Hearing Entitled: Evaluating the Defense Production Act

Chairman Warren Davidson (R-OH)SPEAKER_02

Subcommittee on National Security, Illicit Finance, and International Financial Institutions will come to order. Without objection, the chairman is authorized to declare recess of the committee at any time. This hearing is titled "Evaluating the Defense Production Act." Without objection, all members will have 5 legislative days within which to submit extraneous materials to the chairman for inclusion in the record. I now recognize myself for 4 minutes for an opening statement. 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. As 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, as 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. Moreover, in recent years, the DPA has not been used as effectively as it could, and arguably it's been misused. It's time for Congress not just to reauthorize, but to reset and realign DPA's authorities. For example, 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? A month later, President Biden leaned on DPA to boost the production of residential heat pumps. While the goal might have been laudable, is this really a correct use of DPA? 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 risk irrelevance. From 2018 to 2024, for example, 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, 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. This period highlighted deep vulnerabilities. If we can count on the DPA to be reactive once an emergency arrives, 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. Our 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 intensifies as threats we face continuously augment, and relationships become strained in various ways. The 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. I now recognize the gentleman from Illinois, Mr. Casten, for 4 minutes for an opening statement.

Rep. Sean Casten (D-IL)SPEAKER_03

Thank you, Mr. Chairman, for holding this hearing. Thank you for witnesses for appearing today. I am I am not the ranking member of this committee. I will make no claims to be able to fill into Ms. Beatty 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. So, the DPA gives the president authority to take various actions to ensure that the supply of materials and and services are necessary for national defense, gives the president the authority to prioritize government contracts, waive international trade agreements, offer incentives within the domestic market to enhance production of critical materials and technologies if deemed necessary for the national defense. We've We've seen many benefits in Illinois. Recently saw DPA invoked to help resources in shipbuilding, not because Illinois is not a port, but because Illinois has a lot of steel manufacturing that was important to that need, and that's an important issue. Over the years, Congress has amended the definition of national defense to include emergency preparedness, energy production activities, critical infrastructure protection restoration, homeland security. We of course saw applications to face when we were facing novel challenges national security from the COVID-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. In 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. 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, saying that it must be a part of every strategic decision the department makes. I wish my Republican colleagues didn't criticize the use of the DPA to support cleaner and cheaper energy sources because it's important. We want electric grid resiliency, but we politicize this. 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 U.S. industrial base to meet the demands of national defense, including energy security and independence. 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. And 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 Emerg International Emergency Economic Powers Act, where the president has declared that there's an emergency that requires the imposition of tariffs. IEEPA 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. And 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 I branch, and I would submit to you, the best branch among the three in Congress. Look forward to the discussion, and I yield back.

Chairman Warren Davidson (R-OH)SPEAKER_02

Thanks, Mr. Casten. I now recognize the chairman of the full committee, Mr. Hill, for 1 minute.

Full Committee Chairman French Hill (R-AR)SPEAKER_04

Thank you, Chairman Davidson. America is 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. That 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. I 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.

Chairman Warren Davidson (R-OH)SPEAKER_02

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 Levin, an analyst in economic development policy at the Congressional Research Service. We thank you both for taking time to be here today and for the preparation you've done in advance. You will each be recognized for 5 minutes to give an oral presentation of your testimony. Without objection, your written statements will be made part of the record. Mr. Russell, you're now recognized for 5 minutes for your oral statement.

Mr. William RussellSPEAKER_10

Thank you, Chairman Davidson, Chairman Hill, Vice Chair Nunn, and Congressman Casten, members of the subcommittee. Thank you for the opportunity to discuss federal agency use of the Defense Production Act. While 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 COVID-19 pandemic to ongoing efforts to make our supply chains more resilient. In 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. I'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 I priority ratings on contracts or orders. Priority 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 III investments valued at approximately 3.2 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. For example, DOD completed investments that were used to respond to COVID-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, munitions, and more. Use of Title VII authorities included industrial base assessments and one voluntary agreement with industry over that period. For example, DOD, HHS, DHS, and others requested or completed 17 industrial base assessments to better understand critical supply chains such as microelectronics. Agencies have experienced a number of challenges when using the DPA, specifically difficulties tracking the rated orders through the COVID-19 response. Our latest report found additional challenges. For example, DOD noted that industry partners did 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 III, 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. Additionally, the DPA-wide coordinator, currently FEMA, has not collected and shared lessons learned leveraging DOD's extensive experience with Title III 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

Mr. Adam G. LevinSPEAKER_06

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. Congress 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 III activities, as well as at least another $10 billion to pay for DPA responses to the COVID-19 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.

Chairman Warren Davidson (R-OH)SPEAKER_02

Thanks, Mr. Levin. I now recognize the ranking member of the full committee, Ms. Waters.

