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WASHINGTON (AP) – Despite having a budget of more than $800 billion and the ability to purchase millions of weapons and equipment each year, pentagon You might even find a few dollars in a couch cushion. Or maybe $300 million?
For the second time in nine months, Pentagon accountants sharpened their pencils and pored over their books. found a way This is to send more military aid to Ukraine.
The $300 million figure may seem like a lot to ordinary people struggling to pay their mortgages. But it’s not for the Department of Defense. Given the sheer size of military budgets, even small savings, such as saving a few dollars on each bullet on a new contract, can add up to millions of dollars.
White House and Pentagon leaders are wondering how new weapons and equipment packages could be sent to Ukraine this month, even though no legislation has been introduced to fund military aid. This is how I explained it. deadlocked in parliament. This is the first stopgap aid measure since late December, when a lack of supplies of arms from the United States has caused front-line Ukrainian forces to run out of rations or ammunition.
A defense official said the department used savings recovered from the Army contract, which came out cheaper than planned. The official spoke on condition of anonymity to discuss details of the process.
The $300 million discovery surprised some. The Pentagon is pleading with Congress for funds needed to replace weapons it has already sent to Ukraine. Earlier this month, the Pentagon revealed just how deep the gap is: $10 billion. That means the military that sent stockpiled equipment to Ukraine will not be able to get replacements unless Congress approves a funding bill that House Republicans are blocking.
It is unclear whether the Pentagon could have instead used that $300 million to reduce supply shortages by $10 billion. There are congressional regulations on how the various funding lines can be used, and the Pentagon did not immediately respond to questions about the savings. but, Ukrainian army is running out of ammunition In the fight against Russia, and with Congress’s funding crunch showing no signs of ending anytime soon, the Biden administration has chosen to use its savings to help struggling allies.
In addition to complex financial record-keeping, the Pentagon announced last year that it had discovered accounting errors that led to the release of $6.2 billion in additional weapons for Ukraine. The military used replacement costs to determine the value of equipment sent to Ukraine. However, regulations require that a lower net book value be used.
The surplus was in spending authority, not actual money, meaning the Pentagon received Congressional approval to send an additional $6.2 billion worth of equipment to Ukraine.
Let’s take a look at the complex accounting process.
10 billion dollar hole…
The $10 billion supply gap is based on estimates made by Pentagon budget officials in the early months of the war. At the time, there were few details about what kind of weapons Ukraine would need over time and what the United States would ultimately send. In the early months, mainly simple systems were hastily introduced, such as small arms ammunition and anti-tank ammunition.
For these simpler systems, the Department of Defense’s resupply costs were estimated to be close to a 1:1 ratio.
But as the months passed, the United States began sending entire air defense systems, armored vehicles, advanced missiles, and even Abrams tanks. In some cases, as militaries replaced older weapons with newer, high-tech, and more expensive weapons, the replacement cost ratio for some systems increased, reaching 4 to 1 in some cases.
For example, the Army is sending Humvees to Ukraine, but is purchasing a new and much more expensive Joint Light Tactical Vehicle to replace them. The Army is also purchasing the next Precision Strike Missile (PrSM) to replace the Long Range Army Tactical Missile System (ATACMS), which is a much-needed item for Ukraine and is cheaper than the PrSM.
As a result, early estimates of how much it would cost to replenish U.S. stockpiles fell short. However, it is difficult to calculate how much. The Pentagon has not provided details about how it came up with the $10 billion figure, including how much equipment has already been sent and how much of it will need to be replaced.
…and $300 million in savings
As the U.S. began negotiating contracts for replacement weapons to send to Ukraine, officials were sometimes able to save money by getting supplies at lower prices than originally expected.
For example, the military was able to purchase 25-millimeter ammunition for $93 per round instead of the original estimate of $130 per round. So if you bought 120,000 rounds of ammunition, you would have saved a total of $4.4 million on that contract alone.
Like contract overruns, such savings occur all the time in practice. Over the past two years, due to price savings and other contract issues, the military services have returned more than $1.57 billion to her supply fund as of September 2023.
Of the returned funds, about $1.5 billion was used to replace other stocks sent to Ukraine, while the remaining $70 million arrived too late in the fiscal year and expired before being reprogrammed. became.
A senior defense official said most of the $300 million came from an Army contract to buy armored multi-purpose vehicles. The final cost was $290 million less than originally estimated.
Essentially, the $300 million recovered allowed the Pentagon to offset the cost of sending more munitions to Ukraine without further exacerbating the deficit.
$6.2 billion surprise
That’s what Pentagon officials said in late June of last year, as the fiscal year drew to a close and Congressional funding for Ukraine began to dwindle. announced that an accounting error had been discovered..
The account in question involved the Pentagon’s Presidential Defunding Authority (PDA). The plan would give the ministry the authority to take weapons from its own stockpile and send them to Ukraine. It doesn’t provide funding – it’s included in other spending bills.
When the military took weapons off the shelves, they used replacement cost to calculate the value of the equipment sent, rather than book value, if necessary. The book value of the weapon was the original cost less depreciation, which was much lower than the weapon’s replacement cost, leaving approximately $6.2 billion in spending authority once the cost was adjusted.
What is left?
The Pentagon has made several funding contributions to the $6.2 billion windfall to send additional weapons to Ukraine, and currently has about $3.91 billion remaining.
In theory, it could be used to send weapons to Ukraine from the US stockpile. But the Pentagon has been reluctant to use that authority because there is no money left to buy replacement weapons and there is no guarantee that Congress will act soon.
Sending weapons without funding would only deepen the $10 billion supply hole, further reducing stockpiles and potentially putting the U.S. military at risk.
Last week, Pentagon leaders publicly urged Congress to approve a $95 billion supplemental funding plan that is still stalled on Capitol Hill. Approximately $60 billion of this will go toward funding U.S. aid efforts in Ukraine, and $20 billion of that will go toward replenishing current and future stockpiles. Officials argue that such money would actually be a boon for Congress because it would be used to increase output at manufacturing plants across the country.
Last week, Chairman of the Joint Chiefs of Staff Gen. CQ Brown emphasized this point during an unusual visit with members of Congress. He took Republican House and Senate representatives from Arkansas and Oklahoma, who are opposed to the spending bill, to visit companies in each state that are making the weapons needed for Ukraine and, if the bill passes, will It was shown that this would lead to local economic and profit benefits. The workforce that makes up the U.S. defense industrial base.
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