April 16, 2020

COVID-19 Insights Series: Defense Production Act


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APR 16, 2020



President Trump issued an Executive Order on March 27 requiring the General Motors Company to accept and perform contracts and fulfill orders for the manufacture and production of ventilators to treat patients afflicted with the COVID-19 virus. This action represents a departure from the most common use of the Defense Production Act (DPA), which involves government contractors that are well versed in the strict deadlines and other requirements imposed under these types of contracts and bid for these contracts on that basis. This action expands the normal application of the DPA to US businesses operating in sectors not normally considered subject to DPA authority.

On this webcast, lawyers and professionals from Shearman’s CFIUS and national security practice provided guidance on the potential legal obligations and key business implications arising from an expanded use of the DPA:

  • What is a rated order?
  • What types of US businesses may be targeted for a rated order?
  • Navigating compensation and severance restrictions on stimulus participants.
  • What entities can send a rated order?
  • Does a business have to accept a rated order?
  • How much time does a business have to respond to a rated order?
  • How does a business know if a rated order complies with the DPA?
  • Does the DPA provide a business with any legal protection?
  • What contractual terms can a business request for a rated order?

Special thanks to Lisa Raisner, Head of Government Relations, for her participation in this webinar.