# The Defense Production Act's Title III: A Few Billion Dollars, and Almost No Scorekeeper

A small Air Force office committed about $3.6 billion in DPA Title III factory investments from FY2018 to FY2024, and GAO found almost no one measured whether it worked.

Author: J.A. Watte
Published: July 18, 2026
Source: https://jwatte.com/blog/defense-production-act-title-iii/

---


There is a mine in the California desert, at a spot called Mountain Pass, that pulls rare earth elements out of the ground and turns them into the raw material for the magnets inside fighter jets, guided missiles, and electric motors. For years the ore left that mine, sailed to China, and came back as finished magnets, because separating and processing those elements at home had stopped being profitable and the only American operator had gone bankrupt. The federal government decided that was a national security problem it was willing to pay to fix. The tool it reached for was the Defense Production Act, Title III, a Korean War era authority that lets Washington spend money to build private factories the market abandoned. The Air Force runs that program for the entire Department of Defense out of a modest office in Ohio, and over seven recent years it and two other agencies committed roughly $3.6 billion to it. What the government mostly did not do, according to its own auditors, was check whether the money worked.

## What Title III actually is

The Defense Production Act of 1950 has three operative sections. Title I lets the government jump to the front of the production line by giving defense orders priority over commercial ones. Title VII covers information gathering and voluntary industry agreements. Title III, the one that spends money, authorizes financial incentives to expand domestic production capacity that is essential to national defense. The Congressional Research Service, in its standing explainer on the law (report R43767), lists the tools Title III can use: loans, loan guarantees, direct purchases, and purchase commitments, all aimed at standing up or expanding production the private market will not fund on its own.

The logic is old and simple. Some things a country needs in a war cannot be bought abroad safely, and cannot be produced at home at a profit in peacetime. Left alone, the private market lets that capacity disappear, because there is no paying customer until the shortage arrives, and by then it is too late to build a factory. Title III exists to buy the capacity in advance. It pays a company to build the line, or guarantees it a buyer, or shares the cost, so that the plant exists before the emergency rather than after. The catalog of what it has funded reads like a list of national anxieties: rare earth magnets, microelectronics, medical protective gear, and the specialized materials that go into everything from body armor to missile bodies.

## The office almost nobody has heard of

For a program that touches the deepest parts of the defense supply chain, Title III is run by a strikingly small operation. The Secretary of the Air Force is the Department of Defense Executive Agent for the DPA Title III Program, a designation recorded in the DoD Executive Agent registry maintained by the Office of the Secretary of Defense. The designating instrument is DoD Directive 4400.01E, "Defense Production Act Programs," which names the Secretary of the Air Force as the Executive Agent and directs that Secretary to establish and support a program office to execute the work. That office sits inside the Air Force Research Laboratory, in the Materials and Manufacturing Directorate at Wright Patterson Air Force Base near Dayton, Ohio.

The arrangement matters because it means one service, the Air Force, is holding the pen for the whole department. When the Army, the Navy, or the Pentagon's supply chain planners decide a particular material is a strategic gap, the money and the contracting authority run through that AFRL office. The Executive Agent structure is how the DoD assigns a shared, cross service mission to a single accountable owner, and Title III is a textbook case: a capability everyone in the department depends on, run day to day by a program office most people in the department could not name.

## The money, in plain terms

Here is the load-bearing figure, and it deserves to be stated precisely, because the temptation with programs like this is to conflate very different kinds of dollars. In June 2025, the Government Accountability Office published GAO-25-108497, "Defense Production Act: Use and Challenges from Fiscal Years 2018 to 2024." It found that across those seven fiscal years, three agencies used Title III: the Department of Defense, the Department of Health and Human Services, and the Department of Energy. Together they made 222 investments valued at about $3.2 billion, plus a single $410 million loan, for a combined value of about $3.6 billion. The DoD accounted for 208 of those 222 investments. The Department of Energy made 12 and Health and Human Services made 2.

A few clarifications keep that number honest. This is money committed and awarded across a seven-year span, not a single year of outlays, and not a contract ceiling that may never be spent. GAO noted that most of these investments were still ongoing as of November 2024, with 85 completed, so even the $3.2 billion is the value of investments made over the window rather than dollars fully disbursed. The one large loan is worth pulling out on its own: it was made in 2023, has a 20-year life, and went to a U.S. company to expand manufacturing of vaccines and critical medicines. It was not a rare earth loan, and lumping it into the magnet story would be wrong.

