▶ 0:12:03The subcommittee on national security, elicit finance, and international institutions will come to order. Without objection, the chairman is authorized to declare a recess of the committee at any time. This hearing is titled evaluating the defense production act. Without objection, all members will have five legislative days within which to submit extraneous materials to the chairman for inclusion in the record.
▶ 0:12:22I now recognize myself for four minutes for an opening I want to welcome our witnesses to today's National Security hearing, which is devoted to evaluating the Defense Production Act ahead of its expiration on September 30th, 2025.
▶ 0:12:39As Congress prepares to reauthorize the Defense Production Act, today's panel of witnesses will provide a fundamental overview of DPA, examining its authorities and uses to increase this committee's understanding for effective updates and improvements. This panel's testimony will inform our consideration of how Congress can reform and more effectively deploy the Defense Production Act. The DPA was initially enacted in 1950 in response to the outbreak of the Korean War.
▶ 0:13:08as President Harry Truman aimed to secure domestic industrial resources to meet the nation's national security needs during that war and future national emergencies. It was created with good intentions to bolster the resilience of the United States industrial base in times of crisis by promoting domestic production rather than a reliance on foreign sources. Today, this is more critical than ever as the United States has become dependent upon foreign production of critical materials, goods, and services across many sectors.
▶ 0:13:38Moreover, in recent years, the DPA has not been used as effectively as it could, and arguably it's been misused. Uh it it's time for Congress uh not just to reauthorize, but to reset and realign DPA's authorities. For example, the admin the previous administration invoked defense production act to require suppliers to provide key inputs to infant formula manufacturers before other customers. Is this a proper use of DPA?
▶ 0:14:06A month later, President Biden leaned on DPA to boost the production of residential heat pumps. U while the goal might have been laudable, is this really a correct use of DPA? Uh we look forward to examining all sorts of things with this review. Under both Biden and the first Trump administration, many of the DPA's authorities risks irrelevance.
▶ 0:14:27From 2018 to 2024, for example, uh there was only one direct loan and zero loan guarantees, not because there's no need, but because DPA processes are arguably too cumbersome. If so, uh they need reform. Meanwhile, our supply chains remain vulnerable and our defense stockpiles are dangerously depleted and deeply entrenched with bureaucratic processes. The DPA was most notably used during COVID pandemic and this is the first reauthorization since then.
▶ 0:14:56Uh this period highlighted deep vulnerabilities. If we can count on the DPA to be reactive uh once an emergency um our response may come too late. Modernizing DPA means discovering what a more proactive posture would look like. We have the opportunity to prepare rather than just react.
▶ 0:15:16Our adversaries are advancing in critical sectors from semiconductors to tooling, rare earth mineral processing to pharmaceuticals, and we need stronger domestic capabilities that cannot be done currently. The need for a powerful DPA and robust defense industrial base here in the United States uh intensifies as threats we face continuously augmented and relationships become strained in various ways.
▶ 0:15:42The DPA is a critical component of the United States National Security Toolkit that warrants reauthorization. Yet, this should come only after a thorough review, reassessment, and taking every opportunity to improve on it. I urge my colleagues to focus on reauthorizing the DPA with purpose and commitment to national security and a robust, resilient future for our United States. Anything less could put our nation's future at risk. With that, I yield the balance of my time.
▶ 0:16:08I now recognize the gentleman from Illinois, Mr. Casten, for four minutes for an opening statement. Thank you, Mr. Chairman, for holding this hearing. Uh, thank you for witnesses for appearing today. I am I am uh not the ranking member of this committee. I will make no claims to uh be able to fill into Miss Batty's shoes. I will brag only that I have a better hip because she is out getting surgery today to have that hip repaired. So, she'll be back at full strength shortly.
▶ 0:16:33Um so, the DPA gives the president authority to take various actions to ensure that the supply of materials and ser and uh services are necessary for our national defense. gives the president the authority to prioritize government contracts, wave international trade agreements, offer incentives within the domestic market to enhance production of critical materials and technologies if deemed necessary for the national defense.
▶ 0:16:55Uh we've we've seen many benefits in Illinois recently saw that uh DPA invoked to help uh resources in ship building, not because Illinois hasn't a port, but because Illinois has a lot of steel manufacturing. Um that was important to that need and that's an important issue. Um over the years, Congress has amended the definition of national defense to include emergency preparedness, energy production activities, critical infrastructure protection, restoration, homeland security.
▶ 0:17:21Um we of course saw applications um to face when we were facing novel challenges national security from the CO 19 pandemic to the increasingly devastating effects of climate change. To tackle those issues, the executive branch has appropriately used the DPA to produce ventilators, vaccines, as well as to accelerate domestic manufacturing of clean energy technologies.
▶ 0:17:43In 2022, the Biden administration invoked the DPA to develop and reshape supply chains for transformers and other grid components, solar panels, heat pumps, hydrogen fuel cells. Um, that's relevant because the Department of Defense on a bipartisan basis going back for decades has listed climate change as a threat to national security all the way back to 2008. um saying that it must be a part of every strategic decision the department makes.
▶ 0:18:06Um I wish my Republican prop colleagues didn't criticize the use of the DPA to support cleaner and cheaper energy sources um because it's important. We want electric grid resiliency. Um but we politicize this, you know, we accuse President Biden of accusing the DPA to advance his agenda. I would argue that the DPA is an important tool to mobilize the US industrial base um to meet the demands of national defense, including energy security and independence.
▶ 0:18:32Um and I'd note that President Trump recently invoked the DPA to promote the development of nuclear energy, which the president argues is necessary to achieve energy independence. Also, a cleaner source, maybe not a cheaper source, but let's not pick winners, but let's make sure that we do acknowledge that energy security is important. But I do want to acknowledge that I think my Republican colleagues raise a good point. Congress has a long history of solving problems by asking the executive branch to solve them.
▶ 0:18:58And then we have a long history of complaining that the executive branch abuses the power that we gave them. And we can choose where that sits, but that is an ongoing issue. And I think a lot of us on the Democratic side have concerns about how the current occupant of the White House is also abusing some of these powers. We've seen this not in the DPA but in the emer international emergency economic powers act where the president has declared that there's an emergency that requires the imposition of tariffs.
▶ 0:19:26IPA is not a tariff statute but it's being used that way. We've seen more recently in the Twitter feud between the president and Elon Musk Steve Bannon saying that the president should use the DPA to seize SpaceX in retaliation. That is not how the DPA works.
▶ 0:19:41And so in this context, I think it is appropriate in this moment that we are discussing how Congress intended the DPA to function and how, if at all, we should tweak the DPA to make sure that Congress continues to fulfill its responsibilities as the article one branch. And I would submit to you um the best branch um among the three in Congress. Um look forward to the discussion and I yield back. Thanks, Mr. Casten. I now recognize the chairman of the full committee, Mr. Hill, for one minute.
▶ 0:20:10I thank you, Chairman Davidson. America's navigating one of the most dangerous and complex global threat environments in recent history. Our adversaries are accelerating innovation, scaling production, and heavily investing in their own national defense capabilities. It's critical that the United States keeps pace and expands our dominance as the leader across the free world.
