September 23, 2020
Statement on the Department's Use of Defense Production Act Title III
Statement by Jonathan Hoffman, Chief Pentagon Spokesman:
"As indicated by recent reporting, there appears to be a misunderstanding by some about what the Coronavirus Aid, Relief, and Economic Security Act ("CARES" Act) did and did not do with respect to the Department of Defense. As Speaker Pelosi said on March 27, in support of the CARES Act passage, this bill was about "moving on to mitigating some of the economic and health damage caused by it [sic] this pandemic."Â The CARES Act did not limit - nor did it intend to limit in its language - the use of Defense Production Act (DPA) Title III to only medical resources. As part of the efforts to mitigate economic damage, the Act allowed monies to be spent to support individuals and industries that had been impacted by COVID. This is exactly what DOD has done.Â
Under the Act, it is clear that funding for Defense Industrial Base (DIB) uses would be appropriate as long as they addressed COVID-related impacts in the industrial base, even in that portion of the industrial base not producing medical supplies. In other parts of the Act, it authorized DOD and HHS to spend monies to expand medical resource production â€“ which we did. It also allowed the spending of money to procure needed materials for the response â€“ which we also did (often on behalf of HHS).Â
The Department of Defense has also been using the $1 billion appropriated by the CARES Act "to prepare for, prevent and respond to the coronavirus". The funds in this case have been used to support vital national security industries that were devastated by COVID. Under Secretary Lord directly addressed this issue in her June 10 testimony to the House Armed Services Committee, where she noted that DOD utilized some of the CARES Act funds to address impacts to the DIB caused by COVID-19 by directly offsetting financial distress in the DIB and providing investments to regions more severely impacted in order to sustain essential domestic industrial base capabilities and spur local job creation. No objections were expressed by the Committee at that time or since until yesterday afternoon.
To be clear, the Department has been wholly transparent on this effort. Since April, contracts or disbursements have been announced publicly by the Department, and the appropriate Congressional committees have been given notice before any announcement has been made. Weekly calls were arranged to discuss the COVID response with the committees (HASC, SASC, HAC-D and SAC-D) to answer any and all questions. During these calls, before which we proactively asked each committee to submit questions to be answered by Industrial Policy leaders every single week, policy senior leaders provided notice on various DPA awards prior to public release and answered questions from the participating committees. Additionally, we heard directly from many members of Congress who supported these exact expenditures to aid impacted businesses in local communities. The adverse economic impacts of the COVID-19 pandemic are widespread and the impacts to the defense industrial base â€“ and the potential loss of critical needs - necessitated prompt action including use of DPA Title III authorities to sustain and strengthen essential domestic industrial base capabilities. The goal of these expenditures was to protect US workers as well as ensure that our industrial base survived the COVID crisis â€“ both goals that Congress wisely supported.Â We have been fulfilling Congress's express mandate.
To be clear, we also supported medical industry and medical production. Following initial investment in support of HHS/FEMA to expand domestic productive capacity for essential medical resources for COVID-19 response, the Department focused use of DPA funds to mitigate adverse impacts to the DIB while HHS funds continued to support medical resources industrial base expansion. We did both.
We are thankful the Congress provided authorities and resources that enabled the interagency to invest in domestic production of critical medical resources and protect key defense capabilities from the consequences of COVID. Just as we have successfully worked to ensure the readiness of our military forces during the COVID fight, we must continue to maintain the readiness of our industrial base.Â We need to always remember that economic security and national security are very tightly interrelated and our industrial base is really the nexus of the two.
I would note that the Department worked with the Washington Post to include much of this useful context on the authorized spending, but the majority of that information was left out of the story leading some to misconstrue the expenditures when in fact they are wholly appropriate as directed by Congress. The Department's DPA actions can be found on www.defense.gov/Newsroom/releases/."Â
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