The Defense Production Act (DPA) has long been viewed as the primary federal mechanism for managing and supporting defense production. Since it was enacted in September 1950—just months after the Korean War began—the DPA has armed the President with wartime-style powers to prioritize contracts, allocate scarce materials, and finance surge defense production capacity. These DPA industrial authorities are subject to periodic reauthorization, with the current sunset set for September 30, 2025. While the reauthorization of the DPA remains pending, the Senate Armed Services Committee (SASC) has advanced a new NDAA provision that would convert the extant Industrial Base Fund (IBF) (10 U.S.C. section 4817) into a Pentagon-controlled toolkit that closely mirrors—but is not identical to—DPA’s Title III authorities. The introduction of section 849A of the FY 2026 NDAA suggests that the SASC is no longer willing to entrust the re-armament of the Pentagon and revitalization of the Defense Industrial Base (DIB) solely to reauthorization of the DPA—a process that lives or dies in other committees’ jurisdictions.
What Would Section 849A Actually Do? First, section 849A broadens the IBF’s list of “eligible uses” so the Secretary of Defense can intervene anywhere along the supply chain—upstream, midstream, or downstream—as needed for: castings and forgings; kinetic systems and platforms across the spectrum of sensing, targeting, and delivery; microelectronics; machine tools and other production equipment; critical minerals, materials, and chemicals; the DIB workforce; manned and unmanned systems; power sources; shipbuilding and submarines; defense space systems; even forward echelon advanced manufacturing nodes inside the Indo-Pacific theater. Should the Secretary of Defense wish to invoke section 849A for a purpose not already covered by its expansive list, he need only justify the determination in a report to the Armed Services Committees at least 30 days in advance.
Second, section 849A would authorize virtually every familiar DPA Title III tool: contracts, grants, other-transaction agreements, purchase commitments that can run for ten years, direct subsidies to “offset market manipulation” and keep higher-cost domestic production viable against cheaper imports, authority to stockpile strategic materials, and even permission for DoD to install government-owned equipment in private plants or build entirely new facilities whenever “necessary for the national security interests of the United States.”
Notably, section 849A expressly adds a pivotal new power: funding equity stakes. Nowhere in the DPA’s governing text—50 U.S.C. section 4533—does Congress expressly authorize the federal government to take an ownership interest in a private firm. Section 849A flips that script. New subsection (h)(3) would let the Secretary of Defense channel IBF dollars into “debt and equity investments” executed through third-party vehicles that support “small- and medium-sized entities working in areas of national-security interest.” By explicitly opening the door to minority shareholdings, Congress offers the Pentagon a financing tool the traditional DPA has never expressly provided—one that can crowd in private capital, share in upside returns, and synchronize a company’s long-term growth with national security demand signals.
How is Section 849A Different? Although section 849A’s architecture is unmistakably DPA-like, the differences are consequential. Chief among these is the transfer of program custodianship: DPA authorities ultimately reside with the President and are parceled out across seventeen federal departments and agencies, whereas section 849A would lodge the whole portfolio in the Secretary of Defense. That change matters in terms of speed and focus—no dilutive interagency clearance is required when the Secretary wants to underwrite a new solid rocket motor line or stand up a drone airframe factory.
Beyond the shift in custodianship, section 849A would also tighten the statute’s substantive reach, aiming it squarely at warfighting supply chains. Whereas Title III defines “national defense” broadly enough to cover public health emergencies, critical infrastructure, and even commercial semiconductors, the SASC language limits spending to defense missions—especially those tied to Indo-Pacific operational needs. It further erects a statutory bar: no IBF money may be spent for any activity in China, Russia, Iran, or North Korea—a guardrail the DPA lacks. Finally, it orders an annual return on investment report markedly more granular than Title III’s biennial industrial base review and a 90-day plan for coordinating IBF projects with the DPA Fund and the Pentagon’s Office of Strategic Capital.