▶ 0:20:34that requires not just military might, but economic resilience, financial agility, and industrial strength. Today, this subcommittee will review the Defense Production Act ahead of its reauthorization. We will explore ways to use the Defense Production Act to secure supply chains and strengthen our domestic industrial base while ensuring that our agencies have the tools they need to meet these 21st century threats. I thank Chairman Davidson for his leadership.
▶ 0:21:03I look forward to our panel and I thank members on both sides of the aisle for engaging on this important issue and I yield back. Thank you chairman. Today we welcome the testimony of Mr. William Russell, a director in contracting and national security acquisitions at the government accountability office and Mr. Adam Levan, an analyst in economic development policy at the Congressional Research Service. We thank you both for taking time uh to be here today and for the preparation you've done in advance.
▶ 0:21:31You will each be recognized for five minutes to give an oral presentation of your testimony. Without objection, your written statements will be made part of the record. Mr. Russell, you are now recognized for five minutes for your oral statement. Thank you, Chairman Davidson, uh, Chairman Hill, uh, Vice Chair Nun, and Congressman Casten, members of the subcommittee. Thank you for the opportunity to discuss federal agency use of the Defense Production Act.
▶ 0:21:58While the DPA was first enacted nearly 75 years ago, its authorities continue to be relied upon to bolster the industrial base today. Since its last reauthorization in fiscal year 2018, Congress has appropriated at least 3.2 billion for DPA related activities and agencies have used the DPA in a range of circumstances to address national emergencies such as the CO 19 pandemic to ongoing efforts to make our supply chains more resilient.
▶ 0:22:24In 2025 alone, agencies are using the DPA to help reconstitute the naval industrial base and to assist with expanded production of critical minerals. Unless reauthorized, the DPA authorities will expire in September 2025. Overall, the DPA has been a durable and important tool to address emergencies and enable domestic industrial base to maintain or increase production of needed defense resources.
▶ 0:22:52I'd like to highlight today how agencies have used the DPA since it was last reauthorized, as well as several challenges they faced in doing so. This is based on our prior work looking at the DPA, as well as our new report that was issued today. From fiscal years 2018 to 2024, agencies such as Department of Defense, Department of Energy, Health and Human Services, and others have placed over 2.5 million title title one priority ratings on contracts or orders.
▶ 0:23:20Priority ratings require companies to preference the delivery of goods and services needed to the national defense over other customers. For example, DoD uses these ratings for the production of military aircraft and ships among other things. These agencies also made 222 title 3 investments valued at approximately 3.2 2 billion to bolster the domestic industrial base through expansion of manufacturing capacity of existing suppliers, sustaining some of those suppliers and bringing in new suppliers.
▶ 0:23:50For example, DoD completed investments that were used to respond to CO 19 by expanding production of N95 masks and respirators and has ongoing investments intended to expand the domestic capacity in areas such as critical materials used in weapon systems, areas like electronics, missiles, uh, munitions and and more. Use of title 7 authorities included industrial-based assessments and one voluntary agreement with industry over that period.
▶ 0:24:17For example, DoD, HHS, DHS, and others requested or completed 17 industrial-based assessments to better understand critical supply chains such as micro electronics. Agencies have experienced a number of challenges when using the DPA, specifically difficulties tracking the rated orders uh through the CO 19 response. Our latest report found additional challenges.
▶ 0:24:42For example, DoD noted that industry partners do not always understand how to apply the priority ratings throughout the supply chain, and DoD is currently conducting outreach to ensure better understanding of these responsibilities. In terms of Title 3, a key authority for loans was only used once since 2018. We found that DoD does not currently have the expertise within its Defense Production Act purchases office to fully leverage loan authorities.
▶ 0:25:07Additionally, the DPA wide coordinator, currently FEMA, has not collected and shared lessons learned, leveraging DoD's extensive experience with Title 3 um commitments over the years, but doing so could benefit other agencies like HHS. We had a recommendation to FEMA to address this issue and they concurred with it and planning to take actions on that front. In terms of how the DPA may or may not be used, one option for doing so may be to amend the law's definition of national defense.
▶ 0:25:38Congress provides appropriations for DPA activities. Since fiscal year 2020, Congress has appropriated at least 4.4 billion to the DPA fund, which pays for title 3 activities, as well as at least another $10 billion to pay for DPA responses to the CO9 pandemic. Congress may consider whether to continue these levels of appropriations, which are relatively high by historical comparison. This concludes my remarks. Thank you for the opportunity to testify. I look forward to your questions. Thanks, Mr.
▶ 0:26:08Leven. I now recognize the ranking member of the full committee, Miss Waters. Thank you very much. The Defense Protection Act is America's way that mobilizes our nation's resources, helping to meet challenges like war, pandemics, or natural disasters. It gives the president extraordinary authority to prioritize, allocate, and boost production of critical materials, services, and facilities.
▶ 0:26:35and in the hands of someone willing to bend, break, or disregard the law. It is concerning Donald Trump has abused the International Economic Emergency Powers Act to launch his trade war. He's abused the Alien Enemies Act to declare war against migrants. He's abusing Title 10 in sending troops into LA streets.
▶ 0:26:59Someone with such disregard for the law might use the DPA to hurt civil protesters or reward his crypto investors. Given these novel abuses, we must consider novel ways to protect DPA's important activities and enhance our oversight. Thank you, and I yield Thank the ranking member. I'll now turn to member questions and recognize myself for five minutes uh to begin questions.
▶ 0:27:29Title one of the defense production act deals with priority rated contracts and orders which take preference over other contracts in the event that a contractor can't meet all required delivery dates. That works fine in the United States for industries that already exist. we saw in COVID where you had contractors trying to find ultimately the same handful of suppliers mostly in China and just bid up the price. So we have challenges even mapping what some of the supply chains look like to be ready in advance.
▶ 0:27:59So we found reacting isn't always adequate. Existing priorities and allocations in DPA span from agriculture, defense, energy, commerce, homeland security, transportation, and health resources. I'm aware that recently from 2018 to 2044 nearly all priority ratings were placed for military goods. This makes sense to me given the original intent of President President Truman's 1950 legislation. But the world continues to develop and change.
▶ 0:28:27However, as I said, the industrial supply of semiconductors, prescription drugs, steel, tooling, rare earth minerals, micro electronics to name a few, are extremely important for the United States to produce domestically and are key inputs in all aspects of our supply chains. A reliable and resilient industrial base consisting of these inputs in addition to conventional military armaments is vital for national security.
▶ 0:28:54For instance, the covid pandemic exposed an enormous existence reliance on China uh for health supplies. Specifically, India and China are increasingly the leading US sources for generic pharmaceuticals which account for 91% of all prescriptions in the United States. You can't just turn on those kind of supply chains overnight. So, it's time to implement proactive uh solutions. Now, Mr.
