The Defense Production Act Needs a Reboot
75 years after enactment, DPA needs to be reoriented to national security—and Pentagon officials must use it more creatively.
This is an abridged version of “Rebooting the Defense Production Act,” a report published by the Hudson Institute. Read the full report here.
The United States faces the unprecedented challenge of competing with China, an economic powerhouse and geopolitical rival pursuing one of history’s greatest military buildups. Beijing’s economy is on a war footing, backed by decades of investment in a military-industrial complex that churns out ships, missiles, and ammunition at alarming speed. America has a legal framework, the Defense Production Act (DPA), to mount a response. The act is up for reauthorization. It has delivered mixed results at best. But if Congress and the White House work together, it could be a powerful tool to rebuild the defense industrial base America needs.
Seventy-five years ago this month, President Harry Truman went on the radio to announce the DPA. Enacted just after the outbreak of the Korean War, it sought to ensure American forces had the equipment needed to fight and win. Truman warned that deterring communist aggression required a rapid expansion of industrial capacity and explained that the DPA would prioritize defense needs over civilian demands. In practice, it became a tool for government agencies to direct materials and channel funds quickly, in the name of national security.
Results were impressive. Aluminum production doubled, nitrogen plant capacity (for explosives) grew 80 percent, and jet aircraft production surged. But after dozens of reauthorizations, the DPA has lost its strategic focus, scattering resources across hundreds of disconnected projects. As policymakers reexamine the act, they might consider three challenges.
One involves scope. DPA spending has supported everything from parts for F-35s and hypersonic weapons to energy pipelines, fire hoses, and baby formula. President Biden invoked it to support green energy projects, prompting one lawmaker to deride the act as supporting “environmental fantasies.” During COVID-19, it helped procure some 200 million vaccine doses. But these scattered interventions haven't translated into sustained improvements in America's defense industrial base. As one former defense official asked: "Are we expanding the defense industrial base, or just plugging holes?”
Even congressional staff admit they can't assemble a comprehensive picture of DPA projects. The Government Accountability Office has repeatedly demanded better reporting. More troubling, vulnerabilities identified decades ago—critical mineral shortages, shipbuilding bottlenecks, and medical supply fragilities—persist despite years of DPA spending. If warnings about mineral dependencies from the 1980s still apply, something is wrong. Ironically, many such assessments were conducted under the auspices of the DPA itself.
Second, the Pentagon should stop defaulting to DPA grants and start using tools that draw in private capital. The DPA authorizes loans, loan guarantees, purchases, and purchase commitments—powerful levers that multiply investment. Instead, Washington keeps writing checks. A snapshot of DPA funding in fiscal year 2025 shows that grants continue to dominate. Grants may plug holes, but they don’t build lasting supply chains.
Purchase commitments, where the government agrees to buy products, can make or break companies moving from prototype to production. This approach powered Operation Warp Speed, incentivizing manufacturers to build capacity before regulatory approval. Outside that case, purchase commitments have been virtually absent from DPA use. Yet such agreements can help companies bridge the infamous “valley of death,” where many promising firms that received early grants fail due to lack of contracts to reach commercial viability.
Finally, implementation problems must be fixed. For years, the Pentagon relied on a single contracting office headquartered in Dayton, Ohio—the Air Force Research Laboratory—to manage hundreds of millions in DPA funds. With Dayton still in the lead, one expert argued that it is “time to close the distance between decision-makers and information.” Another former DoD official commented to this author that it made “no sense” for DPA shipbuilding programs, for example, to go through the Air Force Research Laboratory.
In addition, DPA offices often lacked expertise to evaluate specialized projects. The act allows for an "executive reserve" of outside experts, but it has never been activated. It also allows for specialized consultations with industry called “voluntary agreements,” but again this tool is rarely used. The result: a department making complex industrial decisions without the private-sector insight it needs.
The DPA’s complexity stems from decades of congressional add-ons and bureaucratic layering. When the president deems something vital to national security, seven departments and two agencies can invoke the act. Each reauthorization has piled on procedures while stretching “national security” beyond recognition.
The DPA needs streamlining: cut through the bureaucratic maze, focus on measurable outcomes, and eliminate programs that don't deliver.
The DPA should fund only projects directly tied to defense needs—not every sector claiming national security relevance. Priority must go to building domestic capacity where America is truly vulnerable. Success should be measured not by dollars spent or projects funded, but by real gains in the American military’s capacity.
The Trump team, working with Congress, has an opportunity to apply its action-oriented, deregulatory mindset to strengthen the DPA. The act once enabled America to improve its defense industrial base. With leadership focused on strategic priorities, the DPA can again help America outproduce its rivals.
Dr. Nadia Schadlow is a senior fellow at the Hudson Institute.