Funding mechanisms diverge as well. Per 50 U.S.C. section 4534(e), the DPA Fund carries a statutory cap of $750 million in unobligated authority at each fiscal year’s close. By contrast, section 849A would impose no ceiling; the size of the IBF would be whatever appropriations Congress supplies, as well as monies transferred from other DoD appropriations. Congress took action to fill IBF coffers a month ago in the One Big Beautiful Bill Act (Public Law 119-21), which pours billions directly into the fund. Among these direct appropriations: $3.3 billion for grants and purchase commitments made from the IBF, $5 billion for IBF critical mineral projects, and $600 million for solid rocket motor expansion. The Act also included a dizzying array of earmarked line items—$1 billion for one-way attack unmanned aerial systems, another $1 billion for artificial intelligence efforts, and nearly $15 billion for naval shipyard capacity, advanced manufacturing, and submarine procurement—some or all of which could be shifted into the IBF and further leveraged under its new authorities. No comparable windfall has ever been routed through the government-wide DPA Fund. In a single stroke, section 849A would transform what has been a modest pilot account into the largest single-department industrial base policy instrument in federal law.
Why is the Senate Armed Services Committee Acting Now? Four overlapping pressures explain the SASC’s sense of urgency.
Time pressure remains the most acute variable. Both chambers stand adjourned until early September, leaving scant legislative days before the fiscal year’s end. Although the Armed Services Committees can shepherd the NDAA, any DPA reauthorization must originate in the Senate Banking and House Financial Services Committees, and neither panel has yet scheduled a markup. The stakes are amplified because the DPA’s September 30, 2025, sunset coincides with the date by which Congress must pass all 12 appropriations bills, wrap them into an omnibus, or at least adopt a continuing resolution to avert a government shutdown. With congressional floor time already at a premium, there is some concern that DPA renewal could become collateral damage in a crowded queue.
These headwinds are real. If spending negotiations crowd out a standalone DPA bill, the statute could lapse—leaving only the current, comparatively modest IBF authority in force until the FY 2026 NDAA reaches the President’s desk, most likely in December 2025. That outcome would be far from ideal, but not catastrophic: section 849A would still arrive in time to backstop defense supply chains for the new calendar year, provided the provision survives conference intact. The caution, then, is clear: Congress can avoid any gap by pairing a short-term DPA extension with the looming appropriations package—or risk a brief, but very real, vacuum in surge production tools.
Operational urgency is next. Multiple joint exercises and think tank studies have concluded that U.S. stocks of anti-ship and air defense missiles would be depleted within weeks of a major Indo-Pacific conflict, outpacing current production capacity. SASC wants a tool that can add machine tool capacity, forge canister casings, and certify new energetics without running a gauntlet of interagency coordination.
The certainty and security of supply chains is a third driver. Section 849A’s explicit prohibition on work in covered countries ensures that not a dollar of the IBF will flow into Chinese-owned factories. That blanket ban is easier to legislate in a defense-only statute than across the whole of government, where healthcare and energy requirements sometimes weigh in favor of broader sourcing flexibility under the DPA.
Finally, appropriations politics played a role. The authors of the One Big Beautiful Bill Act were willing to send huge sums to the Pentagon, but needed an account with adequate legal authorities to obligate that money. Expanding IBF appropriations through Public Law 119-21 and authorities through the NDAA would solve the problem in a way familiar to legislators: create the funding and the authorities in tandem—a means to re-industrialize at scale without reinventing the DPA.
Deterrence Through Durable Production. The real strength of any military is measured not just in brigades, squadrons, and ships, but in the factories, foundries, and fabs that build and sustain them. By granting the Pentagon its own DPA-like authorities—and financing them at scale—Congress is attempting to ensure that the United States can out produce, not merely out fight, its rivals. If the broader DPA is renewed, section 849A will complement it; if not, DoD will still wield a sovereign set of industrial levers. Either outcome signals a strategic shift. In this proposed revamping of the IBF, the SASC envisions a modern strategic production base, purpose built for the great power competitions of the twenty-first century.