, others contend that energy security, including cleaner sources, is a legitimate national defense concern .

Effectiveness, Challenges, and Current Utilization

From fiscal years 2018 to 2024, agencies placed over 2.5 million Title I priority ratings, primarily for military goods, and made 222 Title III investments totaling $3.2 billion to strengthen the domestic industrial base . However, the DPA has faced challenges, including the underutilization of loan authorities due to cumbersome processes and a lack of expertise within agencies like the Department of Defense . There are also issues with industry understanding of priority ratings and the DPA-wide coordinator, FEMA, failing to effectively share lessons learned across agencies . The Defense Production Act Committee (DPAC), intended for cabinet-level coordination, has been largely dormant, leading to calls for reforms to mandate its effectiveness [ 01:00:36-01:00:54 ]

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Reauthorization and Proposed Reforms

With the DPA's impending expiration, there is an urgent need to reauthorize and modernize its provisions to prepare for future crises rather than merely react . Key areas for reform include addressing vulnerabilities in critical supply chains, such as semiconductors, pharmaceuticals, rare earth minerals, and shipbuilding, which are vital for national security . Proposed reforms involve examining and potentially amending the definition of "national defense," strengthening congressional oversight mechanisms like funding caps and approval thresholds for large projects, and considering ways to expedite permitting processes for essential energy infrastructure [ 00:26:08 ]

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[ 00:40:04-00:40:26 ]

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. Members also highlighted the need to better protect and involve small businesses in DPA activities and explore avenues for private capital investment in national security-related industries [ 00:49:47-00:51:02 ]

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Tone of the Meeting

The tone of the meeting was serious and deliberative, with speakers emphasizing the critical importance of the DPA for national security . There was a pervasive sense of concern regarding vulnerable supply chains, over-reliance on foreign manufacturing, and the potential for misuse or underutilization of DPA authorities [ 00:27:54 ]

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. While there was a bipartisan consensus on the DPA's overall importance, disagreements arose concerning its appropriate scope and the extent of presidential discretion, particularly regarding energy projects . Overall, the discussions were forward-looking, heavily focusing on modernizing the DPA to ensure it is proactive and adaptable to 21st-century threats .

Participants

Transcript

W
William O. Russell
The Subcommittee on National Security, Illicit Finance, and International Institutions will come to order.  Without objection, the chairman is authorized to declare a recess of the committee at any time.  This hearing is titled Evaluating the Defense Production Act.  Without objection, all members will have five legislative days within which to submit extraneous materials to the chairman for inclusion in the record.
I now recognize myself for four minutes for an opening statement.   I want to welcome our witnesses to today's national security hearing, which is devoted to evaluating the Defense Production Act ahead of its expiration on September 30th, 2025.  As Congress prepares to reauthorize the Defense Production Act, today's panel of witnesses will provide a fundamental overview of DPA, examining its authorities and uses to increase this committee's understanding for effective updates and improvements.
W
William O. Russell
This panel's testimony will inform our consideration of how Congress can reform and more effectively deploy the Defense Production Act.  The DPA was initially enacted in 1950 in response to the outbreak of the Korean War as President Harry Truman aimed to secure domestic industrial resources to meet the nation's national security needs during that war.   and future national emergencies.
It was created with good intentions to bolster the resilience of the United States industrial base in times of crisis by promoting domestic production rather than a reliance on foreign sources.  Today, this is more critical than ever as the United States has become dependent upon foreign production of critical materials, goods, and services across many sectors.  Moreover, in recent years, the DPA has not been used as effectively as it could, and arguably, it's been misused.   It's time for Congress not just to reauthorize, but to reset and realign DPA's authorities.  For example, the previous administration invoked Defense Production Act to require suppliers to provide key inputs to infant formula manufacturers before other customers.  Is this a proper use of DPA?  A month later, President Biden leaned on DPA to boost the production of residential heat pumps.   While the goal might have been laudable, is this really a correct use of DPA?  Look forward to examining all sorts of things with this review.  Under both Biden and the first Trump administration, many of the DPA's authorities risks irrelevance.  From 2018 to 2024, for example, there was only one direct loan and zero loan guarantees.  Not because there's no need, but because DPA processes are arguably too cumbersome.   If so, they need reform.  Meanwhile, our supply chains remain vulnerable and our defense stockpiles are dangerously depleted and deeply entrenched with bureaucratic processes.  The DPA was most notably used during COVID pandemic, and this is the first reauthorization since then.
W
William O. Russell
This period highlighted deep vulnerabilities.
If we can count on the DPA to be   Reactive, once an emergency arrives, our response may come too late.  Modernizing DPA means discovering what a more proactive posture would look like.  We have the opportunity to prepare rather than just react.  Our adversaries are advancing in critical sectors from semiconductors to tooling, rare earth mineral processing to pharmaceuticals, and we need stronger domestic capabilities that cannot be done currently.   The need for a powerful DPA and robust defense industrial base here in the United States intensifies as threats we face continuously augmented and relationships become strained in various ways.  The DPA is a critical component of the United States National Security Toolkit that warrants reauthorization.  Yet this should come only after a thorough review, reassessment, and taking every opportunity to improve on it.   I urge my colleagues to focus on reauthorizing the DPA with purpose and commitment to national security and a robust, resilient future for our United States.  Anything less could put our nation's future at risk.
W
William O. Russell
With that, I yield the balance of my time.
I now recognize the gentleman from Illinois, Mr. Kasten, for four minutes for an opening statement.
Thank you, Mr. Chairman, for holding this hearing.  Thank you to our witnesses for appearing today.   I am not the ranking member of this committee.  I will make no claims to be able to fill into Ms.  Beatty's shoes.  I will brag only that I have a better hip because she is out getting surgery today to have that hip repaired.  So she'll be back at full strength shortly.  So the DPA gives the President authority to take various actions to ensure that the supply of materials and services are necessary for our national defense.   gives the president the authority to prioritize government contracts, waive international trade agreements, offer incentives within the domestic market to enhance production of critical materials and technologies if deemed necessary for the national defense.   We've seen many benefits in Illinois, recently saw DPA invoke to help resources in shipbuilding, not because Illinois is on a port, but because Illinois has a lot of steel manufacturing that was important to that need, and that's an important issue.  Over the years, Congress has amended the definition of national defense to include emergency preparedness, energy production activities, critical infrastructure protection, restoration, homeland security.   We, of course, saw applications when we were facing novel challenges, national security from the COVID-19 pandemic to the increasingly devastating effects of climate change.

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