This thread is on US Security Assistance to Ukraine (specifically Presidential Drawdown Authority), a topic I have been covering for 2 years now. There is no TL;DR. This is a complicated subject that I hope I have made understandable for you. 2/109
Long time followers of this account will already know that after the $300 million March 12 announcement, there is now $3.9 billion in Drawdown Authority remaining, which the Biden Admin again maintains they cannot use. This thread will shatter their position. 3/109
With all USAI funds exhausted, PDA is the Biden Admin's primary remaining authority to provide military aid to Ukraine. It is also the more important of the two programs, since it gets Ukraine what it needs right away.
How does PDA work though? 7/109
How does PDA work though? 7/109
So PDA allows a cumulative (and global) total of $100 million worth of ammo, weapons or equipment to be transferred in emergencies to foreign countries. It is not $100 million for each country, it is $100 million for all countries combined in any given fiscal year. 9/109
Of course $100 million doesn't go far in a conventional war, so Congress increased this s.506 cap on the value of drawdowns via the previous Ukraine Supplemental Appropriations & Continuing Resolution bills. Combined, the cumulative FY22 & FY23 total was $25.5 billion. 12/109
Rather than re-issuing a correct valuation for each drawdown up to March 31st, the DoD took the position that they had already notified Congress of that $6.2 billion worth of drawdown authority being committed to Ukraine, and were therefore free to execute it. 15/109
The notification of Congress is the key component of a drawdown, because while the authority is capped and expires annually, once a drawdown is notified to Congress, there is no time limit on it's execution. The defense articles don't need to be delivered immediately. 17/109
This is what has allowed the Biden Administration to continue drawdowns in FY24, despite Congress not increasing the FY24 PDA cap above the default $100 million. That $6.2b in "restored" PDA being executed in FY24 is legal, but the underlying interpretation is suspect. 18/109
So Congress authorized $25.5 billion in PDA, and $25.9 billion in "replacement funding". Though that might seem logical, it doesn't explain how the replacement funds have been exhausted already when there is still $3.9 billion in drawdown authority remaining. 23/109
I will reiterate again that the $6.2 billion valuation error doesn't allow the Biden Admin to exceed that $25.5 billion PDA Cap. Congress has actually only been notified of $23.725 billion in drawdowns, as the Biden Admin allowed ~$2b in authority to expire in FY22. 24/109
As I already noted, they maintained this position for 11 weeks, and actually still maintain it today. Ukraine should not expect President Biden to authorize any additional Drawdowns for them. PDA #55 was a one off situation, according to them. 27/109
When the DoD commits replacement funds to a specific program or purpose, that is done with an estimate of how much money will be required to fund that activity. When contract negotiations are concluded, sometimes the cost comes in below that estimated budget. 28/109
That's $1.6b that was committed, then returned to the replacement fund because contracts were negotiated under the estimated budget, and then recommitted to other priorities. This is a normal process that happens with the regular DoD base budget; nothing underhanded. 30/109
This brings us back to the $3.9 billion gap between the remaining drawdown authority to be executed, and the replacement fund, which is now again at $0. How did that come about when the appropriated replacement funds actually exceeded the amount of Drawdown authority? 32/109
The replacement fund also covers the costs of executing the drawdowns: all the expenses incurred to transport the large quantities of defense articles to Ukraine. In total, ~$2.1 billion has been spent on PDA execution and other Operations & Maintenance (O&M) expenses. 34/109
The Biden Admin's stated position: that they can't execute drawdowns without accompanying replacement funds, suggests that they expect to replace everything provided to Ukraine $ for $ & 1 for 1 with new equipment. This contradicts the DoD's procurement policies though. 36/109
The shell example is a perfect illustration of how PDA and replacement funds can't be expended at a 1:1 ratio. $2.7b was spent to replace 2 million shells worth a fraction of that. New defense articles are almost always going to cost more than old, on an individual basis. 40/109
To recap:
There's no legal requirement to replace defense articles.
DoD policy is that new systems aren't required to be procured to replace old ones 1 for 1, or at all.
The replacement fund never had enough money to replace 1 for 1 or even dollar for dollar anyway. 41/109
There's no legal requirement to replace defense articles.
DoD policy is that new systems aren't required to be procured to replace old ones 1 for 1, or at all.
The replacement fund never had enough money to replace 1 for 1 or even dollar for dollar anyway. 41/109
The Biden Administration continues to blame Congress, even though they themselves are responsible for creating this disparity in PDA and replacement funds. The purpose of a budget request is to articulate the authorities & funds the Admin needs to execute their policies. 46/109
It's not the absence of replacement funds that creates the readiness impact, it's the drawdown itself. Whether funds are available or not, there will be at least a temporary impact on readiness. Defense articles can't be replaced instantly, they have to be procured. 52/109
Long time followers of my account will know that the glacial pace of Ukraine contracting has been a huge problem. Even with the special, rapid contracting authorities provided to the DoD by Congress to support Ukraine, procurement is still a very slow process. 53/109
So if the DoD had more funds available, they would still take months to commit them via a reprogramming notice to Congress, then months more to issue the contract, and finally it would takes years for those defense articles to be produced & delivered to the DoD. 55/109
Lockheed is already increasing MSE production, but there will still be a backlog for the Army's own orders. If the Army had additional funds to procure replacement missiles, they will still have to wait for them. The next contract award likely won't be until Dec anyway. 59/109
So not only have they admitted that they can execute drawdowns without replacement funding, they have actually done so. They didn't refuse to provide Ukraine any assistance until Congress appropriated funding, they recognized the emergency and took action. 62/109
So $18 billion for $7b in new authority plus the existing $3.9b. That needs to cover replacement costs, O&M expenses, and defense industrial base investments. Is that enough?
No.
