The Defense Production Act of 1950 () is a United States federal law enacted on September 8, 1950 in response to the start of the Korean War. It was part of a broad civil defense and war mobilization effort in the context of the Cold War. Its implementing regulations, the Defense Priorities and Allocation System (DPAS), are located at 15 CFR §§700 to 700.93. Since 1950, the Act has been reauthorized over 50 times. It has been periodically amended and remains in force.
Provisions
The Act currently contains three major sections. The first authorizes the president to require businesses to accept and prioritize contracts for materials deemed necessary for national defense, regardless of a loss incurred on business. The law does not state what would occur if a business refuses or is unable to complete a request on time. However, any person who performs any act prohibited or willfully fails to perform any act required by the Defense Production Act may be charged with a felony that results in a fine up to $10,000 or imprisonment for up to one year or both per violation. The second section authorizes the president to establish mechanisms (such as regulations, orders or agencies) to allocate materials, services and facilities to promote national defense. The third section authorizes the president to control the civilian economy so that scarce and critical materials necessary to the national defense effort are available for defense needs.
The original act included four other titles that are expired and repealed under current law that allowed the president to seize private property under Title II, fix wages and prices and implement rationing of goods under Title IV, use force to settle labor disputes under Title V, and control real estate credit under Title VI. Although the president can no longer fix wages and prices of goods, the president can still order to prevent hoarding and selling of designated items "in excess of prevailing market prices" under Title I in section 102 of the Defense Production Act.
The president's designation of products under the jurisdiction of the DPA is the authority of the Act most often used by the Department of Defense (DOD) since the 1970s. Most of the other functions of the Act are administered by the Office of Strategic Industries and Economic Security (SIES) in the Bureau of Industry and Security in the Department of Commerce.
The Defense Priorities and Allocations System institutes a rating system for contracts and purchase orders. The highest priority is DX, which must be approved by the Secretary of Defense. The next level down is DO, and below that are unrated contracts.
Under section 721 of the Defense Production Act of 1950, an inter-agency committee known as the (CFIUS) Committee on Foreign Investment in the United States is authorized to investigate and review transactions involving foreign investment and/or real estate transactions by foreign persons and/or entities in the United States. Civil penalties may result in up to $250,000 per violation or the value of the transaction, whichever is greater, on any persons and/or entities that willfully violated CFIUS regulations, and any mitigation orders, conditions, or agreements imposed by CFIUS. The CFIUS serves as an administrative body to refer and advise the president should the transaction need to be rejected or limited. The law only grants the president the authorization and decision to reject or limit the transaction within a 15-day presidential review period.
Use
Korean War
The DPA, passed by the U.S. Congress in September 1950, was first used during the Korean War to establish a large defense mobilization infrastructure and bureaucracy. Under the authority of the Act, President Harry S. Truman eventually established the Office of Defense Mobilization, instituted wage and price controls, strictly regulated production in heavy industries such as steel and mining, prioritized and allocated industrial materials in short supply, and ordered the dispersal of wartime manufacturing plants across the nation.