▶ 0:29:17Russell, while DPA originally and currently promulgates military equipment, do you believe it's aligned with the legislation's objectives to consider other sectors like pharmaceuticals in national supply chain Absolutely, Mr. Chairman. I think we've seen um in the last several years since the DPA's been reauthorized that the DPA authorities have been applied across a number of areas. Certainly a lot of those do have to do with DoD and and military equipment.
▶ 0:29:47Uh but but there are investments in in pharmaceuticals. HHS has been using it to help u re resupply the strategic national stockpile that was so uh critical uh during the the co9 pandemic. So there are a range of uses um for title one and title three beyond just the the military applications. Yeah. And Mr. Leven, what do you think? I mean, we've mentioned everything from energy security, uh, pharmaceuticals, health supplies.
▶ 0:30:14I mean, what do you think about being more proactive with the DPA authorities? Thank you, Mr. Chairman. I echo my colleagues uh comments that uh most DPA invocations uses, excuse me, are are for defense applications by DoD. DoD is the the heaviest user of DPA.
▶ 0:30:33Um but what I can also say is that the DPA is generally understood um to give the president fairly wide latitude in using it as long as it is used for the purposes of national defense and the pres and if the president does declare uh that it is being used in in cases of national defense and I think that's what we've seen in the past few years with some of the non-defense applications of the law. Yeah. So you definitely lean on the presidential discretion. It is kind of wide open.
▶ 0:31:01Uh, Congress tried to be proactive with the chips act. President Trump's been critical of that approach. I didn't think it was the best approach, but at least we're recognizing critical shortage and I agree with Mr. Casten. We should be a little more proactive. I think this gives us a great opportunity. You know, Mr. Russell, on the defense side, Russia currently produces more artillery, uh, shells, tanks, drones, munitions of all sorts, and greater capacity than really NATO combined. we've seen uh kind of an alarming surge from uh Russia's capabilities in Ukraine in particular.
▶ 0:31:31Uh how can authorities under DPA be used effectively to not just use the arsenal approach but you know domestic supply chains uh to bolster the rest of the defense industrial base? Yeah, thank you for the question, Mr. Chairman. I I think um what we saw with uh DoD trying to um recapitalize and re-equip for uh items sent to Ukraine was a great example.
▶ 0:31:57DPA authorities are used exclusively in terms of title three, title one to build up supplies of ammunition, uh tactical vehicles, missiles, all kinds of munitions. Um and so title three has been a instrumental tool to help companies quickly scale up production. You know add add a shift you can use those funds to uh buy important manufacturing equipment to facilitate uh create new facilities.
▶ 0:32:27So that's been a a key aspect that we've seen you know just recently. Yeah. Thank you. And I look forward to continuing the dialogue and I my time's expired and I now recognize the gentleman from Illinois Mr. Aston for 5 minutes. Uh, thank you. So, I want to I want to start with a observation I made at the start that the bias whenever we see a problem is to direct the executive branch to solve it. It's much easier to write legislation that way. Um, we we could do a better job. Um, I want to start with you, Mr.
▶ 0:32:57Lebanon, can you just talk about within the existing DPA, can you can you help us understand what congressional oversight is built into that that constrains the executive Yes, thank you for the question, Representative. Um, there are a few oversight mechanisms. Um, so for example, with funding of the DPA, um, Congress has set a cap on the DPA fund which pays for title three actions.
▶ 0:33:25uh the unobligated balance at the end of every fiscal year cannot exceed $750 million. Uh that's one example. Another one is for title three activities um as certain activities um over 50 million that would be over $50 million require congressional approval um before the president uh can can take those activities. Uh those are a few examples of uh of some of the oversight that Congress has written into the law. Okay.
▶ 0:33:54Um, and Mr. Russell, are you are you familiar with the ways that the DPA has been used in the past to to help address US energy supply? Just certainly uh Department of Energy has a number of rated orders under under title one? Uh, Mr. Le, any specific examples you're aware of? Yeah.
▶ 0:34:18So the DPA in title one specifically does identify energy as a critical and strategic material. Uh therefore making it eligible for uh to be covered by the DPA for example for Okay. And I and I was thinking of specific ones. I'll just just throw out you know you know President Ford used the DPA to build the Trans Alaska oil pipeline. Um the Clinton administration used it for oil production. The Bush administration used it to provide natural gas to California during the 2000 electricity crisis. We've used this a lot to recognize the supply.
▶ 0:34:47I I'm a bit of a nerd on this because I was in the energy industry for 20 years before I came to Congress. And there's an old saying in the power industry that everybody wants to be the third owner of a power plant. Um I think it's also true for refineries. I think it's also true for transmission lines. You know, you have no control over your commodity cost. You have no control over your what you're producing, but you got a ton of capital that's sitting on thin margins. And I think the challenge has often been where the DPA has been handy is how do you build stuff in that environment without government oversight?
▶ 0:35:17You know, we've done it with regulated monopolies, etc., etc. Um, there is a concern, there's political push back when Biden was using this to say, well, let's build stuff that's, you know, that's cheaper, um, like wind, like solar, like efficiency. And I think the challenge has been that the industry has always been deathly afraid of cheap energy because if you build cheap energy, it lowers your margin and you got a bunch of capital that hasn't been recovered yet.
▶ 0:35:44Um there's this push back from Trump who's saying, well, I want to use the DPA to build nuclear which is really capital intensive, has a low marginal cost, but takes 15 years to build. And so we've had like, you know, the next era CEO, John Ketchum, has warned that what the White House is doing right now could lead to significant energy shortages and reliability challenges because you still have this challenge of how the private sector is going to build and what are they going to allow to build.
▶ 0:36:11So I guess what I'm wondering for either of you who want to answer is if you have this tension between building cheap energy that will benefit consumers or building expensive energy that will benefit producers. Does the DPA in any way constrain whether in title one or title three how the executive branch should balance the interests of energy consumers aka 330 million Americans versus energy producers aka a handful of Americans.
▶ 0:36:40Does the DPA constrain that trade-off? I can try to address that. Congressman, the I think the way we've seen it is the DPA is just the so those are the larger policy questions and then the DPA is the tool to execute decisions on that policy.
▶ 0:37:00So certainly the title three investments can help uh whether it's loans or or uh expansion of manufacturing can help push um you know a particular supply chain to get bigger. uh but it in terms of the larger framework so the DPA does not direct the the political equities and this sort of gets to my larger point of we in Congress should be grappling with those political equities and I would love to see us have a DPA that says if we're going to give that power to the White House I'd like to see us put consumers first and I'd welcome any thoughts
▶ 0:37:30um you know and I realize we're out of time about how we might structure the DPA to ensure that we are always using that very powerful tool to put the interests of Americans first not just put the interest of American energy producers first. Um, thank you. I'm going to yield back. Thank you, Mr. Cassie. Uh, the gentleman from Kentucky, Mr. Bar, who's also the chairman of the subcommittee on financial institutions, is now recognized for 5 minutes. Uh, thank you.
