Tuesday, February 28, 2023
President Joe Biden signed a presidential waiver of some statutory requirements (Waiver) authorizing the use of the Defense Production Act (DPA) to allow the Department of Defense (DoD) to more aggressively build the resiliency of America’s defense industrial base and secure its supply chains. Specifically included in the Waiver are defense organic industrial base supply chains critical to the DoD as well as critical supply chains for electronics, kinetic capabilities, castings and forgings, minerals and materials, and power and energy storage. This authority also affords the ability to invest in strategic areas that enable the industrial base such as workforce development.
Since many of the investments needed in areas like mining and processing of critical minerals can be very costly and take several years, the Waiver permits the DoD to leverage DPA Title III incentives against critical vulnerabilities, and removes the statutory spending limitation for aggregate action against a single shortfall exceeding $50 million. This in turn allows the Department to make more substantial, longer-term investments.
The supply chains covered by the Waiver are directly tied to President Biden’s Executive Order 14017, “America’s Supply Chains.” (E.O. 14017) which highlights vulnerabilities in multiple defense-critical supply chains and provides recommendations on how to increase their future resilience.
“This authorization allows the Department of Defense to act with urgency and efficiency in shoring up America’s supply chains and strengthening our national security,” said Anthony Di Stasio, Director of the Manufacturing Capability Expansion and Investment Prioritization (MCEIP) office. “This flexibility will allow the Department to act strategically to protect the United States’ military and commercial interests, while maintaining our superiority over competitor nations.”
The organic industrial base is a network of government-owned industrial facilities that produce, store, and dispose of many of the conventional munitions used by the DOD and military services. With multiple industry partners, these facilities maintain, overhaul, and repair weapon systems and defense equipment. The capabilities produced by the organic industrial base are essential to numerous critical supply chains and require modernization and improvements to increase capacity in the same manner industry-owned capabilities require.
Issues that contribute to supply chain vulnerabilities include insufficient U.S. manufacturing capacity, misaligned incentives, and a focus on short-term returns in private markets, industrial policies of other nations, geographic concentration in global sourcing, and limited international coordination
The DOD’s Defense Production Act Investment (DPAI) Office will administer the efforts exercised under the Waiver. Section 303 of the DPA (codified at 50 U.S.C. § 4533) allows the President to waive certain statutory requirements when “action is necessary to avert an industrial resource or critical technology item shortfall that would severely impair national defense capability.”
About the Department of Defense’s Defense Manufacturing Capability Expansion and Investment Prioritization Office:
The mission of the MCEIP office is to prioritize and address supply chain and industrial challenges identified by the DoD and other stakeholders. The office determines appropriate authorities to address critical shortfalls, and through prioritization, incentivization, and resource allocation, MCEIP supports domestic industry with direct engagements and investments.