Senate appropriators look to block new 'Critical Munitions Acquisition Fund'

By Tony Bertuca / August 4, 2022

The Senate Appropriations Committee is taking a dim view of a new Pentagon proposal to create a $500 million "Critical Munitions Acquisitions Fund" intended to help the United States surge production of key anti-tank and anti-aircraft weapons to continue to aid Ukraine and prepare for other potential crises.

Defense Secretary Lloyd Austin said in April that a Pentagon proposal for the fund could give the department the money and the flexibility to “surge” weapons production to aid Ukraine and create a “strategic reserve” for the future.

But Senate appropriators, in the explanatory report accompanying their version of the fiscal year 2023 defense spending bill, said a new, more flexible fund is not an adequate solution to broader challenges facing the defense industrial base.

DOD, according to the committee, is seeking “unprecedented acquisition and funding flexibilities without providing specific details.”

“The committee is concerned that the fiscal year 2023 President’s budget request does not include sufficient, predictable investments to empower a resilient and responsive defense industrial base [DIB] in support of near-peer competition requirements, particularly with respect to munitions and large-caliber ammunition,” the report states.

Ongoing challenges, according to the committee, include workforce recruitment, training and retention; steady and predicable investment demand signals from DOD; inadequate analysis of supply chain weaknesses; and the impact of increased inflation on firm-fixed-price supplier contracts.

“The committee is aware that a number of potential tools exist to address these challenges, including the use of multiyear contracts, use of advance procurement funding, and procuring critical long-lead items to shorten production and delivery timelines,” the report states. “However, the committee notes that none of these authorities and associated funds were included in the fiscal year 2023 president’s budget request, and that most acquisition program managers did not recommend their use.”

Instead, the committee said, DOD is seeking solutions like the Critical Munitions Acquisition Fund.

“In the committee’s view, such proposals are an inadequate substitute for strategic assessment and investment across portfolios and programs over the Future Years Defense Program [FYDP],” according to the report.

Senate appropriators said the proposed fund “is narrowly focused on procurement of small amounts of certain munitions to be decided in the year of execution,” and does not address broader challenges like strategic investment and management of the defense industrial base and supply chain.

The committee instead used its bill to make “targeted investments” in “priority procurement programs,” including an additional $240 million to support the defense workforce, $450 million to expand industrial capacity across the military services’ missile procurement programs, and $250 million to invest in ammunition facilities.

Additionally, the committee said its bill invests in hypersonic weapons, Tomahawk missiles and the Small Diameter Bomb.

The funds, however, would not be made available until the committee is presented by DOD with a detailed execution plan.

The committee also says it “expects” DOD to use its FY-24 budget request to “seek greater use of multiyear procurement contracts, advanced procurement, government-furnished equipment, and long-lead procurement, as well as a more strategic approach to investment and management of the individual missile and ammunition acquisition programs and associated workforce.”

Meanwhile, House lawmakers felt differently about DOD’s proposal and voted to include an amendment to the FY-23 defense authorization bill that would create a revolving critical munitions fund specifically for aiding Ukraine.

The purpose of the amendment, which was offered by House Armed Services Committee Chairman Adam Smith (D-WA), is “to ensure that adequate stocks of critical munitions are available for allies and partners of the United States during the war in Ukraine,” and to also “finance the acquisition of critical munitions in advance of the transfer of such munitions to foreign countries during the war in Ukraine.”

The White House, however, has told the House it wants more from the bill, noting the legislation does not “provide the complete authority to establish a revolving fund to maintain continuous orders of munitions that the administration considers critical,” according to a statement of administration policy.

The legislation “as currently drafted would still require DOD to use presidential drawdown authority of existing department munitions stock to support partner operations,” the White House said.

Some lawmakers voiced concern months ago about the rapid rate at which the federal government was transferring U.S. weapons to Ukraine, specifically Javelin anti-armor systems and Stinger anti-aircraft systems.

As of Aug. 1, DOD has transferred more than 6,500 Javelins and more than 1,400 Stingers to Ukraine, according to a Pentagon fact sheet.