On January 30, the U.S. Department of Defense (DOD) issued an interim procurement rule, prohibiting the procurement of personal protective equipment (PPE) from four “non-allied” countries: China, North Korea, Russia, and Iran.
Effective January 31, the draft interim rule implements the restrictions in the 2022 and 2023 National Defense Authorization Acts (NDAA), which limit the acquisition of “covered items” like PPE and “sanitizing and disinfecting wipes, testing swabs, gauze, and bandages.” The restrictions (1) boost public health in the U.S., (2) encourage the expansion of domestic capacity to produce PPE, (3) enhance U.S. national security by reducing PPE dependence on these countries, and (4) reduce the influx of counterfeit PPE items into the U.S. The ban on covered items does not apply to PPE procurement used outside of the U.S. or if the maximum procurement value is under $150,000.
The Federal Register published the interim rule on January 31 and will accept comments for the following 60 days.
Why It Matters
The COVID-19 pandemic revealed significant and life-threatening vulnerabilities in the U.S. supply chain for PPE. Among other things, it exposed a seriously deficient PPE domestic production capacity, and the dependence on foreign sources forced the U.S. to compete with other countries to purchase badly needed PPE. As such, the interim rule banning the procurement of covered items makes good sense and good policy. Most importantly, it presents a unique opportunity for companies considering expanding existing domestic production capabilities — the elimination of covered items (typically of lower quality and lesser price) from the U.S. marketplace. Such a ban may go a long way toward establishing a more competitive marketplace for U.S. producers.