GEN. RYDER: Great. Well, good morning, and thank you very much for joining us today. Again, I'm Major General Pat Ryder, Pentagon press secretary. I'll be facilitating today's background call.
First up, as a reminder, today's call is embargoed until Assistant to the President for National Security Affairs Jake Sullivan goes to the podium for his press briefing later this afternoon, where he'll announce a new PDA package. As I'm sure you can appreciate, we do not want to get ahead of the White House announcement, but we did want to make our briefers available to you in advance to help provide additional context regarding this announcement and to answer any questions you might have to inform your reporting.
Second, today's call is on background, attributable to "senior defense officials." I appreciate your assistance with this, and not for reporting, but for your info only, our briefers this morning are (inaudible), who will be "senior defense official 1", and (inaudible), who will be "senior defense official 2".
Please note I'll call on reporters. We'll try to get to as many questions as possible in the time we have available. Before we begin, I'd ask you to please keep your phones on mute unless you're asking a question.
And with that, I will turn it over to senior defense official one for any opening comments.
SENIOR DEFENSE OFFICIAL 1: Thank you, Pat. Good afternoon, everyone. I was going to take a few minutes here on how we got here.
Many of you know we have basically exhausted our funding to assist Ukraine, both USAI and drawdown funding -- or drawdown replenishment funding. The last supplemental we got was December of 2022, so 15 months now since we've gotten any -- any money to help Ukraine with. Given that the secretary has expressed his concerns about doing any more drawdowns because it -- you know, we have the ability to move funds out of our stocks, but without the ability to replenish them, we are -- we are putting our own readiness at -- at some risk.
So what happened this week, or -- or in the last week or two, given the battlefield situation, you know, the -- the -- the president, secretary of -- others are -- are concerned about what's happening, and we're looking to see if there was anything we could do. As that was -- discussion was ongoing, savings were starting to come in, which has happened before and may happen again. To explain how -- how supplemental funding works, funding for Ukraine is completely separate legally from our base budget. I don't have any ability to reprogram money from any of the other $800 billion available to the Defense Department to help Ukraine with on drawdown. That took -- that -- that funding and that authority are -- are completely walled off, and that's why we need a new supplemental.
Terms and conditions for that funding are in the supplemental. Anybody can read them. The funding for replenishment comes -- comes in what's called a transfer fund that allows us to take a pot of money to replenish anything that we might give Ukraine and move it to the appropriate type of account. When we give them -- if we give them mostly Army equipment, as we have, the -- the funding to replace that is moved to Army accounts. If any of it is not needed, it can be transferred back to the central pot to be reused. That is how every transfer fund that we have works, whether it's counter-drug, environmental restoration or Ukraine replenishment drawdown. Again, you can see those terms and conditions in the law.
We have done this before. No -- it wasn't news before that we transferred money back when we had savings because we weren't broke at the time. But now we are, and it's -- it's more of interest. And so the -- the -- the connection here I think for most -- most interest to you is that we had savings come in that will allow us to offset the cost of a new drawdown package. This is a bit of a -- of a unique occurrence, not that we've not had savings before. We've had about six percent of all the funds appropriated have been returned and reused so far, and those returns are also publicly available on our website. We're not hiding them. Again there just wasn't the interest until now.
So I think that -- that the bottom line here is that the -- the savings that have come in here are going to help square the circle of what the secretary said of needing to have new funding come in to be comfortable doing anymore drawdown. We do have funds come in that can cover the cost of one more package, but this is a bit of an ad hoc, or a one-time shot. We don't know if or when future savings will come in, and we certainly can't count on this as a way of doing business, so we do need the House to act, the House to be allowed to act and allowed to vote on the supplemental to send authority approved.
With that, let me turn to my colleague who has maybe a little more information on the specifics of this particular savings which, again, are not the first time this has happened.
SENIOR DEFENSE OFFICIAL 2: Yeah, thanks, sir. So just, I was going to provide a few examples. So the vast majority of the, you know, contract award savings being returned to the replenishment of fund are the result of good negotiations. And for example, bundling funding across different things, so Ukraine replenishment funding, for example, paired with base budget funding allowed us to buy things at a better price because we were buying in bulk, so to speak, and I have a few examples.
So in one instance, with 25 mm ammunition, we, you know, were buying, you know, 120,000-plus rounds. We estimated initially a unit cost of $130 each, but we ended up getting a better price of $93 to help us as we negotiated the contract with the vendor. So that's an example of how you generate savings with good negotiations.
We did something very similar with joint light tactical vehicles. We used a initial cost estimate based on the previous JLTV contract, but once we were finalizing this contract award, we had the new contract in place, and the unit price went down as a result of a competition we did, where we now have a new vendor for JLTV. That produced a savings.
