The Biden administration released a 200-page executive order to combat supply shortfalls across 12 product categories by invoking DPA. Let’s take a closer look at the roadmap laid down by the President to fight the pandemic.
Last week, U.S. President Joe Biden issued an executive order to direct federal agencies to use the Defense Production Act (DPA) to ensure that the necessary supplies are available to respond to the COVID-19 pandemic. The order holds the key in speeding up the manufacturing of testing and vaccine supplies, and other items that play a pivotal role in combating the pandemic.Â
By releasing a 200-page outline of the executive order within the first week in office, the Biden administration laid down its plans to fill in supply shortfalls for products across 12 categories by using DPA. This primarily includes shortages of syringes, N95 masks, personal protective equipment (PPE), test supplies, lab analysis machines, isolation gowns, nitrile gloves, and other items.
The federal government accesses DPA to ensure that suppliers are prioritizing their orders. The DPA tool can allow the government to issue orders to expand manufacturing capacity at particular companies as the need arises.Â
A similar event was observed in April 2020, when the Department of Health and Human Services announcedOpens a new window  the first contract for ventilator production under the DPA to General Motors. The contract to deliver 30,000 ventilators to the Strategic National Stockpile by the end of August 2020 was priced at $489.4 million. However, the ambiguity over the order’s requirement wasn’t clear as the ventilators were being delivered before the DPA order as well.
Jen Psaki, the White House Press Secretary, saidOpens a new window in a press briefing on Friday that the DPA has been put into effect. Referring to the DPA, Aron Beezley, a partner at Bradley, opined that the DPA could be a powerful tool, adding that it’s, however, “not the magic cure-all that some think it is.â€
As part of the Operation Warp Speed portfolio, six vaccine candidates are being developed, namely Moderna, AstraZeneca, Novavax, Jannsen, Sanofi, and Pfizer. All six vaccines have priority DPA ratings. Apart from these, the firms and establishments delivering therapeutic treatments are also under DPA radar and have received priority ratings. According to a postOpens a new window by the Defense Department, dated 31st December 2020, there were about 18 priority ratings under the DPA.
Biden’s executive order highlights and documents issues the supply chains are facing, especially the shortages of the necessary equipment and material required to accelerate the manufacturing, delivery, and administration of the COVID-19 vaccine. Keeping this in mind, the administration is looking ahead to secure supplies that might create bottlenecks around vaccine distribution, like glass vials, stoppers, and needles.
The White House did not give any official statement over the specific products or companies on which agencies will use the DPA. Yet, Psaki confirmed that the DPA had already been invoked.
DPA Comes to the Fore
The DPA provides the government ability to direct rated orders. This implies that the DPA orders are taken as a priority over commercial orders. A company can be fined up to $10,000 if it doesn’t comply with the orders given under the law.
Companies receiving DPA orders from the government generally get an advanced warning that the formal directive outlining the terms is coming. The DPA provides allocation authority and thereby allows the government to direct companies to reserve materials, services, or facilities in anticipation of a rated order. The DPA provides an additional legal protection layer to the manufacturer so that other customers whose orders are delayed or are on hold cannot sue the manufacturer.
Sarah Rathke, a partner at Squire Patton Boggs who focuses on manufacturing litigation and supply chain disputes, said, “Section 707 of DPA provides immunity from suits for damages so they cannot successfully sue you, so long as your failure to supply is directly connected to your DPA order.â€
The manufacturing capacity at private companies can also be expanded using the power of the DPA. The federal government can pitch in such expansion by providing the necessary funds. With DPA coming to the rescue of supply shortages, it is bound to strengthen the nation’s efforts to combat the pandemic.
Critics on Trump
According to Bechara Choucair, Biden’s COVID-19 vaccine coordinator, the team plans to work with the states and the manufacturers to ensure that the DPA is being used as aggressively as needed to accelerate the supply of the vaccine.
Critics have come out hard against the Trump administration as they felt that though Trump used the DPA to increase the supply of ventilators, masks, and other supplies, he failed at using aggressive tactics to close the shortage of supplies.
A group of Democratic senators wrote a letter to Biden last week, wherein they requested him to use DPA to re-shore the most in-demand PPE, such as nitrile gloves, nearly all of which are manufactured in China. Through the letter, the senators suggested Opens a new window that Biden take assertive steps in the fight against the pandemic by invoking the DPA.
In conclusion
In a nutshell, the Biden administration plans to defeat the pandemic by invoking DPA to boost the manufacturing of testing and vaccine supplies, and other essential items in tackling COVID-19. That being said, the power of DPA, along with other operating supply chain entities, will deliver for good as it will work aggressively on the supply shortages to accelerate the supply of vaccines. Thus, with DPA coming to the fore, the supply chains would benefit as the vaccine demand overhead would be taken care of by these newly invoked DPAs.
Do you think DPA will work in favor of the Biden administration and help overcome supply shortage challenges? Comment below or let us know on LinkedInOpens a new window , TwitterOpens a new window , or FacebookOpens a new window . We’d love to hear from you!