▶ 0:37:56Um, well, if it wasn't for regulations, um, cheap, affordable energy would be fossil energy. Regulations are what's driving up the cost of, uh, conventional energy. Mr. 11 11 permitting and regulatory barriers imposed by the Biden administration have significantly obstructed grid development at a time when our energy demand is rapidly accelerating driven in large part by the rapid growth of artificial intelligence and data centers needed to power the technology.
▶ 0:38:27How can the Trump administration, we know the Trump administration ex has issued some executive orders on coal and other fossil energy. How can the Trump administration use DPA authorities to either build new or reopen shuttered uh power plants, whether they're coal fired plants or gas fired uh plants, and strengthen uh domestic energy Thank you for the question, Representative.
▶ 0:38:54Uh the DPA does give the president broad latitude to um invoke the law if it's deemed to be a national in national defense uh concern. And you're correct that President Trump did recently issue termination an executive order that uh named Cole as um central to national defense and eligible for Title 3 assistance.
▶ 0:39:18Um, one thing I would say is that uh the DPA given that it uh its levels of appropriations and the funding cap sometimes it can be difficult to for example create a new industry or restart an industry as opposed to using the DPA as uh more of a catalytic investment to get something started. I think that that might be a consideration the um in this case.
▶ 0:39:44So um uh under existing title one and title three um authorities um can the executive branch invoke uh those authorities to um bypass permitting requirements? The DPA does not specifically address permitting requirements. That would could be something that Congress will consider.
▶ 0:40:06So, so in reauthorization, um, we we could add that to the tool box, so to speak, of giving the executive branch under the DPA the ability to um expedite permitting. I'm not an expert in permitting and I believe there are other laws that that govern that, but uh consideration of that could be uh could be something Congress could look at at least. What other uh barriers are there?
▶ 0:40:35um that the DPA could potentially eliminate to um uh reopening or building new coal fired power plants to address the the massive need for uh power for artificial intelligence and data centers.
▶ 0:40:55Well, again, the DPA, the president can invoke it to provide awards, for example, under title three to companies, uh, to coal companies, for example, or other energy companies that the president has determined to be essential to national defense. Uh, so that's one option. Um, another, are there are there other laws that are in place that would frustrate uh the president's invocation of the DPA to to permit new coal fired power?
▶ 0:41:23um that would be outside the scope of my expertise. Well, I think here's the point. It's too hard to build new co-fire power plants in this country. It's too hard to build new gas plants in this country that we need for national security that we need for AI.
▶ 0:41:39Um there's subsidies that that have been in policy to build um renewables, but there's there it's too hard today to to uh to open new fossil energy power generation. The DPA is needed to cut through all that red tape. It is a national security imperative that we we need base load power in this country.
▶ 0:42:06and and and my question is um c is the DPA a sufficient tool to cut through all of that red tape? What do we need to do in reauthorization of DPA to make sure that these other barriers, these regulatory barriers to um um reliable affordable energy um are removed?
▶ 0:42:31Um, Congressman, I think that the DPA is one tool that is available to to the president and to the government. Um, so I think it's best considered as part of any suite of options uh that might be considered. Uh, again, I would go back to some funding cons potential funding constraints. Um, the $750 million cap on obligated funding.
▶ 0:42:53And so I think given that it's potentially worthwhile to think of the DPA, how it could operate in conjunction with other tools that are Thank you. My time is expired. Thanks. Gentleman from Kentucky. Uh the gentleoman from California, Miss Waters, who's also the ranking member of the full committee, is now recognized for five minutes. Uh Mr.
▶ 0:43:19Russell, President Trump and Elon Musk were recently engaged in a Twitter spat. While this was amusing in some ways and some would say woolly it also raised questions about the Defense Production Act.
▶ 0:43:34This was because as these two corrupt oligarchs fought, Steve Bannon, an adviser to the president, declared that Trump should use his DPA authority as president quote unquote seize SpaceX Musk company. Mr. Le, could president use a DPA to seize Elon Musk's companies or any of his companies assets? Why or why not? Thank you for the question, ranking member.
▶ 0:44:04uh as the DPA is currently constructed, it does not allow for um the requisitioning of companies. There was a title that lapsed in 1953 that did provide for a requisitioning of uh of private businesses under some circumstances, but that is no longer an active title. Thank you. Can the DPA be used to refuse contracts or force undesirable contracts on firms for inappropriate reasons?
▶ 0:44:32Like if a company's CEO spoke ill of the president's trade policy or didn't make a big enough investment in his private crypto company, cryptoc currency company. Can they be Can he refuse to be used to refuse Title One does require um companies to accept priority rated contracts.
▶ 0:44:57Regulations that are in place do allow for certain exemptions to those requirements. However, those regulations, the exemptions are generally based on things like a company not being able to fulfill the order or having other rated orders in ahead of that order in the queue. Finally, I know that members of Congress might have disagreements on the scope of what should constitute national defense under the DPA. Generally, though, we agree on its purpose.
▶ 0:45:27Is it conceivable though that instead of preparation or support for possible emergencies that DPA funds could be diverted to pay for a deportation camp in Libya or refurbishing the prison in Alcatra and so on? What are the limitations of the act and what are the oversight options for members of Congress who have concerns about how the law is being interpreted and executed by the Uh I'm sticking with you, Mr. Leb. Sure.
▶ 0:45:57Thank you. Um I I can't speculate on potential uses of the DPA. What I can say is that uh the DPA is generally understood to give the president broad authorities uh to use n to to invoke it for national defense as national defense is defined in the law. I think an over potential oversight mechanism for Congress could be to address the definition of national defense. Uh it has done so numerous times over the years.
▶ 0:46:27Uh for example, homeland security was added to the definition I believe in 2009. Uh so that would be a potential oversight mechanism for Congress. Um further and I know this may go a little beyond um your expertise but do you see that the president having created all of these crypto companies and stable coin that anyway uh they can be enhanced um that would cross with the
▶ 0:47:00again, it's hard to speculate on on potential cases. Um, that does seem to be outside of the DPA scope. As I understand it, he wanted to set up a DPA Bitcoin reserve. Did you hear about that? I did not. Did anybody hear about that? I have not heard of that. Okay. Okay.
▶ 0:47:19Well, uh because you're so expert in DPA, let me just ask if perhaps in your continued work and research, etc., uh that if you learn about um cryptocurrency uh being advanced, the president's ownership in any way, I would hope that you would include that in the knowledge that you could share with the Congress of the United States. Thank you very much, and I yield back.
▶ 0:47:49Thank you, Miss Waters. The gentleman from Texas, Mr. Williams, who's the chairman of the Small Business Committee, is now recognized for five minutes. Thank you, Mr. Chairman, and thank you all for being here today. Uh, when the Defense Production Act is activated in an emergency, the federal government turns to large contractors to fulfill urgent needs. Now, but these larger corporations do not operate in a vacuum. They rely heavily on small businesses for parts, components, uh, and specialy services.
▶ 0:48:16What often happens is that large primes pass DPA driven expecting uh small business to absorb costs, ramp up production, or shift their operation to a moment's notice. These small businesses are willing to do their part, but they often lack the resource or flexibility to make those changes quickly without taking a hit. So, Mr. Russell, how can we ensure that small businesses are protected when DPA authorities are deployed in an emergency?