On Humvee, we also similarly were able to work with the vendor to extend the ordering period and the quantity, so we got more -- more for our same dollars, but also a unit-cost break. So here again, just working with the vendors, we got -- we came in kind of under -- under estimate, which generate the savings that goes back to the replenishment pot.
So, the funding in question being referred to here going back to the pot was a result of multiple contract actions over multiple months as they worked to finalizing as -- as (Senior Defense Official 1) said. You know, we made the department aware. There's a process where we make OSD Comptroller aware of such things, and that was part of the conversation about this drawdown package.
And this has happened before. We've had savings -- significant savings, for example, from Javelin, Stryker, and HIMAR awards -- HIMARS awards that will also impact the (replenishment pot ?). So it is not routine but it is also not unprecedented and is mostly the result of just good stewardship by the Army to make sure we're getting the right thing at the right price for -- for what the Army needs to replenish. Over.
GEN. RYDER: Thank you very much, gentlemen. First question will go to Associated Press, Tara Copp.
Q: Hi. Thank you both for doing this. A couple questions. Can you give us a dollar figure for what this PDA will be and what kind of munitions or air defense or -- or whatever it will cover?
And then secondly, can you confirm that -- like, the DOD isn't just broke on this particular replenishment fund, it's actually $10 billion overdrawn. So how could you find in -- more money by this cost savings if you're already $10 billion in the hole? Thank you.
SENIOR DEFENSE OFFICIAL 1: Yeah, thanks. So we believe that the package that the -- that the Security Advisor will announce will be up to $300 million. So when you think about the -- the savings that we have identified, it's in that same range. So it leaves us neutral. It doesn't -- it doesn't -- at the end of the day, should not increase or decrease the $10 billion.
The $10 billion is a good example of why we need the supplemental approved, right? When we get funding from Congress to replenish things that we've -- have given or will give to Ukraine, that means that we can use them to fill the hole or, if there is new drawdowns, we can -- we can at least keep even.
And the pace of events on the battlefield kind of dictates how much you lean in the one direction or the other, but we do -- we do need funding for -- for ourselves. Even if there were a -- a -- a decision, which would be a horrible decision, to stop helping Ukraine, the hole -- the hole would exist and we still would need Congress to do something.
Q: So is $10 billion kind of the ceiling of the -- the amount -- like, you're not willing to assume more risk than that at this point?
SENIOR DEFENSE OFFICIAL 1: I don't want to put words in the Secretary's (inaudible) but I think it's -- you know, something in that neighborhood is correct, yeah, that he -- he -- you know, without a signal from Congress -- and remember, the -- after the first year, we had Congress act four times, very quickly every time, 100 percent, if not more, of what we asked for.
So there's kind of been a sea change in the difficulty of getting Congress to continue supporting for Ukraine. So absent that -- you know, with that complete kind of 180 on congressional support, to date at least, in terms of the House being allowed to vote, we believe the -- the support's still there if the House is allowed to vote, but not -- having that kind of change in situation means yeah, you -- you -- you -- you've got to take a different risk calculus about going any further if it's no longer assured that you're going to get help.
GEN. RYDER: Thank you. Let's go to NBC, Courtney Kube.
Q: Thank you. I just -- if I could just ask, when you -- forgive me, cause you both sound a little bit alike, if you could just say if it's Defense Official one or two, just so we don't misidentify you, if he's -- if it's not too much trouble? Thanks.
And then one clarification off of Tara's --
SENIOR DEFENSE OFFICIAL 2: Anything offered is Defense Official 1.
(Laughter.)
Q: Thank you -- thank you. Sorry. I figured, but you don't want to make a mistake.
You -- you didn't -- you didn't dispute Tara's $10 billion, so I just want to be clear -- you guys are -- you're acknowledging that there is this $10 billion in -- deficit in replenishment money, right?
SENIOR DEFENSE OFFICIAL 1: Yes.
Q: Okay. And -- and then --
SENIOR DEFENSE OFFICIAL 1: -- number one -- sorry -- official number one said yes.
Q: Thank you -- thank you. And then can you just give us some specifics about what's in this package, the number of -- you know, in a -- everyone's assuming it's artillery and ammunition. Can you give us some specifics about what you're sending? Thanks.
GEN. RYDER: Hey, Courtney, this is Gen Ryder. So -- so we'll have much more to provide later today, but it's a -- a combination of things like anti-aircraft missiles, ammunition, artillery rounds, some armor systems. Again, we -- we don't want to get ahead of the -- the White House, but -- but they'll be announcing it, plus there'll be a DOD press release on this later today.
Q: Thanks. If the announcement later could also include when they expect some of these things to get in, that would be helpful too, unless you can share it now. Thanks.