Full Committee Ranking Member Maxine Waters (D-CA)SPEAKER_01

Thank you very much. The Defense Production 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. And in the hands of someone willing to bend, break, or disregard the law, it is concerning. Donald Trump has abused the International Emergency Economic Powers Act to launch his trade war. He's abused the Alien Enemies Act to declare war against migrants. He's abusing Title 10 and sending troops into LA streets. Someone 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 back.

Chairman Warren Davidson (R-OH)SPEAKER_02

I thank the ranking member. I'll now turn to member questions and recognize myself for 5 minutes to begin questions. Title I 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, but 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. So 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 2024, nearly all priority ratings were placed for military goods. This makes sense to me given the original intent of President Truman's 1950 legislation, but the world continues to develop and change. However, as I said, the industrial supply of semiconductors, prescription drugs, steel, tooling, rare earth minerals, microelectronics, 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. For instance, the COVID pandemic exposed an enormous existent reliance on China for health supplies, specifically India and China, are increasingly the leading U.S. 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 solutions now. Mr. Russell, 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 readiness?

Mr. William RussellSPEAKER_10

Mr. Chairman. I think we've seen 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 military equipment, but there are investments in pharmaceuticals. HHS has been using it to help resupply the Strategic National Stockpile that was so critical during the COVID-19 pandemic. So there are a range of uses for Title I and Title III beyond just the military applications.

Chairman Warren Davidson (R-OH)SPEAKER_02

Yeah, and Mr. Levin, what do you think? I mean, we've mentioned everything from energy security, pharmaceuticals, health supplies. What do you think about being more proactive with the DPA authorities?

Mr. Adam G. LevinSPEAKER_06

Thank you, Mr. Chairman. I echo my colleague's comments that most DPA invocations, uses, excuse me, are for defense applications by DOD. DOD is the heaviest user of DPA. But what I can also say is that the DPA is generally understood 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 that it is being used 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.

Chairman Warren Davidson (R-OH)SPEAKER_02

Yeah, so you definitely lean on the presidential discretion. It is kind of wide open. 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. Mr. Russell, on the defense side, Russia currently produces more artillery shells, tanks, drones, munitions of all sorts in greater capacity than really NATO combined. We've seen kind of an alarming surge from Russia's capabilities in Ukraine in particular. How can authorities under DPA be used effectively to not just use the arsenal approach, but domestic supply chains to bolster the rest of the defense industrial base?

Mr. William RussellSPEAKER_10

Yeah, thank you for the question, Mr. Chairman. I think what we saw with DOD trying to recapitalize and re-equip for items sent to Ukraine was a great example. DPA authorities are used exclusively in terms of Title III, Title I to build up supplies of ammunition, tactical vehicles, missiles, all kinds of munitions. And so Title III has been an instrumental tool to help companies quickly scale up production, add a shift. You can use those funds to buy important manufacturing equipment, to facilitate, create new facilities. So that's been a key aspect that we've seen just recently.

Chairman Warren Davidson (R-OH)SPEAKER_02

Yeah, thank you, and I look forward to continuing the dialogue. And I My time is expired, and I now recognize the gentleman from Illinois, Mr. Casten.

Rep. Sean Casten (D-IL)SPEAKER_03

Thank you. So, I want to I want to start with an observation I made at the start that Congress 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. We we could do a better job. I want to start with you, Mr. Levin, and 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 branch?

Mr. Adam G. LevinSPEAKER_06

Yes, thank you for the question, Representative. There are a few oversight mechanisms. So, for example, with funding of the DPA, Congress has set a cap on the DPA fund, which pays for Title III actions. The unobligated balance at the end of every fiscal year cannot exceed $750 million. That's one example. Another one is for Title III activities. Certain activities over $50 million, that would be over $50 million, require congressional approval before the president can take those activities. Those are a few examples of some of the oversight that Congress has written into the law Okay .

Rep. Sean Casten (D-IL)SPEAKER_03

And Mr. Russell, are you familiar with the ways that the DPA has been used in the past to help address U.S. energy supply?

Mr. William RussellSPEAKER_10

Just certainly, Department of Energy has a number of rated orders under Title I.

Rep. Sean Casten (D-IL)SPEAKER_03

Mr. Levin, any specific examples you're aware of?

Mr. Adam G. LevinSPEAKER_06

Yeah. So, the DPA in Title I specifically does identify energy as a critical and strategic material, therefore making it eligible for to be covered by the DPA, for example.