▶ 0:48:42and what can be done to prevent unintended negative impacts on small suppliers and contractors further down the chain. Thank you for the question, Congressman. Um, a couple of thoughts there. One, um, in Title 7, there is a specific preference for uh, small business utilization and and to try to to give awards and think of small businesses as part of using the DPA. So, that's a plus. That's something the committee could potentially look at to build on.
▶ 0:49:12um in other sections in terms of the the title one the rated orders you know we we did see uh during CO 19 an instance with u um a particular fabric for N95 masks the you know lots of rated orders and then some of the subtier suppliers that provided those materials uh got bombarded with you know competing rated orders and so the the key there one of the expectations in title one is for those companies and for the government to
▶ 0:49:42have a way to reconcile when those um bottlenecks in the supply chain emerge. And so on the supplier standpoint, you know, raise your hand, let let um the government customer know that you have these competing priorities, but then there has to be a coordination group.
▶ 0:49:59Um, you know, right now FEMA is the lead of agencywide coordination, but that that group has to be active to quickly reconcile and um, you know, get some relief to those subtier suppliers. So, it's a it's an important issue to look at. It's one that, you know, DoD when we were doing the the recent work, you know, also noted that they're trying to educate uh, some of the subtier suppliers on the responsibilities for Title One when they have a rated order.
▶ 0:50:28The only other thing I would add is that um within the title one authorities there are two types of rated orders DODX. So there's a there is an ability to further prioritize um across rated orders. Thank you. Uh one of the biggest complaints I hear from small business owners, especially manufacturers, is that when a national emergency hits, the federal process slows slows them down.
▶ 0:50:52Whether it's an unclear guidance, a burdensome paperwork, or long wait times for approvals and reimbursements, many of these firms simply can't navigate the red tape fast enough to make a difference. And when you're talking about national security disaster response, timing is everything. These small businesses have the talent equipment but lack a robust compliance department. So again, Mr. Russell, what re what reforms the DPA could better support small business in scaling production quickly during emergencies without getting buried buried in federal red tape?
▶ 0:51:21Yeah, I'd go back again to look look at Title 7 and some of the preferences that are already there for small businesses and maybe that is an area that can be expanded as you think about I think um DoD is doing the lion share of of of the use of some of the titles title one and three in particular. So there could be an opportunity to help educate small businesses.
▶ 0:51:45They've tried to streamline the process with white papers and you know applying to the the needs that emerge but there's always more improvement to um expedite the amount of time that it takes to um look at the uh proposals that the small businesses or other companies propose and then come to a you know a contracting or other decision. In closing, we're in a different security environment today than when the DPA was first written.
▶ 0:52:09And our adversaries are not just building up their militaries, they're using economic leverage, trade choke points, and cyber attacks to weaken us before a shot is even fired. So when we've seen uh how is through hacking, hostile trade policies, targeted shortages of critical inputs, these are real threats to our national defense readiness, and the DPA needs to keep up the pace with them. So briefly, while we have time left, Mr.
▶ 0:52:32Russell, as our adversaries become more sophisticated in targeting supply chains through cyber attacks or trade manipulation, how can DPA authorities be modernized to help neutralize these Couple of thoughts there. One, there's the uh Defense Production Act Committee um that's been largely dormant.
▶ 0:52:52That's that could be a forum to potentially u go across agencies that use the the DPA and come up with a you know a larger strategy to get at some of these um national issues cyber security. It could also be used to potentially um gentleman's time's expired. I'd encourage a followup uh afterwards. The gentleman's time's expired. Uh the gentleman from California, Mr. Vargas, is now recognized for five minutes. Uh thank you very much, Mr. Mr.
▶ 0:53:21Chair, and again I thank the witnesses for being here. Um, the Defense Production Act of 1950 has been a vital tool for our country in times of crisis. Whether it's a war or global pandemic, we have to make sure that we have the ability to respond swiftly to national security threats. And again, that's why I think this hearing is so important. Again, I want to thank the the chairman and the um ranking member for bringing it forward.
▶ 0:53:46During COVID, I had a provision included in the American Rescue Plan to support the president's use of DPA authority authorities with an additional $10 billion in appropriations to fund testing, personal protective equipment, vaccine production, and other critical medical supplies. The scope of how far the president should be able to go with DPA is an important discussion for us to have today, and I'm glad we are having it.
▶ 0:54:11In San Diego, we're proud to have a strong ship building presence and a number of shipyards, but China's growing dominance in ship building may threaten our national security. Mr. Russell, in fact, you even mentioned the naval industrial base. But according to a recent report, China's largest stateowned ship builder built more commercial vessels by tonnage in 2024 than the entire US ship building industry has built since the end of the World War II. Now, if that statistic is correct, that's incredible.
▶ 0:54:42So, how can the DPA be used strategically as a tool to support this domestic ship building, I think, is so vital. Yeah, absolutely. And there was a a recent executive order to um tackle the the naval industrial base. So, that gives authority to use title three um which can definitely help. We'll see it play out over time.
▶ 0:55:06in terms of funding to expand the capacity of our ship builders uh to to hire more staff to to get the critical equipment they need, uh castings and forgings is another area where DPA investments are used to help facilitate ship building. Um the other aspect would be um maybe some industrial-based assessments.
▶ 0:55:29there's that authority under title 7 uh that can help to further illuminate where there are some shortfalls in the supply chain and and help agencies come up with a strategy to address them. But you know I a couple of these large companies are in my district and it's normally not the case that they're trying to find things. It's usually they don't have a contract for a ship. I mean that's the thing. So they build up their resources in sense of staffing.
▶ 0:55:55They get all these great welders and then all of a sudden they don't have a contract to build a ship or to fix a ship and all a sudden they have to lay off all these people and it's very very hard for them once again to get people to be able to do this. Um there has to be some way where we can work with the government to make sure that this doesn't happen again. Um I do think that this is a real problem. I think you do too and I think others do too. How do we have more ship building in the United States? I mean, I think we're getting our clock cleaned on this.
▶ 0:56:26Yeah. The the one thing I would add, we've done a a body of work looking at some of the struggles in and ship building and the DPA is one aspect that could help certainly with the Title 3 investments and and potential use of loans. Um, you know, but there's a there's work for the Navy, Department of Navy to do as well in DoD in terms of production smoothing um ensuring that they're sufficiently utilizing the the shipyards and maintaining the, you know, the workforce when the companies do um ramp up. Okay.
▶ 0:56:56Well, again, I I hope we can do more in that because that really is a big concern of mine. Again, that's why I thank the chairman for bringing this forward. Uh lastly, one of the things that was interesting when you were talking about small business, one of the things you didn't mention was the fifth amendment of taking of private property without for public purpose without just compensation. I mean, how does that interplay with the DPA because obviously that's a fundamental right under the Constitution?