GEN. RYDER: Thanks, Courtney. Let's go to CNN, Haley.
Q: Hi. Thanks for doing this. I'm curious if you can talk sort of about the timeline here? I -- unless I'm mistaken, I don't believe these contracts necessarily, like, immediately new. So sort of how was this figured out today -- or, you know, recently?
And then if you could kind of address -- I -- I -- I'm sure there's going to be some inevitable questions from Congress and things on sort of why this is happening now and -- and what this means for DOD being able to move ahead without Congress supplemental and -- et cetera. So I guess just kind of address those ahead of time if you could.
SENIOR DEFENSE OFFICIAL 2: So, this is Defense Official 2. So, I think the way these -- you know, as (Defense Official 1) said, the -- the funding comes in -- you know, we get this transfer fund. The -- the DOD then iteratively goes to Congress and says "we would like to use amounts of that fund for these specific purposes." These are our replenishment requests that go back to Congress for approval.
So the Army, as we've been getting those -- they're, you know, coming at a fast pace for a -- a while -- you know, those -- that starts the clock on getting the funding on -- on contract. So, like, the funding for the ones I'm talking about were, you know, in some cases, provided several months ago, and then just through the natural course of contract negotiations and working through the paperwork to review and vet and make sure we're doing the contract the right way, you know, these -- these things have been trailing items that have now manifested, that have been planned for a while.
So, you know, the timing is really coincidental, in my view, but it has also turned out to be timing that helps support the overall decision here, I believe.
SENIOR DEFENSE OFFICIAL 1: Yeah, and I'll -- I'll just add -- this is -- this is (Defense Official 1) here. The process takes a little time but it -- we are not allowed to replenish anything until we've actually given it to Ukrainians.
That's kind of a legal requirement, right? We can't replenish something we think that we're going to give them or would like to give them, we actually have to -- have -- given it to them first and then start the contracting process --
SENIOR DEFENSE OFFICIAL 2: That's right.
SENIOR DEFENSE OFFICIAL 1: -- that he's describing. So it takes a while.
I would say in -- in -- the other part of your question, this has no impact on the -- the need for a supplemental moving forward. Again, the -- this -- this has happened before. It is sporadic, unpredictable, and hardly to the scale that we need. $300 million is -- is -- you know, we -- we were doing, as you may remember, packages much -- much more than this every two weeks when we had funds.
And what drove this of course in the near-term, just look at what's happening on the battlefield today around Avdiivka and other places. Ukrainians are -- are struggling without ammunition. I think everybody knows that.
So there was an imperative to act, and we had on our side an ability to help the Secretary and the President with a way to at least cover the cost of this one package, but that's this one package. Not -- it's not a -- it's not a -- you know, a fountain of -- of -- of money that is going to sustain us.
GEN. RYDER: Thank you. Let's go to Nick Schifrin, PBS.
Q: Thanks very much for doing this. I think this was kind of asked before but when will the weapons arrive? And -- and what I'm really getting at is -- is how critical is specifically air defense? Are you taking this step because if you didn't, air defense in Ukraine might run out? And is there a concern that this could reduce pressure on the House to pass the supplemental or -- you know, we're all tracking a discharge petition movement this morning.
And if -- if -- forgive me for asking one more question. Are you considering more drawdown packages that would not be immediately replenished? Thanks.
SENIOR DEFENSE OFFICIAL 1: Let -- let me answer the last one first, no, we're not considering any further drawdown packages at this time. The president has that right, obviously, and the secretary and others, to make a different decision based on the situation on the ground, but, no, we are not.
When -- when items might deliver, our colleagues in TRANSCOM have a very good record of getting things over there within days, oftentimes, of a decision being announced. So the actual equipment, I think -- and that presumably is the point, is to get it there quickly because they need it now.
GEN. RYDER: Thank you --
(CROSSTALK)
Q: And, sorry, but I just -- the -- the question about, is there a concern this could reduce pressure on the House to pass the supplemental?
SENIOR DEFENSE OFFICIAL 2: It shouldn't.
(Laughter.)
SENIOR DEFENSE OFFICIAL 2: It's Official 2. The supplemental is absolutely vital for our readiness, as well as Ukraine winning this conflict. This doesn't change that at all. It is a relatively small package to give Ukraine the minimum of what it needs for a short amount of time. We need it badly.
GEN. RYDER: Thank you. We have time for just a few more here. Let's go to Jeff Schogol, Task & Purpose.
Q: Thank you.
Senior Defense Official 1, you mentioned briefly the concerning situation in Ukraine. I'm wondering if you can elaborate about how concerning it is?
And also, just a clarification, the package will include armor systems. Does that mean tanks?