Rep. Sean Casten (D-IL)SPEAKER_03

Okay, and I was thinking of specific ones. I'll just just throw out President Ford used the DPA to build the Trans-Alaska Oil Pipeline. 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. 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. I think it's also true for refineries. I think it's also true for transmission lines. You have no control over your commodity cost. You have no control over what you're producing, but you've 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? We've done it with regulated monopolies, et cetera, et cetera. There's a concern, there's political pushback when Biden was using this to say, Well, let's build stuff that's that's cheaper, 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've got a bunch of capital that hasn't been recovered yet. There's this pushback 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 the NextEra 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. So, 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 I or Title III, how the executive branch should balance the interests of energy consumers, a.k.a. 330 million Americans, versus energy producers, a.k.a. a handful of Americans? Does the DPA constrain that trade-off?

Mr. William RussellSPEAKER_10

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. So certainly the Title III investments can help, whether it's loans or expansion of manufacturing, can help push a particular supply chain to get bigger, but in terms of the larger framework—

Rep. Sean Casten (D-IL)SPEAKER_03

the DPA does not direct 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, 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 interests of American energy producers first. Thank you. I yield back.

Chairman Warren Davidson (R-OH)SPEAKER_02

Thank you, Mr. Casten. The gentleman from Kentucky, Mr. Barr, who's also the chairman of the Subcommittee on Financial Institutions, is now recognized for 5 minutes.

Rep. Andy Barr (R-KY)SPEAKER_05

Thank you. Well, if it wasn't for regulations, cheap, affordable energy would be fossil energy. Regulations are what's driving up the cost of conventional energy. Mr. Levin, 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. How can the Trump administration—we know the Trump administration 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 power plants, whether they're coal-fired plants or gas-fired plants, and strengthen domestic energy reliability?

Mr. Adam G. LevinSPEAKER_06

Thank you for the question, Representative. The DPA does give the president broad latitude to invoke the law if it's deemed to be a national— a national defense concern. And you're correct that President Trump did recently issue a determination, an executive order, that named coal as essential to national defense and eligible for Title III assistance. One thing I would say is that the DPA, given that 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 more of a catalytic investment to get something started. I think that that might be a consideration in this case.

Rep. Andy Barr (R-KY)SPEAKER_05

So, under existing Title I and Title III authorities, can the executive branch invoke those authorities to bypass permitting requirements?

Mr. Adam G. LevinSPEAKER_06

The DPA does not specifically address permitting requirements, though it could be something that Congress will consider. So no, I, I

Rep. Andy Barr (R-KY)SPEAKER_05

So in reauthorization, we could add that to the toolbox, so to speak, of giving the executive branch under the DPA the ability to expedite permitting.

Mr. Adam G. LevinSPEAKER_06

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.

Rep. Andy Barr (R-KY)SPEAKER_05

What other barriers are there that the DPA could potentially eliminate to reopening or building new coal-fired power plants to address the massive need for power for artificial intelligence and data centers?

Mr. Adam G. LevinSPEAKER_06

Well, again, the DPA, the president can invoke it to provide awards, for example, under Title III to companies, to coal companies, for example, or other energy companies that the president has determined to be essential to national defense. So that's one option. Another—

Rep. Andy Barr (R-KY)SPEAKER_05

Are there other laws that are in place that would frustrate the president's invocation of the DPA to to permit new coal-fired power?

Mr. Adam G. LevinSPEAKER_06

Um, that would be outside the scope of my expertise.

Rep. Andy Barr (R-KY)SPEAKER_05

Well, I think here's the point. It's too hard to build new coal-fired 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. There's subsidies that that have been policy to build renewables, but there's it's too hard today to 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 need baseload power in this country. And and my question is, 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 reliable, affordable energy, are removed?

Mr. Adam G. LevinSPEAKER_06

Congressman, I think that the DPA is one tool that is available to to the president and to the government, so I think it's best considered as part of any suite of options that might be considered. Again, I would go back to some of the funding—potential funding constraints, the $750 million cap on unobligated funding. And 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 available.

Rep. Andy Barr (R-KY)SPEAKER_05

Thank you. My time has expired.

Chairman Warren Davidson (R-OH)SPEAKER_02

Thanks to the gentleman from Kentucky. The gentlewoman from California, Ms. Waters, who's also the ranking member of the full committee, is now recognized for 5 minutes.

Full Committee Ranking Member Maxine Waters (D-CA)SPEAKER_01

Mr. Russell, President Trump and Elon Musk were recently engaged in a Twitter spat. While this was amusing in some ways, and some would say wholly unsurprising, it also raised questions about the Defense Production Act. This was because as these two corrupt oligarchs fought, Steve Bannon, an advisor to the president, declared that Trump should use his DPA authority as president, quote, unquote, "seize SpaceX," Musk's company. Mr. Levin, could the president use the DPA to seize Elon Musk's companies or any of his company's assets? Why, or why not?

Mr. Adam G. LevinSPEAKER_06

Thank you for the question, Ranking Member. As the DPA is currently constructed, it does not allow for the requisitioning of companies. There was a title that lapsed in 1953 that did provide for the requisitioning of private businesses under some circumstances, but that is no longer an active title.

