Home Economy Wartime Production Law Has Been Used Routinely, but Not With Coronavirus

Wartime Production Law Has Been Used Routinely, but Not With Coronavirus

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WASHINGTON — Chemicals used to construct military missiles. Materials needed to build drones. Body armor for agents patrolling the southwest border. Equipment for natural disaster response.

A Korean War-era law called the Defense Production Act has been invoked hundreds of thousands of times by President Trump and his administration to ensure the procurement of vital equipment, according to reports submitted to Congress and interviews with former government officials.

Yet as governors and members of Congress plead with the president to use the law to force the production of ventilators and other medical equipment to combat the coronavirus pandemic, he has for weeks treated it like a “break the glass” last resort, to be invoked only when all else fails.

“You know, we’re a country not based on nationalizing our business,” Mr. Trump said earlier this month. “Call a person over in Venezuela, ask them how did nationalization of their businesses work out? Not too well.”

The law’s frequent use, especially by the military to give its contract priority ratings to jump ahead of a vendor’s other clients, has prompted those most familiar with it to question why the administration has been so hesitant to tap it for a public health emergency that as of Tuesday has killed more than 3,600 Americans and sickened 181,000.

“What’s more important? Building an aircraft carrier or a frigate using priority ratings or saving a hundred thousand lives using priorities for ventilators?” said Larry Hall, who retired in August as the director of the Defense Production Act program division at the Federal Emergency Management Agency. “If we used the president’s logic, most of our economy is already nationalized. But it isn’t.”

On Friday, the president said he had finally pressed the law into action to force General Motors to step up efforts to manufacture ventilators. Then the federal authorities raided the home of a hoarder in Brooklyn and his warehouse in New Jersey, invoking the Defense Production Act to recoup tens of thousands of surgical masks.

Those actions could presage a wider use of the law now that Peter Navarro, the White House trade adviser, has been appointed the coordinator of Defense Production Act policy. The law gives the government the power to subpoena firms and force companies to fulfill the government’s contractual obligations before those of other clients. Mr. Navarro, who has in the past criticized multinational companies like General Motors and Walmart for cheating workers and sending jobs abroad, appears to relish his new role marshaling American industry.

But critics fear that weeks of dithering have already locked in deadly shortages at American hospitals.

Mr. Trump has “discreetly, just in a discreet way, done something about ventilators. But there’s an overall appeal for him to do much, much more,” Speaker Nancy Pelosi said on Tuesday. “And this is nothing that can be handled piecemeal. It has to be across the board.”

Invoking the Defense Production Act is hardly a rare occurrence. As recently as last summer, the Department of Defense used it to obtain rare earth metals needed to build lasers, jet engines and armored vehicles.

The Defense Department estimates that it has used the law’s powers 300,000 times a year. The Department of Homeland Security — including its subsidiary, FEMA — placed more than 1,000 so-called rated orders in 2018, often for hurricane and other disaster response and recovery efforts, according to a report submitted to Congress in 2019 by a committee of federal agencies formed to plan for the effective use of the law.

The law, which was used frequently by previous administrations as well, does not permit the federal government to assert complete control over a company. The federal government can, however, use it to jump ahead of other clients or issue loans so a company can buy all of the supplies it needs to complete the government’s order by a specific date. A rarely used authority of the law also allows the administration to control the distribution of a company’s products and determine where such materials go.

The Pentagon has long been aggressive in its use of the law, inserting language from the wartime act into contracts to ensure delivery of products by a specific date.

For the coronavirus pandemic, Mr. Trump has elected to rely on the volunteerism of the private sector to obtain additional personal protective equipment, virus test kits and hospital equipment. He and his advisers have argued that using the act has been unnecessary, given the outpouring of support from large and small American companies — from Ford to MyPillow — that are retooling their factories to make masks, ventilators and gloves.

People familiar with the president’s thinking say he has been skeptical of using the law, seeing it as anti-American. But politics may have also influenced Mr. Trump’s decision. The president has repeatedly tried to deflect responsibility for the most significant crisis on American soil in decades. Using the Defense Production Act would make it clear that the government is in charge.

Many corporate executives have also lobbied the Trump administration against using the act, fearing that more government intervention and bureaucracy at a time of intense supply chain disruptions could do more harm than good.

“The Defense Production Act isn’t a magic wand,” said Neil Bradley, the executive vice president and chief policy officer at the U.S. Chamber of Commerce.

“It can’t produce highly specialized manufacturing equipment overnight,” he added. “It can’t convert a refrigerator factory into a ventilator factory.”

The only company the administration has targeted with the law is General Motors. But more actions could come: Mr. Navarro said he anticipated frequently using the law to crack down on hoarding and price gouging, and he added that the government might also use the act to ensure resources are allocated to companies making protective equipment, medicines and other medical supplies.

“We won’t hesitate to use this where we need to,” he said.

So far, the administration has not been so decisive.

Peter T. Gaynor, the FEMA administrator, said on CNN last week that the administration would use the law to procure 60,000 coronavirus test kits, only to back off hours later.

With General Motors, it is unclear what the act accomplished. The company had already announced its intention to collaborate with the medical device firm Ventec Life Systems to produce ventilators.

After the president threatened on Friday to invoke the Defense Production Act against G.M., the automaker announced that the venture would aim to produce up to 10,000 ventilators a month.

“We cannot afford to lose hours in this crisis, much less days, in the production of ventilators,” Mr. Navarro said, adding that G.M. had been working too slowly.

While Mr. Trump has generally refrained from using the law, the recently passed economic stabilization package included $1 billion to take action under the Defense Production Act and ramp up purchases of necessary medical equipment, protective gear and medicines.

Mr. Trump issued an executive order granting his Department of Homeland Security and Health and Human Services Department to use the act to compel companies to produce medical equipment. But the agencies have been ambiguous about their plans.

Lizzie Litzow, a spokeswoman for FEMA, said the agency was “in the process of reviewing” the authorities of the production act.

The law permits federal agencies to skip an often bureaucratic procurement process that can take months and force companies to come to the table to sign a contract. Given the speed of the crisis, Joshua Gotbaum, a former assistant secretary of defense for economic security, said the government did not have the luxury of normal bidding and contracting.

“Under the process of business as usual, they’re not even going to award contracts until this month or April, then there will be a protest,” he said. “Under the Defense Production Act, they could have sat down with people in February” and finalized a contract.

Previous administrations have also been hesitant to invoke the law for nonmilitary matters.

If the federal government used the law to make itself the priority, other clients that had worked through the company’s procurement process could have their orders delayed, though under the law, the vendor is protected from lawsuits.

“My general experience is when you’re in the midst of a national crisis, contractors generally speaking want to help,” said Ernest B. Abbott, who was the general counsel of FEMA during the Clinton administration. “They want to participate. They want to be able to keep their people employed to build what’s needed for the nation.”

But Mr. Hall, who the months after Mr. Trump took office assisted Customs and Border Protection in using the law to secure body armor from Armor Express, a Michigan-based company, said such caution had allowed understanding of the law’s powers to atrophy.

“You have people on the civil side saying, ‘What is this thing? I might get in trouble using it,’” Mr. Hall said.

While FEMA and Health and Human Services have discussed the law in training situations, Mr. Hall said he often had to press his superiors to prepare for its use in the event of a national emergency, such as a pandemic.

“They had the authority to do this years ago,” Mr. Hall said. “They could have filled up the medical stockpile with priority ratings if they thought it was necessary.”

Maggie Haberman contributed reporting from New York.

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