Against that committed total, Congress put up more. GAO reported that since Title III's last reauthorization in fiscal year 2018, Congress appropriated at least $3.8 billion for DPA-related activities, a chunk of it a roughly $1 billion surge in 2020 tied to the pandemic response under the CARES Act. So the appropriations were larger than the investments actually booked, which is itself a small tell about how fast the program can move money out the door.

Individual awards are modest, which is part of the program's character. At Mountain Pass, the Pentagon gave MP Materials $9.6 million in 2020 to optimize light rare earth separation, then $35 million in 2022 to build heavy rare earth separation capacity at the same site. That 2022 award is documented in a Defense Department press release now hosted on war.gov, reflecting the 2025 renaming of the department, though the award itself dates to 2022 when it was still the Department of Defense. On the medical side, press reporting from April 2020 described the Pentagon using the DPA to commit about $133 million to 3M, O&M Halyard, and Honeywell to produce N95 respirator masks during the acute shortage. That aggregate figure comes from contemporaneous news coverage rather than the GAO report, which does not name companies, so it is best read as a reported detail rather than an audited one. The pattern holds either way: a few million here, a few tens of millions there, adding up to a few billion over many years.

## Where the ledger goes soft

The uncomfortable finding in GAO-25-108497 is not that the money was stolen or that the factories are frauds. It is that almost nobody is measuring whether any of it works. GAO found that the U.S. International Development Finance Corporation, which was involved in the Title III loan mechanism, declined to evaluate the effectiveness of the loan program at all. It found that the DoD does not have the in-house expertise to fully use its Title III loan authorities, a striking gap for the agency that runs the program for everyone else. And it found that FEMA, which serves as the government-wide coordinator for DPA activities, had not collected the lessons the DoD had learned over decades of operating Title III, so the institutional memory of the most experienced player was not being captured for the others.

Outside the audit, the critique gets sharper on results. Years of Title III rare earth awards have not, by themselves, loosened China's dominance over military-grade magnets, which remains the strategic problem the awards were meant to solve. Restarting separation at one site is real, but it is a long way from an independent domestic magnet supply chain, and the gap between the two is where skeptics live. On the pandemic side, legal scholars writing in the American Bar Association's Public Contract Law Journal in the winter of 2022 documented a use of DPA authorities during COVID-19 that was slow, limited, and poorly overseen, to the point that a lack of oversight made it genuinely difficult to determine exactly how the DPA had been used. When a program cannot fully account for how it deployed its own authorities during the emergency it was built for, that is a management failure independent of whether the underlying idea is sound.

The through line in all of it is not corruption. It is absence: absent evaluation, absent expertise, absent shared lessons, absent a clear scorecard tying dollars to capacity that actually materialized. For a program whose entire justification is strategic foresight, the thinness of its own measurement is the most damning thing in the file.

## What the money bought that markets would not

And yet the defense of Title III is not weak, and honesty requires stating it as plainly as the criticism. This is the primary federal tool for rebuilding supply chains that private markets, left to themselves, walked away from. The rare earth awards helped restart separation and processing at the only rare earth mine and processing site of real scale in the Western Hemisphere. Whatever its limits, that capacity exists now and did not exist before, and it exists at a site the country would want in a crisis. The 2020 mask awards, whatever the exact dollar attribution, helped stand up domestic N95 production during a shortage that was killing people and stripping hospitals. The microelectronics awards target the kinds of chips the military cannot safely source from potential adversaries.

The economics are worth sitting with. A few billion dollars, spread across many years and hundreds of separate investments, run by a small program office, is a genuinely cheap way to buy strategic production capacity that the market would not build on its own. Set that against the cost of a wartime shortfall, the price of discovering mid-conflict that the only source of a critical magnet or a critical chip sits inside a country you are fighting, and the calculus tilts. Insurance looks expensive right up until the day the house burns down. Title III is, in essence, an insurance premium on industrial capacity, and premiums are supposed to look like money spent on nothing until the claim comes due.