Full Committee Ranking Member Maxine Waters (D-CA)SPEAKER_01

Thank you. Can the DPA be used to refuse contracts or force undesirable contracts on firms for inappropriate reasons, like 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, cryptocurrency company? Can they be refused, can it refuse to be used to refuse contracts?

Mr. Adam G. LevinSPEAKER_06

Title i. does require companies to accept priority-rated contracts. Regulations 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.

Full Committee Ranking Member Maxine Waters (D-CA)SPEAKER_01

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. Is 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 Alcatraz 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 president? I'm sticking with you, Mr. Levin.

Mr. Adam G. LevinSPEAKER_06

Sure. Thank you. I can't speculate on potential uses of the DPA. What I can say is that the DPA is generally understood to give the president broad authorities to invoke it for national defense, as national defense is defined in the law. I think a potential oversight mechanism for Congress could be to address the definition of national defense. It has done so numerous times over the years. For example, homeland security was added to the definition, I believe, in 2009. So that would be a potential oversight mechanism for Congress.

Full Committee Ranking Member Maxine Waters (D-CA)SPEAKER_01

Further, and I know this may go a little beyond your expertise, but do you see that the president having created all of these crypto companies and stablecoin that any way they can be enhanced that would cross with the DPA?

Mr. Adam G. LevinSPEAKER_06

Again, it's hard to speculate on potential cases. That does seem to be outside of the DPA's scope.

Full Committee Ranking Member Maxine Waters (D-CA)SPEAKER_01

As I understand it, he wanted to set up a DPA Bitcoin reserve. Did you hear about that?

Mr. Adam G. LevinSPEAKER_06

I did not.

Full Committee Ranking Member Maxine Waters (D-CA)SPEAKER_01

Did anybody hear about that?

Mr. William RussellSPEAKER_10

I have not heard of that.

Full Committee Ranking Member Maxine Waters (D-CA)SPEAKER_01

Okay. Well, because you are so expert in DPA, let me just ask if perhaps in your continued work and research, et cetera, that if you learn about cryptocurrency being advanced to presidents' 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.

Chairman Warren Davidson (R-OH)SPEAKER_02

Thank you, Ms. Waters. The gentleman from Texas, Mr. Williams, who's the chairman of the Small Business Committee, is now recognized for 5 minutes.

Rep. Roger Williams (R-TX)SPEAKER_08

Thank you, Mr. Chairman, and thank you all for being here today. 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, and especially services. What often happens is that large primes pass DPA-driven expecting small business to absorb costs, ramp up production, or shift their operation at 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 the hit. So Mr. Russell, how can we ensure that small businesses are protected when DPA authorities are deployed in an emergency, and what can be done to prevent unintended negative impacts on small suppliers and contractors further down the chain?

Mr. William RussellSPEAKER_10

Thank you for the question, Congressman. A couple of thoughts there: one, in Title VII, there is a specific preference for small business utilization and to try 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 in other sections. In terms of the Title I, the rated orders, we did see during COVID-19 an instance with a particular fabric for N95 masks, lots of rated orders. And then, some of the sub-tier suppliers that provided those materials got bombarded with competing rated orders. And so, the key there, one of the expectations in Title I is for those companies and for the government to have a way to reconcile when those bottlenecks in the supply chain emerge. And so, on the supplier standpoint, raise your hand, let the government customer know that you have these competing priorities. But then there has to be a coordination group. Right now, FEMA is the lead of agency-wide coordination, but that group has to be active to quickly reconcile and get some relief to those sub-tier suppliers. So it's an important issue to look at. It's one that DOD, when we were doing the recent work, also noted that they're trying to educate some of the sub-tier suppliers on the responsibilities for Title I when they have a rated order. The only other thing I would add is that within the Title I authorities, there are two types of rated orders, DO/DX, so there is an ability to further prioritize across rated orders.

Rep. Roger Williams (R-TX)SPEAKER_08

Thank you. One of the biggest complaints I hear from small business owners, especially especially manufacturers, is that when a national emergency hits, the federal process slows them down. Whether it's unclear guidance, 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 and equipment but lack a robust compliance department. So again, Mr. Russell, What reforms the DPA could better support small business in scaling production quickly during emergencies without getting buried in federal red tape?

Mr. William RussellSPEAKER_10

Yeah, I'd go back again to look at Title VII 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 reauthorization. I think DOD is doing the lion's share of the use of some of the titles, Title I and III in particular. So, there could be an opportunity to help educate small businesses. They'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 expedite the amount of time that it takes to look at the proposals that the small businesses or other companies propose and then come to a, you know, contracting or other decision.