▶ 0:57:25Congressman, are you referring to the um industrial base assessments? Well, sure, but I I guess also the the the context that you have a small business here that puts out a whole lot of money or is an opportunity that's lost to it. It's sort of a taking. Um, how do you compensate? I mean, there's a basic, you know, right, a fundamental right under the fifth amendment that the government can't take anything for public purpose without just compensation. How does that interplay with the DPA?
▶ 0:57:55Yeah, that that's not something that we've seen in the last uh since it was reauthorized in 2018. Um, generally speaking, the you know, once the contractor or order has the the priority rating, um, it's just a matter of uh executing the government's need above other customers. For the most part, what we've seen at at DoD that uses a li line share of those is that uh the the company is able to meet all their orders, so they don't have to uh lose. Okay, my time is up. Thank you, Mr. Chairman.
▶ 0:58:26Uh, thank you, Mr. Vargas. I'd now like to recognize the gentleoman from California, Miss Kim, uh, for five minutes. Thank you, Chairman Davidson, and ranking member for hosting this hearing. Thank you to our witnesses for joining us today. Uh in two 2021, those of us in Orange County saw the benefits of the Defense Production Act or DPA first 10 when it was invoked to increase fire hose production.
▶ 0:58:53As fires blazed through California, it was thanks to DPA that fire crews had the tools they needed to save lives and protect our homes. So as we consider the reauthorization of DPA, I believe it is critical that we make reforms that will protect our national security and enable efficient domestic supply chains and strengthen emergency preparedness.
▶ 0:59:18And one method of achieving that goal is reforming the DPAC, the defense uh production act committee. The goal of DPAC was to uh result in real coordination at the cabinet level and ensure that the president had effective advice on how to utilize the DPA appropriately. But unfortunately, uh it does not seem like DPAC is fulfilling that role. Mr. Leven, what reform should we consider to ensure that DAC fulfills that mandate?
▶ 0:59:49Thank you, Congresswoman. Um I think there are a few things Congress could consider. So when the DPAC was established, it had purview for reporting on all of the DPA, title one, title 3, and title 7. Uh it was also in statute required to uh have an executive director.
▶ 1:00:06Uh an executive director was does not appear to have ever been appointed and in the uh later reauthorization, I think it was 2014, um the D-packs permit was uh was reduced to just title one from all the authorities. So, I think um Congress could consider whether it wants to uh go back to the DPAC's original um mandate and what tools might be able to strengthen it in doing so. Um so that could be increased reporting requirements.
▶ 1:00:36That could potentially be something like mandating the level of official from the agencies that sit on the D-pack specifically requiring that. Um, another thing that I'll mention is that uh by uh by executive order uh FEMA has been delegated to be the uh the chair of DPACT. At one point that was a rotating position at least between FEMA and DoD. Um and DHS through FEMA through DHS, I should say.
▶ 1:01:03That could be uh it could be a a rotating position again. Uh the last thing I'll say is um you know, Congress could consider potentially providing appropriations directly for the DACA. Okay. Well, I do want to see DACA as engaged and active within the federal government. And one idea is to achieve that would be uh increase in assessments and uh simultaneous coordinations within the uh DPAC.
▶ 1:01:30So could you do you think that kind of a proposal will be beneficial in uh creating a more effective DPAC? I think that that uh could be something that that could be beneficial and I think um observers have noted that the DPAC was originally charged with um inter agency coordination things like that and has over the years appeared to not totally fulfill that that role.
▶ 1:01:56Yeah, overall it seems like we need to thoroughly analyze DACA and ensure that it functions the way that it was originally intended and it's a tool during a crisis rather than a liability. Um, another aspect of the DPA that I'm concerned about is the section 705. Section 705 authorizes the president to obtain necessary information to conduct the industry studies and that includes inspection of a business records and property. So, Mr.
▶ 1:02:24Leand um does anything in the law prevent an administration from using this authority to obtain Americans personally identifiable information that may be uh possessed by a business? Nothing in the law specifically prevents that prevents that. However, the law does provide that the president or um the business that is being um from which the information is being gleaned upon a request can Thank you. Let me I want to get to um you did answer that quickly.
▶ 1:02:54Uh I'm going to shift gears and um close by touching on China uh and our over reliance on them for imported goods. So if we end up in global conflict with China and other countries, our current federal permitting timeline will not allow us to produce the necessary goods to protect Americans. So Mr. Roso, can you talk about how we can reform the DPA to streamline the permitting and enable private companies to deliver the goods that we need on time? Absolutely. Thanks for the question.
▶ 1:03:25Uh I think in short there was a recent executive order that does just that tries to target uh critical materials, critical minerals. Um as you noted, China does produce the the line share or at least the mines a line share of rare earths and other things that are important. Um and we've seen some instability in that supply over the last few months. The gentleman's time the gentle woman's time is expired.
▶ 1:03:50Uh the gentleman from Illinois who is also the ranking member of the financial institutions subcommittee, Mr. Foster, is now recognized for five minutes. Thank you, Mr. Chair and to our witnesses. Mr. Russell, I'd like to start out with a shout out to GAO for all the tremendous work that you did on oversight of Operation Warp Speed and including the DPA uh during the the COVID crisis.
▶ 1:04:14Um, you know, in early on, I think in about April of 2020, I led a letter from Congress um basically encouraging the administration to do operation warp speed. And this was um we didn't call it warp speed then, but it said, "Don't worry, just stand up these factories to build vaccines that have not been proven to work." And Congress, we promised, would not yell at you if you built a factory that ended up useless, which was actually what happened.
▶ 1:04:40two of the three vaccines that we put a lot of money into um worked and and one didn't and that's okay. That was the thinking behind it. It was shared by uh Dr. Peter Marx who actually I think coined the term operation warp speed and he was one of the heroes who stood up the operation in the first place and it's one of the tragedies of recent history that he recently quit and disgusted over all of the activities of RFK and the budget cuts and in agencies he's overseeing.
▶ 1:05:07Um but they but there were was really spectacular work that was done a lot of it with the DP the DPA at the time. And so um and as part of the COVID select committee that I was on I partnered with um our my Republican uh uh partner uh Representative Dr. uh Mark Green on requesting and then help guiding GAO oversight of Operation Warp Speed.
▶ 1:05:32And one of the the great things that came out of that is that we have now a bunch of lessons learned that so if we're in a comparable situation, there's actually a very good set of documents that can be read about what are what's going to work, what's going to be easy, what's going to be hard, when to use DPA and military assistance versus just going to to public and and so that and you know the GAO was sitting in on a lot of the the planning of you know planning and of of Operation
▶ 1:06:03Warp Speed. And it it was great to see that partnership that those who were executing Operation Warp Speed on the government level understood that GAO sitting in on their meetings and understanding what they were doing was a positive thing. And I heard later that they appreciated the advice and the periodic documents you did. So that is an example of government really working well. And when that happens, we you deserve um public acknowledgement.
▶ 1:06:27Um and so I guess that's That's now the thing that we've struggled with for a long time is that there are lots lots of of critical industries uh in that we should as a matter of national security um maintain in the United States or at least in the free world the countries we trust in the free world for which the US is not the lowcost supplier. Okay.