How do we know?
Because they have told us. 65/109
No.
How do we know?
Because they have told us. 65/109
Since then there has been another $2.722b in drawdowns. So the Admin asked for $18b, minus $4.7b, leaving $13.3b to cover costs for $7b in new authority, $3.9b in existing authority, and $2.722b in past drawdowns. $13.3b in funds for $13.622b in PDA. They're still short. 67/109
The problem is of course even worse than that too. The assessed replacement costs in July were $30.6b, and as I already explained, not all of those $25.9 billion in funds are used for replacing defense articles. So the funding deficit is much larger than it appears. 68/109
If $17.1 billion in drawdowns generate replacement costs of $30.6 billion, then the replacement fund needs to be double what the PDA cap is at a minimum, in order to cover the replacement costs, the O&M expenses, and the DIB investments. 69/109
The entire Biden Administration is blaming Congress for not giving them enough funding, when they themselves created this situation by not fulfilling their commitment to Congress to request adequate levels of funding. 71/109
Congress already passed 4 Ukraine Supplementals; 3 of them exceeded the budget requests from the Biden Admin, so there was no opposition to providing more support to Ukraine. As I previously noted, Congress has consistently pushed the Admin to provide more aid to Ukraine. 72/109
It continues to get worse though. On March 11, @laraseligman of @politico broke the news that the DoD's assessed replacement costs for weapons drawndown to Ukraine had risen to $10 billion (from the aforementioned $4.7 billion in July). 73/109
So with the Biden Administration's new supplemental request, they would only have $8 billion in funds to cover replacement costs for $10.9 billion worth of authority ($7b new, $3.9b existing), plus O&M expenses and the DIB investments. 75/109
The Biden Admin continues to ignore this reality though. When pressed further by @noahjrobertson about the genesis of the $10 billion hole, their excuse was that they didn't realize that it would be much more expensive to replace old, depreciated equipment with new. 77/109
Regardless of when they reached that conclusion though, it's an absurd number. Recall that Supplementals 3 & 4 asked for LESS funding than PDA, not even 10% or 20% more. As I have shown, it will actually require double; 100% more funding than PDA, to cover all costs. 81/109
Ukraine has received just under $20b in drawdowns. A 20% premium on that equals $24b. Congress appropriated $25.9b in funds, and there is a $10b shortfall. That's an 80% premium. Which again, only covers replacement, hence a 100% premium to cover everything else too. 83/109
I know I said there was no TL;DR for this thread, and that's true, but there's 1 point that needs to be emphasized above all others: In July Congress was told there is a $4.7 billion shortfall in replacement funds, but the Biden Admin continued drawdowns until December. 84/109
So they drewdown from US stocks to support Ukraine, which they were and are correct in doing, but did so knowing they had no money left to buy replacement stock. During that time they pretended they had money when they didn't, and have blamed all of this on Congress. 85/109
Absolutely nothing has changed between December and today. For 11 weeks President Biden refused to authorize any Drawdowns and justified that decision with a lie. There was no money available in July, no money available in Dec, and there is still none available now. 86/109
Now of course the Admin knows all of this. They were the ones who told Congress back in July about the shortfall in replacement funding. So what is motivating this dishonest narrative?
IMO, they are just making things up as they go along. They have never had a plan. 88/109
IMO, they are just making things up as they go along. They have never had a plan. 88/109
They predicted the invasion but took no action to deter it. Their first instinct was to allow Russia to take Kyiv & offer Zelensky a government in exile. They debated every increase in material aid for months or even years & nothing has been given in decisive quantities. 89/109
Congress of course should have passed the Supplemental back in October. It includes not only essential aid for Ukraine, but for Israel as well, plus Taiwan, and critical investments in the US submarine industrial base too (which AUKUS is depending on). 92/109
@RepMcCaul There may be a light at the end of the tunnel though. Johnson has said that the House will take up votes on foreign aid "immediately" once they return from recess on April 9. How that exactly plays out remains to be seen though. 94/109
The bill does increase the amounts being directly appropriated to the Procurement accounts of the Services, which is good and necessary, but those funds can't come at the expense of the replacement account. The latter needs to be funded adequately. 97/109
The replacement fund is substantially larger, to account for the existing $10 billion hole, the existing $3.9b PDA, and the new PDA. This ensures that DoD can execute Drawdowns at no cost to their base budget and replace everything given to Ukraine. 99/109
I cut USAI because the Biden Admin has been very irresponsible in their use of these funds, and instead substantially increased the FMF available to Ukraine. This gives them the freedom to place FMS orders for what they want rather than what the DoD thinks they need. 100/109
I consider these to be minimum amounts to sustain successful Ukrainian defensive operations through to January 2025. I don't consider it likely that Congress will dramatically change the amounts already appropriated, so I see no point in making less realistic asks. 101/109
At a bare minimum, $34 billion in replacement funds are needed to make DoD hole by covering the $10b and the existing & new PDA in the current bill. That amount will just barely keep the lights on in Ukraine for the next year. Less PDA=higher casualties on the front. 102/109
Although amending the supplemental will take a little extra time, it is essential. The current amounts will not provide enough material support to ensure the Ukrainian Armed Forces remain an effective and intact fighting force into 2025. This bill has to be gotten right. 103/109
The United States can't repeat the same mistakes they made 50 years ago with South Vietnam. The Biden Admin has been indecisive, and the US House intransigent. Ukraine has paid dearly in blood because of it. This is their opportunity course correct from the last 2 years. 108/109
I hope that I succeeded in explaining this complex topic to you. Believe it or not, as I said with my ATACMS thread (pinned on my profile), an awful lot was left out. I'd appreciate it if you'd RT the thread, and follow myself & my colleagues @InsiderEng & @tochnyi for more.
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