## Reading the ledger

So here are the two readings, and they both survive contact with the evidence. The critical reading: a program that spent roughly $3.6 billion over seven years cannot tell you, in any rigorous way, whether the money produced the capacity it was meant to produce, because the lead agencies declined to evaluate it, lacked the expertise to use their own tools, and failed to share what they learned. The generous reading: a tiny office bought real factories that markets would never have built, at a rare earth site and in medical and microelectronics supply chains where a shortage would be catastrophic, and did it for a rounding error inside the defense budget. Both are true. The rare earth line at Mountain Pass is real and the magnet supply chain is still not free of China. The masks got made and the pandemic response was still slow and badly tracked. The insurance is cheap and no one is checking whether the policy would actually pay out. Title III is not a boondoggle and it is not a triumph. It is a sound idea run without a scorekeeper, which is exactly the kind of program that is easy to defend, easy to attack, and hard to actually improve until someone decides to measure it.

## Related reading

- [The watchdog's high-risk list and improper payments](/blog/gao-high-risk-list-improper-payments/): the same GAO oversight apparatus that flagged Title III's missing evaluations tracks the government's chronic accountability gaps.
- [When the census technology failed](/blog/decennial-census-technology-failures/): another case of a big federal program spending real money while struggling to show what the money bought.
- [The index of programs, lifelines, and boondoggles](/blog/public-money-programs-index/): the full catalog of public-money programs in this series, from lifelines to waste.
- [The working ledgers](/blog/the-working-ledgers/): the running notebook of figures and sources behind these program write-ups.

## Fact-check notes and sources

- The Executive Agent and directive: the Secretary of the Air Force is the DoD Executive Agent for the DPA Title III Program, with the operating office in the Air Force Research Laboratory's Materials and Manufacturing Directorate at Wright Patterson AFB. The designation is recorded in the DoD Executive Agent registry, and the designating instrument is DoD Directive 4400.01E, "Defense Production Act Programs." [DoD Executive Agent Registry](https://dod-executiveagent.osd.mil/Agents/ViewAgent.aspx?agentId=20).
- The load-bearing figure: from FY2018 through FY2024, the DoD, HHS, and DOE made 222 Title III investments worth about $3.2 billion plus one $410 million loan, for roughly $3.6 billion combined; the DoD made 208 of the 222 investments. This is money committed and awarded across the seven-year window, not annual outlays; most investments were still ongoing as of November 2024 (85 completed). The single loan (2023, 20-year term) was for vaccines and critical medicines, not rare earths. Congress appropriated at least $3.8 billion for DPA-related activities over the same period. [GAO-25-108497, June 12, 2025](https://www.gao.gov/products/gao-25-108497).
- The oversight gaps: GAO found the U.S. International Development Finance Corporation declined to evaluate the Title III loan program's effectiveness, the DoD lacked in-house expertise to fully use its loan authorities, and FEMA had not collected the DoD's lessons learned. [GAO-25-108497](https://www.gao.gov/products/gao-25-108497). On COVID-era DPA use being slow, limited, and poorly overseen, see the [American Bar Association, Public Contract Law Journal (Winter 2022)](https://www.americanbar.org/groups/public_contract_law/resources/journal/2022-winter/covid-19-pandemic-defense-production-act-government-misuse-failures/).
- The specific awards: the DoD awarded MP Materials $9.6 million in 2020 (light rare earth separation) and $35 million in 2022 (heavy rare earth separation) at Mountain Pass, California; the 2022 award release is now hosted on war.gov following the 2025 department rename. [DoD / Department of War release](https://www.war.gov/News/Releases/Release/Article/2941793/dod-awards-35-million-to-mp-materials-to-build-us-heavy-rare-earth-separation-c/). The roughly $133 million April 2020 N95 award to 3M, O&M Halyard, and Honeywell comes from contemporaneous press reporting, not GAO, which does not name companies; treat the exact aggregate as reported rather than audited. [Federal News Network](https://federalnewsnetwork.com/dod-reporters-notebook-jared-serbu/2020/04/pentagon-to-use-defense-production-act-for-133-million-in-n95-masks/).
- What Title III authorizes: financial incentives (loans, loan guarantees, direct purchases, purchase commitments) to expand domestic production capacity essential to national defense, historically operating under an annual balance limitation on the DPA fund. [Congressional Research Service, R43767](https://www.congress.gov/crs-product/R43767).

*This post is informational and journalistic, drawn from public records, and is not legal, financial, or policy advice; dollar figures are attributed to their fiscal year as cited.*


---

Canonical HTML: https://jwatte.com/blog/defense-production-act-title-iii/
RSS: https://jwatte.com/feed.xml
JSON Feed: https://jwatte.com/feed.json
Hero image: https://jwatte.com/images/defense-production-act-title-iii.webp