A breakdown of the Ukraine aid bill
Speaking Security Newsletter | Advisory Note for Activists and Candidates, n°158 | 23 May 2022
It was a bit touch and go in the Senate following an objection by Rand Paul (R-KY), but all told the legislation practically flew through Congress, at least by Washington’s standards: Biden submitted the funding request to Congress on April 28 and it was sent back to his desk just three weeks later.
What’s in it
Based on the bill text, I counted $40.1 billion worth of provisions; $24.6 billion for military programs and $15.5 billion for non-military ones.
Not all of the funding provisions are for aid. The money for the Department of the Treasury and Department of Justice to seize and track Russian assets aren’t, for example, and neither are a portion of the funding for the Pentagon to develop and procure weapons. Moreover, a good bit of the included appropriations covers the operating expenses and overhead of US agencies implementing the aid and not for the aid itself, like for the deployment and hazard pay of US troops to eastern Europe or extra operating expenses for USAID.
Of the provisions that are unmistakably for military and non-military aid, it’s tough to say how much will end going to Ukraine, for two reasons. First, there’s a “...and other countries” (or similar) suffix following most of the major economic, humanitarian, and military assistance provisions. Second, the bill raises the legal limit on existing authorities that allow the executive branch to authorize additional aid transfers (like this one, this one, and this one), which could raise the top line amount given to Ukraine (and/or other countries).
What’s in it for US military contractors
I estimate that for-profit military contractors will derive about $17.3 billion in revenue from the bill, which exceeds the total amount of non-military aid included in the legislation ($15.5 billion).
This doesn’t mean that the money going to military contractors isn’t going to Ukraine. It’s just that giving military aid to Ukraine (or wherever) means giving money to military contractors. The funds given to the Pentagon by Congress through the bill are generally to provide Ukraine either with goods (weapons, equipment) or services (logistical support, intelligence, training). Military contractors get paid by the Pentagon for both, to varying extents. (See methodology section, below, for how I arrived at these estimates).
The Pentagon obligates more than half its total annual budget to private sector contractors for various goods and services. Certain parts of the Pentagon budget—like the Personnel account, which pays salaries and other expenses—yield relatively low revenue for military contractors, while other parts of the budget—like the Procurement account, which buys weapons and other military equipment—are huge for for-profit contractors. Other accounts (like ‘Operations and Maintenance’ and ‘Research, Development, Test, and Evaluation’) fall somewhere in between.
The military-related portion of the Ukraine aid bill is also organized by these accounts. I calculated the level of privatization (how much will go to military contractors) by how much usually goes to contractors in these accounts in the Pentagon’s base budget. I defaulted to this methodology but overrode it several times if the bill text, presidential request, or appropriations summary provided by Congress gave enough reason to. For example, the language for procurements in the bill suggested nearly all funding would result in military contractor revenue, while the language for personnel suggested nearly zero.
All told, the lack of information provided in the bill text makes this a rough estimate, but it’s also a conservative one. For example, the bill obligates $6 billion in additional funding for an existing bilateral military aid program called the Ukraine Security Assistance Initiative (USAI). Because the Pentagon can carry out the service portion of USAI itself, I didn’t assume any contractor revenue from services, even though there was likely some. So for this provision, I only used the chunk of the USAI that’s used to buy weapons and equipment from contractors (this chunk was 25 percent as authorized by P.L. 117-81, so that’s the percentage I used here, even though it seemed low to me). There were also two State Department security assistance programs that sometimes involve the transfer of military gear, but not always, so I set the expected military contractor revenue to zero dollars for those provisions.