Rep. Roger Williams (R-TX)SPEAKER_08

In closing, we're in a different security environment today than when the DPA was first written, and our adversaries are not just building up their militaries, they're using economic leverage, trade choke points, and cyberattacks to weaken us before a shot is even fired. So when we've seen through hacking, hostile trade policy, 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. Russell, as our adversaries become more sophisticated in targeting supply chains through cyberattacks or trade manipulation, how can DPA authorities be modernized to help neutralize these threats?

Mr. William RussellSPEAKER_10

A couple of thoughts there. One, there's the Defense Production Act Committee that's been largely dormant. That could be a forum to potentially go across agencies that use the DPA and come up with a larger strategy to get at some of these national issues, cybersecurity. It could also be used to potentially

Chairman Warren Davidson (R-OH)SPEAKER_02

Gentleman's time's expired. I encourage a follow-up afterwards. The gentleman's time's expired. The gentleman from California, Mr. Vargas, is now recognized for 5 minutes.

Rep. Juan Vargas (D-CA)SPEAKER_09

Thank you very much, Mr. Chair, and again, I thank the witnesses for being here. The Defense Production Act of 1950 has been a vital tool for our country in times of crisis, whether it's a war or a 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 chairman and the ranking member for bringing it forward. During 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. In San Diego, we're proud to have a strong shipbuilding presence and a number of shipyards, but China's growing dominance in shipbuilding 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 state-owned shipbuilder built more commercial vessels by tonnage in 2024 than the entire U.S. shipbuilding industry has built since the end of World War II. Now, if that statistic is correct, that's incredible. So how can the DPA be used strategically as a tool to support this domestic shipbuilding that I think is so vital?

Mr. William RussellSPEAKER_10

Yeah, absolutely. And there was a recent executive order to tackle the naval industrial base, so that gives authority to use Title III, which can definitely help. We'll see it play out over time. But in terms of funding to expand the capacity of our shipbuilders, to hire more staff, to to get the critical equipment they need. Castings and forgings is another area where DPA investments are used to help facilitate shipbuilding. The other aspect would be maybe some industrial base assessments. There's that authority under Title VII that can help to further illuminate where there are some shortfalls in the supply chain and help agencies come up with a strategy to address

Rep. Juan Vargas (D-CA)SPEAKER_09

But, you know, 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 the sense of staffing. They 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 of a sudden they have to lay off all these people, and it's very, very hard for them once again to find people. To get people to be able to do this. There has to be some way where we can work with the government to make sure that this doesn't happen again. 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 shipbuilding in the United States? I mean, I think we're getting our clock cleaned on this.

Mr. William RussellSPEAKER_10

Yeah, the one thing I would add, we've done a body of work looking at some of the struggles in shipbuilding, and the DPA is one aspect that could help, certainly with the Title III investments and potential use of loans. But there's work for the Navy, Department of Navy to do as well, and DOD in terms of production smoothing, ensuring that they're sufficiently utilizing the shipyards and maintaining the workforce when the companies do ramp up.

Rep. Juan Vargas (D-CA)SPEAKER_09

Okay, well, again, I hope we can do more than that, because that really is a big concern of mine. Again, that's why I thank the chairman for bringing this forward. 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. How does that interplay with the DPA? Because obviously that's a fundamental right under the Constitution.

Mr. William RussellSPEAKER_10

Congressman, are you referring to the industrial base assessments?

Rep. Juan Vargas (D-CA)SPEAKER_09

Well, sure, but I guess also 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. How do you compensate? There's a basic 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?

Mr. William RussellSPEAKER_10

Yeah, that's not something that we've seen in the last—since it was reauthorized in 2018. Generally speaking, once the contract or order has the priority rating, it's just a matter of executing the government's need above other customers. For the most part, what we've seen at DOD, that uses the lion's share of those, is that the company is able to meet all their orders, so they don't have to

Rep. Juan Vargas (D-CA)SPEAKER_09

okay, my time is up. Thank you, Mr. Chairman.

Chairman Warren Davidson (R-OH)SPEAKER_02

Thank you, Mr. Vargas. I'd now like to recognize the gentlewoman from California, Mrs. Kim, for 5 minutes.

Rep. Young Kim (R-CA)SPEAKER_00

Thank you, Chairman Davidson and ranking member, for hosting this hearing. Thank you to our witnesses for joining us today. In 2021, those of us in Orange County saw the benefits of the Defense Production Act, or DPA, firsthand when it was invoked to increase fire hose production as 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. And one method of achieving that goal is reforming the DPAC, the Defense Production Act Committee. The goal of DPAC was to 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, it does not seem like DPAC is fulfilling that role. Mr. Levin, what reforms should we consider to ensure that DPAC fulfills that mandate?

