Two recent presidential actions have paved the way for private industry to aid the nation's COVID-19 response.
President Trump has declared a national emergency under the Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, enabling the federal government to access a $50 billion relief fund. Last week, the president invoked the Defense Production Act (DPA) to encourage private industry to increase the production and distribution of emergency medical supplies ─ primarily masks, ventilators, respirators and other materials deemed critical to help combat COVID-19 and support health care infrastructure. We are starting to receive details from the White House about how it intends to utilize the DPA, and we expect to provide a summary of the options the Administration has available through this act.
The Stafford Act
The Stafford Act allows the President to declare an “emergency” in reaction to an incident, such as the current COVID-19 pandemic, that overwhelms the response capability of state and local governments, and more quickly enable disaster relief assistance and funds as appropriated by Congress. Assistance can come as direct federal aid for grants and technical support or as a reimbursement for services provided by or contracted for local or state needs. As an example, under the Stafford Act, an individual state can make a purchase and obtain a 75% reimbursement from the federal government, under certain conditions. Companies that think that the contracts will be awarded exclusively at the federal level may be missing opportunities. Warner stands ready to help assess these specific situations and provide guidance.
The Defense Production Act
The DPA was enacted in the 1950s to help the U.S. economy support the conflict in Korea. It focuses on increasing production and stockpiles for military, homeland security and emergency preparedness events thereby ensuring that the domestic industrial base is mobilized and prepared to support national defense during times of national emergency. It allows the President to delegate authority to executive branch agencies in support of these activities. Such powers include, but are not limited to: (a) requiring manufacturers to prioritize government contracts and orders; (b) allocating scarce materials, services and facilities; and (c) guaranteeing loans to contractors and subcontractors involved in these efforts.
Implications for Michigan Businesses
So, how can Michigan's manufacturing capabilities that were so effectively utilized as WWII's Arsenal for Democracy respond to the nation's latest call to action? The auto industry responded to production requirements during WWII and converted manufacturing to support war efforts. Similarly, Michigan’s manufacturing supply chain should think about ways it can partner or respond to the government’s petition to produce scarce or critical medical supplies to fight COVID-19.
According to Warner Senior Counsel Michael Stone, few businesses understand the complex government contracting landscape. "Companies often begin by reaching out to their federal contacts, but don’t understand the essential elements of these laws nor the most efficient channels to secure contracts. Other industries, such as automotive, have little or no history of selling to state, local and/or federal government and simply don’t know where to begin.”
"Most of Warner’s clients want to help and be part of the solution. It's the cumbersome process, red tape and even the nomenclature itself that gets them bogged down. We already see it happening, so I’d encourage any Michigan business that has the ability to transition manufacturing to the types of materials currently deemed critical to the COVID-19 fight to call Warner. We can help expedite the process,” says Stone.
“Government purchases are going to be a key component of the COVID-19 response efforts,” says Adam Bruski, Senior Counsel at Warner. “This will include both existing product lines, goods and equipment that manufacturers are asked to provide by the government or that manufacturers identify as an unfilled market need.”
Over the past week, our attorneys have advised companies seeking new federal contracts as a result of the DPA and the Stafford Act and their related emergency contracting and procurement powers. Warner attorneys can advise companies on entering into new contracting relationships with the federal government or help make changes to existing ones. In addition, our attorneys can assist in soliciting and securing state and local contracts to provide critically-needed products and materials. Like the rest of the world, the United States is currently in unchartered waters. Warner’s Aerospace, Defense and Government Contracting attorneys stand ready to help clients navigate the uncertainty and are available to assist on any related matter.