Defense contractors make millions when the US sends weapons to Ukraine

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Defense contractors stand to make millions as the Biden administration vows to continue supporting Ukraine “as long as necessary.”

In December, the US military announced that it had awarded Raytheon Missiles and Defense an $84 million contract for more than 1,000 Excalibur 1B precision munitions to supplement those sent to Ukraine.

A few weeks ago, the military awarded Lockheed Martin a $432 million contract to replenish the High Mobility Artillery Missile System (HIMARS) launchers sent to Ukraine by the United States and its allies, DefenseNews reported. The Army also awarded a $1.2 billion contract to Raytheon for six National Advanced Surface-to-Air Missile System (NASAMS) batteries for Ukraine.

The Biden administration is expected to announce additional military aid to Ukraine this week when US defense chiefs meet with their German counterparts at the eighth meeting of the Ukrainian Defense Liaison Group.

The United States pledged $400 million worth of military equipment at the group’s last meeting on November 23. CNN reported Wednesday that the administration is handing out one of its largest aid packages.

So far, the US has provided $113 billion in aid to Ukraine, including $24.2 billion in security since the conflict began in February 2022.

Most of what the United States supplies to Ukraine comes from its own military stock. The Biden administration has examined these inventories 29 times using what is known as the Presidential Selection Authority, or PDA.

But today, the flow of weapons is at odds with the current supply and production capacity of the defense industry.

On the one hand, the US military must maintain enough weapons for its war plans, as well as for its units to continue training and maintenance.

U.S. military and defense officials have told members of Congress and their staffs “repeatedly” that they need to maintain a certain amount of weapons mandated by the Pentagon’s war plans, Foreign Policy reported. last month. These weapons include Stingers, Javelins, 155 mm artillery and Guided Multiple Launch Munitions (GMLRS).

Second, some weapons that are in high demand in Ukraine have been discontinued or produced only in very limited quantities.

For example, Raytheon shut down its Stinger production line in December 2020, months before Russia invaded Ukraine. In July 2021, the company won a contract to produce more, but primarily for international governments, according to Reuters.

Raytheon CEO Greg Hayes said in an April 2022 conference call that the Pentagon has not purchased a Stinger in 18 years and that some components are no longer commercially available. “So we have to go out and re-engineer some of the rocket electronics. It will take us some time,” he said.

In addition to continuing to deliver to Ukraine, the US military is trying to replace what it has already sent, and it is clear that maintaining these two efforts will cost the US taxpayer dearly.

Ukrainian servicemen receive FGM-148 Javelins, an American man-portable anti-tank missile delivered by the United States to Ukraine. (Photo by SERGEY SUPINSKY/AFP via Getty Images)

Because defense contractors are reluctant to ramp up production for a war they don’t know how long it will last, US policymakers are trying to incentivize them with multi-million multi-year contracts that are not competitive.

Congress recently authorized multi-year contracts for certain munitions in the National Defense Authorization Act.

According to Breaking Defense:

The move to multi-year contracts is something that many in the Pentagon support, but Congress has always been reticent about granting such authorizations. Calls for a multi-year supply of ammunition have intensified in recent months as the war in Ukraine complicates ammunition supplies for America and its partners.

The main beneficiaries of the multi-year contracts will be Lockheed, Raytheon and General Dynamics.

A January 12 Bank of America analysis said:

With the high volatility and risks associated with the FY24 budget process…we are confident that General Dynamics (NYSE:GD), Lockheed Martin (NYSE:LMT), and Raytheon Technologies (NYSE:RTX) will continue to receive presidential fees and USAI funding. supporting Ukraine, given the large impact of legacy ground systems. These gifts were tasked with meeting the new demand in Europe and supplementing US reserves depleted by 29 PDAs.

Lockheed affiliates and employees donated more than $3.2 million to congressional campaigns and political parties, and more than $10 million to lobby members of Congress in 2022, according to OpenSecrets.org. Raytheon affiliates and employees donated more than $2.2 million and spent more than $8 million on lobbying in 2022, according to the website. General Dynamics affiliates and employees donated more than $2.7 million and spent more than $8.4 million on lobbying.

Some within the DOD have recently expressed concern about where the continued supply of weapons to Ukraine will leave them.

Navy Secretary Carlos del Toro recently told reporters that it would be “difficult” for the United States to arm both Ukraine and the United States Navy in the near future. It comes after the commander of the US Navy expressed his displeasure at the lack of targets for defense contractors to deliver weapons and that he wants to help Ukraine, but “not in a way that destroys me and takes me back to the dark ages”.

A leading defense expert says the arms shipments are likely in the future, even if they don’t affect the navy or a future maritime emergency involving China.

Mark Kancian, a retired Marine Corps colonel and senior adviser at the Center for Strategic and International Studies, a Washington think tank, recently told Breitbart News:

For the most part, shipping to Ukraine does not affect naval engagement or deterrence with China. The reason for this is that the types of weapons and ammunition supplied to Ukraine are for ground combat, while the weapons and ammunition needed for Taiwan’s defense are mainly air and sea. However, there will be competition for future production between Taiwan, which is trying to build up its armed forces, and US services, which are trying to replenish their stockpiles.

In a recent article, he warned that there could be a “boiling crisis” replacing US artillery munitions.

“The bottom line is that military aid will continue and Ukraine can still survive, but stockpiling will become an increasingly pressing issue. DOD has many tools to alleviate the “empty box” problem. and all of them should be used not to slow down military support to Ukraine,” he wrote.

Last year, House Speaker Kevin McCarthy (R-CA) pledged to limit “blank check” spending on Ukraine when Republicans won the majority, but there is support for continuing arms deliveries to Ukraine.

Recently, South Carolina Republican Joe Wilson proposed placing a bust of Ukrainian President Volodymyr Zelensky inside the Capitol.

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