Mr. Adam G. LevinSPEAKER_06

Thank you, Congresswoman. 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 I, Title III, and Title VII. It was also in statute required to have an executive director. An executive director was—does not appear to have ever been appointed, and in the later reauthorization, I think it was 2014, the DPAC's remit was was reduced to just Title I from all the authorities. So I think Congress could consider whether it wants to go back to the DPAC's original mandate and what tools might be able to strengthen it in doing so. So that could be increased reporting requirements, that could potentially be something like mandating the level of official from the agencies that sit on the DPAC, specifically requiring that. Another thing that I'll mention is that by executive order, FEMA has been delegated to be the chair of DPAC. At one point, that was a rotating position, at least between FEMA and DOD, and DHS through FEMA through DHS, I should say. That could be it could be a rotating position again. The last thing I'll say is Congress could consider potentially providing appropriations directly for the DPAC.

Rep. Young Kim (R-CA)SPEAKER_00

Okay. Well, I do want to see DPAC that's engaged and active within the federal government, and one idea is to achieve that would be increase in assessments and simultaneous coordinations within the DPAC. So do you think that kind of a proposal will be beneficial in creating a more effective DPAC?

Mr. Adam G. LevinSPEAKER_06

I think that that could be something that could be beneficial. And I think observers have noted that the DPAC was originally charged with interagency coordination, things like that, and has over the years appeared to not totally fulfill that role.

Rep. Young Kim (R-CA)SPEAKER_00

Yeah. Overall, it seems like we need to thoroughly analyze the DPA and ensure that it functions the way that it was originally intended, and it's a tool during a crisis rather than a liability. 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 business records and property. So, Mr. Levin, does anything in the law prevent an administration from using this authority to obtain Americans' personally identifiable information that may be possessed by a business?

Mr. Adam G. LevinSPEAKER_06

Nothing in the law specifically 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

Rep. Young Kim (R-CA)SPEAKER_00

Thank you. I want to get to—you did answer that quickly. I'm going to shift gears and close by touching on China and our overreliance 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. Russell, 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?

Mr. William RussellSPEAKER_10

Absolutely. Thanks for the question. I think in short, there was a recent executive order that does just that, tries to target critical materials, critical minerals. As you noted, China does produce the lion's share, or at least mines the lion's share of rare earths and other things that are important, and we've seen some instability in that supply over the last few months.

Chairman Warren Davidson (R-OH)SPEAKER_02

The gentlewoman's time has expired. The gentleman from Illinois, who is also the ranking member of the Financial Institutions Subcommittee, Mr. Foster, is now recognized for 5 minutes.

Rep. Bill Foster (D-IL)SPEAKER_12

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 during the COVID crisis. Early on, I think in about April of 2020, I led a letter from Congress basically encouraging the administration to do Operation Warp Speed. And this was—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 promise, would not yell at you if you build a factory that ended up useless, which is actually what happened. Two of the three vaccines that we put a lot of money into worked and one didn't, and that's okay. That was the thinking behind it. It was shared by Dr. Peter Marks, 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 in disgust over all of the activities of RFK and the budget cuts in agencies he's overseeing. But there was really spectacular work that was done, a lot of it with the DPA at the time. And so, and as part of the COVID Select Committee that I was on, I partnered with my Republican partner, Representative Dr. Mark Green, on requesting and then help guiding a GAO oversight of Operation Warp Speed. And one of 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'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 public. And so that—and the GAO was sitting in on a lot of the planning of, planning of Operation Warp Speed, and it was great to see that partnership. Those who were executing Operation Warp Speed at on the government level understood that GAO sitting in on their meetings and understanding what they're 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, you deserve public acknowledgment. And so I guess that's—the thing that we've struggled with for a long time is that there are lots of lots of of critical industries in that we should, as a matter of national security, maintain in the United States States, or at least in the free world, the countries we trust in the free world, for which the U.S. is not the low-cost supplier. Okay. And one example of this that's in the news right now is is the critical minerals and for for permanent magnets. The other PhD physicist in Congress, Representative Rush Holt, worked for probably more than a decade on that with almost no success. What he got were reports. 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-asides, 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 who would not tax and would not spend even to protect what has turned out to be a really, really critical part of our supply chain. And so, and so my question, I guess, if you look at the two tools, the the two basic approaches, tariffing or set-asides, which are sort of equivalent, they have the feature that, yes, you can protect a U.S. industry, but it makes that industry less competitive. You can see that in military set-asides where the military stuff is just way overpriced compared to commercial markets. Or you can subsidize, which is sort of what we did during trying to get the CHIPS and Science and 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, how do you how do you do the balance in on that?

Mr. William RussellSPEAKER_10

Well, I can speak to the other side of the ledger, certainly the subsidizing using the DPA. We've seen that through purchase commitments and other arrangements, a lot of support across some vital supply chains that DOD and others have identified, whether that's hypersonics, emerging things like biomanufacturing.

Rep. Bill Foster (D-IL)SPEAKER_12

Well, if you can respond for the record with anything that's written 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 Congress.

