WASHINGTON — The US has invoked the Defense Production Act to help munitions suppliers “essentially collude” without breaking antitrust laws and find ways to ramp up production, according to Michael Cadenazzi, the Assistant Secretary of Defense for Industrial Base Policy.
“It’s a way for us to communicate and leverage industry,” Cadenazzi told an audience at a Center for a New American Security event today.
“In this particular case,” he later added, “our interest is using voluntary agreements as a way to bring industry in in an antitrust environment to go ahead and have conversations with them. For us to articulate problems to them around nasty issues in the supply chain and the industrial base that allow them to communicate and work together, essentially collude.”
Collusion in business is a secretive, anti-competitive agreement between rival companies to manipulate the market for mutual gain, and parties found guilty can face steep fines or jail time.
Cadenazzi said he has been pushing for this construct for the past nine months, and was surprised when news broke today that President Donald Trump signed out a June 11 memo that posted on the Federal Register but is listed for publication on Wednesday [PDF]
In that memo, Trump invokes the Defense Production Act — a sweeping law that grants the president emergency authority to control domestic industries for national security — and says that “voluntary agreements” will be a way to break “systemic constraints in the munitions industrial base” when it comes to issues of production capacity, supply chains, long-lead items, and other production “bottlenecks.”
The second Trump administration has been exploring a myriad of ways to boost munitions production, especially at a time when it is looking to refill its stockpiles in the wake of operations against Iran. Some of those avenues have included inking framework deals with companies to invest in their own manufacturing facilities, and investing $1 billion into L3Harris’s solid rocket motors business.
Speaking to reporters after the CNAS event, Cadenazzi said that invoking the Defense Production Act will enable him to gather large groups of munitions suppliers together to better strategize investment and production plans, and shorten the certification process.
“I want to be able to bring all the solid rocket motor providers into one room and say, ‘We have talked about having solid rocket motor problems for a long time. We now have the opposite. We have 10-12 companies that want to make SRMs. How do I best approach the market for SRMs?’” he said.
Some of those topics of conversation, Cadenazzi added, could range from workforce and engineering topics to materials issues and electronics to concerns regarding certification and qualification.
“These conversations can’t happen across companies unless we provide the framework for it. This provides that framework,” he told reporters.
