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SS+D COVID-19 Response Team: The Defense Production Act: What Is It, and How Will It Impact My Business?

March 18, 2020 | Sebaly Shillito + Dyer

Earlier today, President Trump announced that he would be invoking his powers under the Defense Production Act (the “DPA”). The DPA gives the President broad powers over manufacturers “to promote the national defense.”

Pursuant to the DPA, the government could deliver “rated orders” to any manufacturer. If a manufacturer receives a rated order, they must prioritize that order over all other orders. If they do not, there are potential criminal penalties. The DPA also gives the government the power to compel manufacturers to manufacture certain products that are critical to the nation’s defense.

If you manufacture products for the healthcare industry, you should begin strategizing on what your messaging will be to your regular customers should you receive a rated order. At this point, if you don’t manufacture products in the healthcare industry, it seems unlikely that you would receive a rated order. We will continue to monitor the situation.

The SS+D COVID-19 Response Team was formed to provide clients, colleagues, and friends of the Firm updates for the foreseeable future on COVID-19 issues facing businesses, executives, and employees. Please let us know if there are any items/issues you would like for us to track or summarize.

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Sebaly Shillito + Dyer