Mr. William RussellSPEAKER_10

Absolutely. I, I can take that back because I didn't have the expertise. And

Rep. Bill Foster (D-IL)SPEAKER_12

again, you guys did great work, and please pass that on.

Chairman Warren Davidson (R-OH)SPEAKER_02

Thank you, Mr.

Mr. William RussellSPEAKER_10

Wells. Certainly,

Chairman Warren Davidson (R-OH)SPEAKER_02

The gentleman's time has expired. The gentleman from Iowa, Mr. Nunn, who's also the vice chairman of the, subcommittee on National Security, is now recognized for 5 minutes.

Rep. Zachary Nunn (R-IA)SPEAKER_13

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 U.S. 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, but 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. This 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 the other side of the aisle here, Representative Jim Himes, to be able to move forward. And let's look back where this came from. Look, 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—B-17 Flying Fortresses, which we'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. Russell, you're the director of Contracting and National Security Acquisitions in 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?

Mr. William RussellSPEAKER_10

Yes, and that's a, a little-used part of the DPA, which is the executive reserve. You know, as we look back over the last several years since the last reauthorization, no, no executive reserves were set up across the agency. So that is an area where certainly with COVID you know, that was the stress test of the DPA in a number of ways. You know, there needed to be coordination with, with companies as decisions were being made. So the executive reserve— I would agree with

Rep. Zachary Nunn (R-IA)SPEAKER_13

you here. Look, 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. And I'll 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 U.S. could leverage the DPA to help bring on and prioritize critical minerals for things that are needed for national security?

Mr. William RussellSPEAKER_10

Absolutely. I think those efforts are already underway.

Rep. Zachary Nunn (R-IA)SPEAKER_13

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 for 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. Would 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?

Mr. William RussellSPEAKER_10

Absolutely. Private capital is an important part of investments in new and innovative technology that the government would want to use. One of the things that we've seen is a lack of use of the loan authorities under Title III, and if if nothing else, some of those signals, the use of those loans, can provide a demand signal to industry and also help cultivate then private capital. I would agree. come in the mix.

Rep. Zachary Nunn (R-IA)SPEAKER_13

This is something that also we should be looking at in the DPA. And finally, very briefly, Mr. Levin, 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. We 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?

Mr. Adam G. LevinSPEAKER_06

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.

Rep. Zachary Nunn (R-IA)SPEAKER_13

Excellent. Thank you very much. Thank you, Mr. Chair. I yield my time.

Chairman Warren Davidson (R-OH)SPEAKER_02

Thank you, Mr. Nunn. The gentleman from California, Mr. Liccardo, is now recognized for 5 minutes.

Rep. Sam Liccardo (D-CA)SPEAKER_11

Thank you, Mr. Chair, and thank you both for your testimony. We'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 as we watch $1,000 drones be deployed in great numbers and we're spending $1 million or $2 million per rocket to try to shoot them down. What I hear routinely in Silicon Valley is a frustration of an awful lot of tech leaders, of innovators, entrepreneurs, VCs, and others around trying to deal with defense procurement. And I know this is not a new challenge. A lot has been written about the challenges of procuring tech. But clearly the DPA does provide, under Section 4533(a), for the procurement of critical technology items, and we've seen that certainly in 2023 and other times. I believe at that time it was around microelectronics. I suspect this is going to be increasingly a focus for us as we think about critical supply chain as technology. And so I'm thinking a lot about how the DPA might be used 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. I think you've all heard the criticisms that the sclerotic approach of 9-year procurement cycles, of long lists of specifications, does not work in a world where technology development is much more dependent on iterative and nimble approaches, whether it's microelectronics or biotech. And so I guess my question is, how do you see that we could use this reauthorization as an opportunity to expand, for example, bipartisan efforts in support of the Defense Innovation Unit, which I know is, over the last decade, has demonstrated one alternative approach, or, as we saw with Operation Warp Speed, a better approach to procuring technology through the DPA?

Mr. Adam G. LevinSPEAKER_06

Thank you, Congressman. I can address that first, at least. I think one thing we haven't mentioned here today, which could potentially be relevant to your question, is mobilization planning. I think that is not something that is directly addressed in the DPA, but could be, potentially, in any reauthorization. Having DOD or other agencies do mobilization planning and connect that to any DPA planning efforts could be something to potentially address that.

Rep. Sam Liccardo (D-CA)SPEAKER_11

Thank you, Mr. Levin. Mr. Russell?

Mr. William RussellSPEAKER_10

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 scale fast. So to the extent that Title III authorities, whether it's loans, as we talked about earlier, trying to attract 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.

