The Defense Production Act (“DPA” or “Act”) provides the President of the United States with the authority to direct civilian businesses to facilitate the acquisition of “materials, components and equipment” during a period of national emergency for the purpose of meeting orders necessary for the national defense.
On March 18th, the President announced that he was invoking the Act “just in case we need it.” Approximately one week later, after a failed attempt to persuade General Motors to retool one of its factories to begin producing ventilators, the President announced that he would use the DPA to compel General Motors to do just that.
Use of the DPA as a blunt instrument with which to pummel General Motors into submission is a contorted application of the Act and does little to address the mission critical need for effective and efficient distribution in resolving this grave national emergency.
The Act provides, among other things, that the powers of the DPA may be used by the President to control the general distribution of any material if the President finds: (1) such material is “a scarce and critical material essential to the national defense;” and, (2) the requirements for such material “cannot otherwise be met without creating significant dislocation of the normal distribution of such material in the civilian market…”.
The shortage of equipment during the COVID-19 crisis combined with the free-for-all competition which exists among the several states in their attempts to secure adequate inventories of medical equipment and supplies, and the auctioning of those products on the part of some sources of supply serve to satisfy the conditions for presidential authority under the Act.
The logistics of getting product where it is needed could be greatly enhanced without the individual states’ independently struggling to bolster their inventories of such product. It is becoming increasingly clear that without federal intervention to control the acquisition and distribution of essential equipment, this pandemic will claim many more lives than need be. One of the tragic ironies predicted is that there will be cities in the country where patients will die from the lack of ventilators, and there will be other cities where ventilators will be sitting on shelves awaiting use. The inadequate supply and distribution of personal protective equipment for the medical community and other front-liners will compound the tragedy.
The task of distribution is to facilitate getting the right product to the right customer in the most effective and efficient manner. In order to deliver on this task, the distributor must identify the sources of product necessary for the consumer base, secure relationships with those sources, analyze consumer need by geography, and attend to the logistics of getting the right product to the right customer in a timely and efficient manner.
The chaos the nation is presently witnessing is result of the absence of a single controlling entity performing in such a role. No “air traffic control,” if you will. The federal government is the only entity which can practically serve in such a role. The Act vests in the President the ability to secure exclusive relationships with critical sources of supply. And our military is well experienced and positioned to perform in attending to the logistics necessary to execute.
The President, relying on the Act, should order immediately that all manufacturers of essential equipment now have only one customer: the U.S. government. If the President were to use his powers in such a way the federal government would become the sole purchaser and distributor of essential medical equipment. Such action would bring an end to having the governors of the various states competing with manufacturers and other sources on the basis of price. It would establish a centralized data base of all sources for product in the country. It would vest in the government all relevant information regarding production capacities, lead times, and other logistical matters incident to the effective and efficient production and delivery of this equipment.
Moreover, in the event it becomes the reality, as is expected, that the need for this equipment outpaces the country’s ability to manufacture on a timely basis, by knowing who has been shipped what, while at the same time tracking the infection incident curves around the country, the government will have obtained for itself the ability to retrieve product from cities which have passed the apex of infection and move that product to other communities where the infection curve is building.
Finally, provisions of the Act further extend Presidential power to exert control over services and facilities for the protection of critical infrastructure operations. A commissioning by the federal government of hotel rooms, at previously negotiated government rates, to make available temporary living quarters for medical and other front-line workers concerned about returning to their homes and risking infecting their loved ones, would be a benefit, both to the brave souls on the front lines as well as to the hotel industry.
Unless manufacturers can produce and get to market enough ventilators for the predicted COVID patient population in the country, and protective equipment for all medical personnel, distribution and logistics management will play a critical role in the resolution of this crisis. It is time for the federal government to step into the role of logistics master as our nation struggles to manage this pandemic. The need is now and the DPA is the instrument for the job.