▶ 1:06:52And you know, one example of this that's in the news right now is um is the critical minerals and for for permanent magnets. The other PhD physicist in Congress, Representative Rush Hold, worked for probably more than a decade on that with almost no success. What he got were reports.
▶ 1:07:11Um what he got Congress to agree to were reports on how what a huge vulnerability this is and no action because the only ways that you can do the only things you can do the only tools government has are either taxing and spending taxing in the forms of tariffs protective tariffs or perhaps set aides which are sort of equivalent or spending subsidies and the problem that Rush Holt ran into in trying to get some action ahead of time on critical minerals is that he was faced with Republicans
▶ 1:07:41who would not tax and would not spend uh even to protect what has turned out to be a really really u critical part of our supply chain. Um and so and so my question I guess if you look at the two tools the you know the two basic approaches you know tariffing or set aides which are sort of equivalent you know they have the feature that yes you can protect a US industry but it makes that industry less competitive.
▶ 1:08:08Uh you can see that in military set aides where the military stuff is just way overpriced compared to commercial markets. um or you can subsidize um which is sort of the what we did during um you know trying to get the chips and science chip production. So do you have any observations on how effective those two tools are which if we have to create some amount of of taxpayer debt um how do you how do you do the balance and on that?
▶ 1:08:37Well, I can speak to the other side of the ledger. Certainly the the you the subsidizing um using the DPA. Um we've seen that through purchase commitments and and other arrangements a lot of support across some vital supply chains that DoD and others have identified, you know, whether that's hypersonics um emerging things like biio manufacturing.
▶ 1:09:01Well, if you can respond for the record with anything that's written to to sort of give us guidance on when the subsidies are the best approach and when the taxes and tariffs are the best approach that would because that's that's what I've been struggling with for my time in Absolutely. I I can take that back because I I did I have the the expertise on again you guys did great work and please pass that on. Thank you, Mr. Certainly. M the gentleman's time is expired. The gentleman from Iowa, Mr. Mr.
▶ 1:09:27Nun is also the vice chairman of the uh subcommittee on national security is now recognized for five minutes. Well, thank you very much, Mr. Chairman, and thank you both for being here today. I think we all recognize the defense production act is one of the most valuable tools in the arsenal for the US to be able to protect itself. I just want to say first and foremost, I believe strongly in a free market. I think we all agree that private property rights matter.
▶ 1:09:53But I also recognize that there are things that are so important to this nation's security that we must have a whole not a government approach alone but a whole of nation approach to being able to tackle these challenges and provide the security for every American. As geopolitical tensions rise across the world, we must ensure that this 1950s version of a DPA continues to evolve with it.
▶ 1:10:16This Congress, I believe, needs to be able to provide President Trump and all future presidents with a fully armed and updated DPA that allows the executive branch to strategically address our national security threats. And I speak from a position here where I would like to highlight two bills that we're working on. First, the Force Act as well as the Clear Act. Two updates to the DPA, working with friends on other side of the aisle here, Representative Jim Heims, to be able to move forward. Let's look back where this came from.
▶ 1:10:44Look, at the advent of World War II and onwards, General Motors changed cars into tanks. Boeing took commercial aircraft and turned them into a fleet of Boeing 17 Strata fortresses, which he'd never had before. Kaiser alone produced 3,000 ships in over two years. And he didn't do it alone. He brought in the best leaders from government and industry working together. So, Mr.
▶ 1:11:10Russell, you're the director of contracting at the National Security Acquisitions and Government Accountability Office. During a national security emergency where a president would enact the DPA, do you believe it would be beneficial for the executive branch, cabinet, and members of Congress to have guidance and feedback from members in the private sector? Yes. And that's a a little used um part of the DPA, which is the executive reserve.
▶ 1:11:37you know, as we look back over the last several years since the last no no executive reserves were were set up across the agency. So, that is an area where certainly with COVID, you know, that was the trust the the uh stress test of the DPA in in a number of ways. Um, you know, there needed to be coordination with with companies as uh decisions were being made. So, the executive I would agree with you here.
▶ 1:12:04Look, this is why not only the reserve, but what we're working on together as a force act would bring the best leaders in industry back to the table and have these conversations. Perfect example right now. Look, one shipyard in China has built more ships in 2024 alone than the entire United States has produced since World War II. If we think the Department of the Navy is up to the chops of being able to catch up, I think we'd all be wrong.
▶ 1:12:33And I will speak as an Air Force guy. If we can't even get a new plane for the president done on time, we're going to have a real hard time trying to do this internally. We must be seeking out through this DPA the opportunity to bring in expertise from the field. I'd also highlight here that President Trump has secured a massive critical mineral deal to combat China's dominance in the sector. Would you agree with me that the US could leverage the DPA to help bring on and prioritize critical minerals for things that are needed for national security? Absolutely.
▶ 1:13:04And I think those efforts are already underway. I think that this DPA has an opportunity to help lead in that charge. I'd also look at private capital procurement. Financial services companies in my district in Iowa are looking at how they can contribute to providing capital for the national security sector. Right now, taxpayers alone shouldn't be on the hook for covering all of our national defense. This has to be a whole of country approach.
▶ 1:13:27Would you also agree that private capital has a role in helping to alleviate some of the inventory financing constraints that currently plague our departments of defense? Absolutely. Private Capital is an important part of um investments in new and innovative technology that the government would want to use. Um you know, one of the things that we've seen is a lack of use of the loan authorities under Title Three.
▶ 1:13:53And if if nothing else, some of those signals, the use of those loans can uh provide a demand signal to industry and also help cultivate then you know private capital come in the mix. This is something that also we should be looking at in the DPA. And finally, very briefly, Mr. Lean, look, we have reports that China is building over 50 mega data centers every single year. The United States has a hard time even keeping pace. But before we can build a data center, we need a workforce.
▶ 1:14:21We don't have enough electricians and linemen in the country right now to build the data centers we need to even keep pace with this. Can the DPA also be used to look at things like building the workforce necessary to help protect our country? I I think yes. I think that's an area also where there may be more opportunity for Congress to build that into the DPA. Excellent. Thank you very much. Thank you, Mr. Chair. I yield my time. Thank you, Mr. Nun. The gentleman from California, Mr. Licardo, is now recognized for five minutes. Uh, thank you, Mr. chair and thank you both for your testimony.
▶ 1:14:51We've certainly learned a lot of lessons from the war we're seeing in Ukraine and elsewhere around the globe around the limitations of traditional defense procurement uh as we watch uh thousand drones um be deployed in great numbers and we're spending a million or two million in per rocket to try to shoot them down.
▶ 1:15:15Uh and you know what I hear routinely in Silicon Valley is a frustration of an awful lot of tech leaders of innovators, entrepreneurs, VCs and others uh around trying to deal with defense procurement. And I know this is not a new challenge. I know it's a lot has been written about the challenges of procuring tech.
