President Trump Invokes Defense Production Act – Initiates Executive Order For Health And Medical Resources

Earlier today President Trump announced he was invoking sections of the Defense Product Act to help mitigate COVID-19 (Chinese Coronavirus) in the U.S.  The act empowers the government with greater authority to control specific sectors of the U.S. economy, and specific industries, needed to respond to national emergency needs.

The three main components of the Defense Production Act include:

♦ Companies are required to accept and prioritize contracts from the government and to prioritize “materials, services, and facilities to promote the national defense or to maximize domestic energy supplies.” While this provision has historically been used to ramp up military production, in the midst of the COVID19 pandemic the act will be used for medical supplies.

♦ The second provision in the act provides financial measures, such as loans, loan guarantees, purchases, and purchase commitments, to speed up the production of materials “needed to support national defense and homeland security procurement requirements.”

♦ The act also addresses voluntary agreements – or what the government says is “an association of private interests, approved by the Government to plan and coordinate actions in support of the national defense.” The proviso permits business competitors to work together to plan and coordinate measures to increase the supply of materials as directed by the U.S. government.

Immediately after invoking the act, President Trump signed an executive orderto prioritize Health and Medical resources (masks, respirators, medical equipment).