DoD official: Many factors considered in Defense Production Act contracts

Companies are selected based on data provided to DoD leaders by the Defense Contract Management Agency and the Defense Logistics Agency.

WASHINGTON — Companies are selected to receive emergency coronavirus rescue funds from the Defense Department based on multiple factors, said the Pentagon’s top procurement official Ellen Lord.

“We have a team” that reviews data on a weekly basis to decide which companies should receive contracts funded under the Defense Production Act, Lord said June 22 at a Pentagon news conference.

President Trump in April invoked the Defense Production Act in response to the coronavirus pandemic. The 1950 law gives the president emergency authorities to make purchases and invest in industries critical to national security.

Six space launch providers in the small launch sector were selected last week to receive contracts under the Defense Production Act Title 3.

Lord said the Pentagon since April has awarded $472 million in contracts aimed at boosting domestic industries such as medical equipment, shipbuilding, aircraft manufacturing, and textiles. “And we expect more actions will be announced over the next few weeks,” she said. DoD has not yet revealed the specific amounts of the small launch contracts.

Aevum, Astra, X-Bow, Rocket Lab, Space Vector and VOX Space each will receive contracts to launch two rideshare missions for government customers over the next 24 months.

The small launch industry was identified by the Pentagon as one of the sectors most financially impacted by the pandemic as venture funding pulled back. By some accounts there are more than 120 companies in the small launch industry and many are not likely to survive.

Financial distress caused by the pandemic is one of many factors considered in evaluating suppliers for Defense Production Act contracts, said Lord.

Lord said companies are selected by a senior level group — known as the Defense Industrial Base Council — that includes members of the office of the secretary of defense and officials from the military services. The group meets weekly to review data from the Defense Contract Management Agency and the Defense Logistics Agency, both of which have detailed information on every company that does business with DoD.

“We look at the impact to our readiness and modernization,” said Lord. “So it really comes down to having the forces ready, and the team looks at it and comes to a consensus and makes decisions.”

The investment made by Defense Production Act funds is “critical to help re-open the economy,” Lord said. “The increased production will ensure the U.S. government gets dedicated long term industrial capacity to help meet the needs of the nation.”

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