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How much of the Ukraine aid bill will go to US military contractors?
Speaking Security Newsletter | Note n°189 | 22 December 2022
Attached to the omnibus legislation is a $47.3 billion supplemental bill called the Additional Ukraine Supplemental Appropriations Act, 2023. From the $28.5 billion the legislation has for military-related programs, I estimate that US contractors can expect at least $20 billion in revenue. This rough, conservative estimate is based on my reading of the bill text, accompanying House and Senate documents, and additional research—see the methodology section below.
The Additional Ukraine Supplemental Appropriations Act is under Division M of the omnibus legislation. If you sift through the bill text (which I wouldn’t recommend doing but by all means go for it—start on p. 1834) you’ll see that funding for military programs is broken down by account. Personnel; Operations and Maintenance (O&M); Procurement; Research, Development, Test and Evaluation (RDT&E); and others—Taxpayers for Common Sense has a terrific breakdown. I assumed zero percent of Personnel funding would go to contractors, but 100% of Procurement spending. For O&M and RDT&E, I arrived at a return rate of 44 percent and 57 percent for contractors, respectively, based on the average share of each account’s annual funding that went to contract obligations. Data on this is thin—there isn’t a contract-share breakdown of individual DOD accounts like there is for the Pentagon budget as a whole—so the 44 percent figure (via CBO) and the 57 percent (via CSIS + DOD) are adopted despite both being from one fiscal year. But they seemed close to the median of all the averages I looked at, so that’s why I chose them. A notable exception was an $11,880,000,000 provision under O&M—it looks like those funds will be shifted to procurement for US military stockpile purchases. In addition to being a rough estimate, the projected contractor revenue is also a conservative one. For example, I omitted from my analysis two military aid programs run through the State Department (INCLE and NADR) even though military contractors are probably awarded contracts through them. I just haven’t had time to look into it. INCLE and NADR are counted in the “enacted funding” column in the chart above, contributing $374,996,000 and $105,000,000 respectively to the “bilateral train & equip programs.”