Shortly after taking office, the Biden Administration unveiled what it called a "comprehensive," "coordinated" and "aggressive" National Strategy to confront the COVID-19 pandemic. As a key component of this approach, the President directed federal agencies to use the authorities provided by the Defense Production Act (DPA) to mobilize private industry in response to the national COVID-19 emergency. As explained in our prior client alert, the DPA gives the President the authority (which he may delegate to agencies) to compel domestic companies to accept or prioritize certain contracts, allocate or produce certain materials, and deploy federal funding to finance industrial production of essential supplies.
On February 5, the Biden Administration announced its first uses of the DPA to respond to the pandemic. Through three separate invocations of the Act, the Administration will increase manufacturing of vaccines, at-home testing kits and surgical gloves for frontline healthcare workers.
Initial Actions Under the Defense Production Act
In a February 5 press briefing, the White House described how its first three actions under the DPA were intended to address a range of COVID-19 issues: "One has an immediate impact, one will be felt over the next few months, and one will help diminish our reliance on foreign manufacturing for PPE over the long term," said Tim Manning, White House COVID Response Team Supply Coordinator.
First, the Administration issued DPA priority ratings to its orders under contracts with Pfizer to alleviate bottlenecks in supplies of two necessary components in the pharmaceutical company's vaccine manufacturing process: filling pumps and tangential flow filtration skid units. DPA regulations require contractors to prioritize rated orders ahead of their other business, and this priority is applied to vendors and suppliers whose products are necessary for the higher-tier contractor to meet its contractual delivery schedule. Manning stated that, although vaccine production capacity has increased by 20 percent since President Biden took office, short supply of these two components was impeding Pfizer's production. According to the White House, the Administration's action was a "critical factor" enabling Pfizer's recently announced plan to produce 200 million vaccine doses by May 2021.
Second, the Administration will use the DPA's financing authorities to surge COVID-19 testing capacity by contracting with six suppliers to build new factories and supply lines in the United States. Manning stated that the agreements will result in 61 million additional at-home or point-of-care COVID-19 tests by the end of the summer. Relatedly, the Department of Defense announced a $231.8 million agreement with Australian manufacturer Ellume to increase its domestic capacity to produce at-home tests by 19 million each month by year's end and to procure 8.5 million tests.
Third, the Administration announced plans to facilitate the construction of new rubber plants to produce surgical gloves for frontline healthcare workers. Manning reported that the United States is currently almost entirely reliant on foreign producers for surgical gloves. Construction of the new plants will reportedly allow the United States to produce more than one billion surgical gloves each month by the end of 2021.
The White House also indicated it would announce further agreements under the DPA in the next two to three weeks. Manning said that much of what the Administration can do under the DPA requires additional appropriated funding, highlighting the White House's urgency in pressing Congress to approve the President's proposed $1.9 trillion COVID-19 relief package.
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