On April 29, 2020, the US Department of Defense (DoD) announced that it had exercised its authority under Title III of the Defense Production Act (“DPA”), 50 U.S.C. § 4501 et seq., to fund increased production capacity for swabs in light of the COVID-19 pandemic.
Section 303 of the DPA provides authority to ensure the timely availability of essential domestic industrial resources to support national defense and homeland security requirements through the use of tailored economic incentives. Authorized incentives include direct purchases and purchase commitments, development of emerging technologies, and the authority to procure and install equipment in private industrial facilities. 50 U.S.C. § 4533.
Previously in April, DoD provided $133 million in Title III contracts to bolster production of N95 respirators.
In its April 29 announcement, DoD stated that it will “invest $75.5 million” in Title III funding “to increase swab production by 20 million per month” starting in May 2020. The contract was awarded to Puritan Medical Products, which will quickly establish a new manufacturing facility capable of doubling its current monthly output of 20 million to 40 million swabs.
According to the DoD announcement, Puritan will secure a manufacturing facility in Pittsfield, Maine. Puritan will add 150 employees to staff the new factory, which is scheduled to start production in May 2020.
DoD has standing authority to use Title III and has established a program under the auspices of the Office of Industrial Policy staffed with experts to identify and support projects. Before Section 303 authorities may be used by other agencies, the President must make a (non-delegable) finding that there is a “shortfall” in the domestic industrial base for a particular type of technology or industrial capability that poses a threat to national defense. Such a shortfall determination reflects that current US industry does not have the capability to produce the needed product(s) and that the purchases, or other actions are the most effective means of meeting the need. To date, no such determination has been made for agencies outside DoD. Further use of DoD to facilitate such actions should be expected.
***
If you wish to receive periodic updates on this or other topics related to the pandemic, you can be added to our COVID-19 “Special Interest” mailing list by subscribing here. For any other legal questions related to this pandemic, please contact the Firm’s COVID-19 Core Response Team at FW-SIG-COVID-19-Core-Response-Team@mayerbrown.com.