Rep. Sam Liccardo (D-CA)SPEAKER_11

Thank you. I understand under Title III we are entitled to impose conditions on how DPA appropriations are used, consistent with congressional intent. I understand we're not the committee that is going to reform defense procurement, and I understand that is not exactly what the DPA is about, but have there been other attempts to essentially nudge procurement in a more toward a more nimble future through the DPA? Have we seen that before? Are there examples we could look at as guidance?

Mr. William RussellSPEAKER_10

Outside the DPA, there are certainly other efforts to reform defense procurement. It's an area that's been on GAO's high-risk list, I think, since the '90s. So, just effort—usually, it's the Defense Authorization Act would have the shaping legislation for the procurement reforms, but there's certainly more to be done. I would speak to work that we've done looking at leading commercial practices, how companies do the speed of innovation, coming up with minimal viable products, the digital twins. All of those tools are important and can help streamline the requirements in the procurement side at DOD.

Rep. Sam Liccardo (D-CA)SPEAKER_11

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.

Chairman Warren Davidson (R-OH)SPEAKER_02

Thank you, Mr. Liccardo. The gentlewoman from Michigan, Mrs. McClain, who is also the conference chair for the Republican Party, is now recognized for 5 minutes.

Rep. Lisa McClain (R-MI)SPEAKER_07

Thank you, Mr. Chairman, and thank you for holding this hearing, and and thank you both for being here. Appreciate it. Mr. Levin, I want to start with you. Is, 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.

Mr. Adam G. LevinSPEAKER_06

Thank you, Congresswoman. The voluntary agreements provision of the DPA has has not been used heavily over the over the last few years. I believe since FY18, there has only been one new one, and that was initiated by FEMA to address the COVID pandemic. The Department of Transportation, I believe, has one or two other active ones. So it is an area that the DPA provides for, but has has not been used very much in recent years.

Rep. Lisa McClain (R-MI)SPEAKER_07

But do you have some examples of how it's been working successfully, those partnerships?

Mr. Adam G. LevinSPEAKER_06

Again, with the limited usage in recent years, it's hard to say, but the DPA was used during COVID, for example, Title I, to procure ventilators, masks, things like that.

Rep. Lisa McClain (R-MI)SPEAKER_07

Was it successful?

Mr. Adam G. LevinSPEAKER_06

It was able to purchase those things. There were also some criticisms from some places that FEMA, for example, didn't have the necessary expertise to fully implement its DPA authorities.

Rep. Lisa McClain (R-MI)SPEAKER_07

Okay. Mr. Russell, how should this committee consider reforms to ensure that the United States does not have deficiencies in areas of critical defense, and what sectors, I'm thinking specifically maybe critical minerals, should we focus on?

Mr. William RussellSPEAKER_10

Thank you for the question, Congresswoman. I think DOD and their Industrial Base Policy Office, other aspects of the agencies that use the DPA, typically can outline what some of the key supply chain areas are that either are emergent or at risk. Critical materials, rare earths is one in the news recently. And to the extent that some of the authorities under Title VII with the industrial base assessments can be harnessed to coincide with areas where either we want to expand as a country or shore up some risks, that could be a positive thing. You just need to have that coordination so the left hand knows what the right hand is doing in terms of each of the agencies that have the DPA authorities.

Rep. Lisa McClain (R-MI)SPEAKER_07

In coordination, I think you touched on something which is extremely important. I think coordination— how do we do a better job of that in your opinion? Give us some, uh, sure.

Mr. William RussellSPEAKER_10

Right now FEMA is the government-wide coordinator of the DPA. There's a lot of activity around Title I authority, the priority ratings, but there could be more on Title III. We had a recommendation in our report that came out today that recommended that FEMA try to leverage some of the lessons learned and experiences of DOD in applying the Title III purchase commitments and other things so that could be shared with other agencies like HHS that's trying to stand up that capability. So there's lots of synergies like that that could potentially be bolstered with

Rep. Lisa McClain (R-MI)SPEAKER_07

I think those recommendations, I think, would be helpful, so thank you on that. 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 everything is a priority, then nothing is a priority. 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 really funnel our criteria for making those decisions a priority?

Mr. William RussellSPEAKER_10

I would say the lion's 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, major defense weapons systems, other activities. What we've heard from industry associations and in talking to the DOD folks that administer those programs is it's sort of baked in. The contractors understand their responsibilities for the priority ratings. The key is where there are bottlenecks or challenges that occur at the subtier, that those get elevated and then resolved quickly.

Rep. Lisa McClain (R-MI)SPEAKER_07

Okay, my time has expired. Thank you.

Chairman Warren Davidson (R-OH)SPEAKER_02

Thanks, Mrs. McClain. I would like to thank our witnesses for their testimony today. Without objection, all members will have 5 legislative days to submit additional written questions for witnesses to the chairman. Questions will be forwarded to the witnesses for their response. Witnesses, please respond no later than July 17th. This hearing stands adjourned.