Rep Cmte Financial Services

Subcommittee Discusses Defense Production Act Reauthorization

Washington, May 8 -

The House Financial Services Committee’s Monetary Policy and Trade Subcommittee heard testimony today on the importance of reauthorizing the Defense Production Act (DPA).

The DPA was enacted at the outset of the Korean War to ensure the nation’s industrial resources would be available to meet the national security needs of the United States. The DPA grants the President the authority to provide prompt and uninterrupted supplies of needed resources to our Armed Forces. It also allows the government to move to the head of a company’s production and delivery schedule and indemnifies the company from breach-of-contract lawsuits that could result. In addition, the DPA supports the manufacturing of items essential to our national defense that otherwise might not be made here in the United States.

Although enacted originally in 1950, the Act is still relevant and necessary for the nation’s defense in the 21st century. In recent years, the Defense Production Act has been used to support our troops in the Gulf War, Bosnia, Iraq and Afghanistan. The same DPA authorities that help protect our troops also help the nation respond and recover when disaster strikes. President George W. Bush, for example, used the DPA after Hurricane Katrina to procure railroad switching and signaling equipment so trains could go back into operation. When the DPA was enacted, it had seven titles, but as the Korean War wound down four of the articles were allowed to expire, leaving three titles that remain effective.

“The three DPA titles that remain active are due to expire in 2014 and this Subcommittee will be considering their reauthorization. Possessing exclusive jurisdiction over this statute in the House of Representatives, the Financial Services Committee can best ensure that these powers are exercised with the least possible distortions on the broader economy. I hope to gain a better understanding from our witnesses’ testimony about how the government is using DPA authorities today and what systems and policies are in place to ensure that they are only exercised for the circumstances under which they are truly warranted,” said Monetary Policy and Trade Subcommittee Chair John Campbell (R-CA).

“In addition, periodic reauthorizations of statutes provide Congress the opportunity to review effectiveness and identify problems. Since the DPA was enacted in 1950, Congress has taken advantage of this opportunity to strip out provisions that were no longer relevant and add additional provisions to mitigate the risk of outsized unintended consequences. I will be looking for our panel of witnesses to provide their expert opinions on what is working and what is not working with regards to the DPA in order to help the Committee identify appropriate solutions that we could implement in this reauthorization,” Campbell added.

Witnesses at today’s hearing testified to the importance of the DPA for our national security, both at home and abroad.

Kevin Wolf, Assistant Secretary of Commerce for Export Administration, said “the DPA provides authority for a variety of programs at the Department of Commerce of substantial importance to our nation’s security. The DPA continues to facilitate the timely delivery of industrial resources to support the Department of Defense, coalition partners, and increasingly, to meet Homeland Security requirements. The DPA also facilitates valuable assessments of the impact of offsets in defense trade and the health of key sectors of the defense industrial base.”

Because the authorities under the DPA help meet our national security needs and respond to disasters, Congress has generally reauthorized it for five years or more at a time. The DPA was last reauthorized in 2009 and it is set to expire at the end of fiscal year 2014.