▶ 1:15:38But clearly the DPA does provide under section 4533A for the procurement of critical technology items and we've seen that certainly in 2023 and other times. Um I believe at that time is around micro electronics.
▶ 1:15:53I suspect this is going to be increasingly a focus for us as we think about critical supply chain as And so I'm thinking a lot about how the DPA might be used uh as a method to nudge the defense department and other departments toward more nimble ways of procuring technology than the traditional approaches of procuring ships and tanks.
▶ 1:16:17Um I I think you've all heard the criticisms uh that the uh sclerotic approach of you know 9-year procurement cycles of um of long lists of specifications does not work in a world uh where technology development is much more dependent on iterative uh and nimble approaches whether it's micro electronics or or biotech and and so I guess my question is how do you see that we could use this
▶ 1:16:47reauthorization as an opportunity to expand, for example, bipartisan efforts in support of the defense innovation unit, which I know is, you know, over the last decade is has demonstrated one alternative approach, uh, or as we saw with Operation Warp Speed, uh, a better approach to precurring technology um, through through the DPA. Thank you, Congressman.
▶ 1:17:16and I can address that first at least. I think one thing we haven't mentioned here today which which could potentially be um relevant to your question is is mobilization planning. Um I I think that is not something that is directly addressed in the DPA but uh could be potentially in any reauthorization having DoD or other agencies do mobilization planning and connect that to any uh DPA planning efforts could be could be something to potentially address that. Thank you, Mr. Leven. Mr.
▶ 1:17:46Russell. Yeah, I would just add that I'm glad you mentioned the defense innovation unit. You know, that's a key effort the defense department has to try to bring in those innovative companies and and and scale fast. So to the extent that title three authorities whether it's loans you know as we talked about earlier trying to attract attract u you know private capital in conjunction with loan guarantees and other things that the government can do to help spur and foster that innovation could be a good thing. Thank you.
▶ 1:18:14I understand under title three we are entitled to impose conditions on uh how uh the PA appropriations are used consistent with congressional intent. I understand, you know, we're not the committee um that is going to reform defense procurement.
▶ 1:18:32Uh and I understand that is not exactly what the DPA is about, but uh have there been other attempts to essentially nudge procurement in a more toward a more nimble uh future through the DPA? Have we seen that before? Uh are there examples we could look at uh as guidance outside the DPA? There are certainly other efforts to um reform defense procurement.
▶ 1:18:58You know, it's an area that's been on GAO's high-risisk list, I think, since the '9s. So, um just effort usually it's the defense authorization act would have the the shaping legislation for the procurement reforms, but there's certainly more to be done. I would speak to uh work that we've done looking at leading commercial practices, how companies do, you know, the speed of innovation, coming up with minimal viable products, digital twins.
▶ 1:19:25All of those tools are important and can help uh streamline the the requirements in the the procurement side at DoD. Thank you. I appreciate it. And I look forward to having conversations offline particularly on mobilization about how we might be able to do that in this legislation. Thank you, gentlemen. You Thank you, Mr. Licardo. A gentleoman from Michigan who's Mrs. Mlan who's also the conference chair for the Republican party is now recognized for five minutes. Thank you, Mr.
▶ 1:19:53Chairman, and thank you for holding this hearing and and thank you both for being here. Appreciate it. Um Mr. Leven, I want to start with you is um I I like the public private partnership idea arena. Can you discuss a little bit more of and and give me some examples of the successful voluntary partnerships between the government and industry that actually bolster our country's national defense because I do think we're on to something with this.
▶ 1:20:25Thank you, Congresswoman. Um the voluntary agreements provision of the DPA has has not been used heavily over the over the last few years I believe since uh FY18. There has only been one new one and that was um initiated by FEMA uh to address the the COVID pandemic. Uh the Department of Transportation I believe has one or two other active ones. So it is an area that you know the DPA provides for but has has not been used in uh very much in recent years.
▶ 1:20:54But do you have some examples of how it's been working successfully those partnerships? Um again with the with the limited uh usage in recent years it's hard to say but um it the DPA was used during co for example title one to um procure to uh procure ventilators, masks, things like that. Was it successful there? um it was able to purchase those things.
▶ 1:21:24There were also some um some criticisms from from some places that um FEMA, for example, didn't have the necessary expertise to um to fully implement its DPA authorities. Okay. Mr.
▶ 1:21:39Russell, how should this committee consider reforms to ensure that you the United States does not have deficiencies in areas of critical defense and what sectors I'm thinking spec specifically maybe critical minerals should we focus Thank you for the question, Congresswoman.
▶ 1:22:03I I think uh DoD and their industrial based policy office, other aspects of uh the agencies use the DPA typically can outline what some of the key uh supply chain areas are that either are emergent or at risk, you know, critical materials, rare earths is one in the news recently.
▶ 1:22:23And to the extent that um some of the authorities under title seven with the ind industrialbased assessments yeah can be harnessed to uh coincide with areas where either we want to expand as a country or shore up some risks that could be a positive thing. It you just need to have that uh coordination so the left hand knows what the right hand's doing in terms of um each of the agencies that have the DPA authorities in coordination. I think you touched on something which is extremely important. I think coordination.
▶ 1:22:54How do we do a better job of that in your opinion? Give us some uh some Sure. Right now FEMA is the governmentwide coordinator of the DPA. There's a lot of activity around title one authority, the priority ratings, but there could be more on title three.
▶ 1:23:10Um, we had a recommendation in our report that came out today that um recommended that that FEMA try to leverage some of the lessons learned and experiences of DoD in applying the title three uh purchase commitments and other things so that could be shared with other agencies like HHS that's trying to stand up that capability.
▶ 1:23:29So there's lots of synergies like that that that could potentially be uh bolstered with I think those recommendations I think would be helpful for and so thank you on that and and since you talked about priorities let's move into that the DoD issued 300,000 roughly give or take 300,000 priority ratings each year seems like a lot and my concern if if everything is a priority then nothing is a priority.
▶ 1:23:59I mean, 300,000 priorities seems pretty large to me. What I'm wondering is how can we reform the performance rating system so that we are actually using the DPA in a thoughtful targeted manner, right? I mean, I'm not saying but 300,000 seems to be a lot. How do we narrow that down and and and really funnel our criteria for making those decisions a priority?
▶ 1:24:28I I would say for the the line share of those priorities do relate to the Department of Defense and they pretty much put priority ratings on all procurement contracts related to the big defense um major defense weapon systems other activities. what we've heard from uh industry associations and in talking to um the DoD folks that that administer those programs is it's sort of baked in the contractors understand their responsibilities um for the priority ratings.
▶ 1:24:58Um the key is where there are bottlenecks or or uh challenges that occur at the subtier that those get elevated and and then resolved quickly. Okay, my time is expired. Thank you. Thanks, Mrs. MLAN. I would like to thank our witnesses for their testimony today. Without objection, all members will have five legislative days to submit additional written questions for witnesses to the chairman. Questions will be forwarded to the witnesses for their response.
▶ 1:25:25Witnesses, please respond no later than July 17th. This hearing stands adjourned.