SENIOR DEFENSE OFFICIAL 1: On the second part first, I -- I don't -- no.
SENIOR DEFENSE OFFICIAL 2: I believe it's more anti-armor.
SENIOR DEFENSE OFFICIAL 1: I think -- I think, yeah, it might have been a miscommunication, anti-armor.
On -- on the first part, you know, I would say General Cavoli and others are much better positioned to characterize what's happening on the battlefield. I'm just going by -- by what I observe as we discuss this among senior officials. But, again, I don't think it's particularly a surprise that -- that Ukraine is low on ammunition now. I think they've been saying that publicly, and it's, sort of, self-evident.
GEN. RYDER: Thank you. Let's go to Noah Roberts -- Robertson, Defense News.
Q: Thank -- thank you both for doing this, Senior Defense Official One and Two.
I'm wondering if you could go a little bit further into how the $10 billion hole on replenishment actually came about in the first place?
Is that due to a difference in price, replacing the items sent, than actually sending them themselves, the value at the time?
Just explain that a little bit further, please?
SENIOR DEFENSE OFFICIAL 1: Yeah, basically what happened, when we started, back shortly after the invasion in February '22, we got our first supplemental, I think it was only a month later. And at the time, we had to come up with some ratio, with zero data, on how much more of a premium there should be if you give what is -- what is valued on your books at $100 of x, how much it would cost to buy that same x back again. And we came up with -- with 10 percent.
That turned out to be, after -- after we had some data, which was quite far along, under-valued, based on, you know, replacement values, which were probably in many cases closer to 20 percent. So that is basically where the hole came from, is having a fairly decent volume over that year, year and a half, at what turned out to be, once we had data, which was much, much later, that we had any kind of good data on this, that we -- we were not getting enough dollars back to replace what was -- what was given out.
There's plenty of things that influence this, right? There's -- there's some things, maybe, you can't replace and some things that you can only replace with something that's newer and better and that's not identical. So there's a lot of variables here, and it took us a while to, kind of, get some data and assign it to different categories, like a vehicle versus an artillery round.
So in the course of that, yeah, we -- we are ahead, and -- and, as I said, remember, we haven't gotten any funding in 15 months. So this issue is -- is -- the hole is not news, by the way. The committees have been aware of this for some time as well. But what we need is -- is some help with this.
Very much like what happened, you know, in Desert Storm and other -- and other previous conflicts where there was a -- a recognition that you need to come in on the backend and kind of make, in that case as in this case, the Army largely whole for what was used up or -- or in this case, donated.
Q: And a -- a second question. Could you explain when that data explaining the 20 percent, rather than 10 percent estimate actually came in? When were you able to develop that?
SENIOR DEFENSE OFFICIAL 1: That was -- I -- I would say the second half of last year, by which point three of the four sups were already done. And you know, we have -- if you'll notice, the sup that we sent up in October, which Congress hasn't been able to act on yet -- at least, the House has not been able to act on yet -- the ratio is adjusted. But -- but you know, there was hes- -- was some water under the bridge before that happened.
Q: Thank you.
GEN. RYDER: Last question will go to Carla Babb, Voice of America. Carla, are you there? Okay, then we'll go to (inaudible) --
Q: I'm here, Pat.
GEN. RYDER: Oh, go ahead.
Q: Sorry, I didn't press "*6". Officials -- help walk me through again, because somebody just looking at this, giving Ukraine $300 million of savings that you found that could be going to replenish, it's hard to see the difference, if you're willing to do that, why you're not willing to use the $4 billion left in PDA, you know, if you're willing to take it out here instead of giving it back to the Army to replenish. What's the argument for why you can't pull out anything more from the $4 billion that you could potentially pull out? Because there's been arguments that 155 mm cluster munitions, or M-113s, things that the Army's not using anyway could go to Ukraine, and you have the authority to do that with the $4 billion. So why is that a stopping point for you guys, and this is not?
SENIOR DEFENSE OFFICIAL 1: Well, I would say first that there's scale, $300 million and $4 billion. One is -- one is, you know, 12 times, 13 times larger than the other in terms of money. Second, as I described a -- a -- a minute ago, the -- the lack of clarity about whether the House even intends to vote on this, let alone approve it, makes -- makes us very reluctant to dig the hole deeper. Here in this case, we are not digging the hole deeper; we're staying even while recognizing that Ukraine is in -- is in a very tough spot this moment.
So, you know, I would say that as -- as a -- a mere Under Secretary, I -- the secretary doesn't get any easy stuff, nor does the president, right? So it this -- this is not necessarily an easy call, but you've got a situation where, yeah, we are -- we are short on funding. They are short on ammunition. We have an opportunity here to -- to -- to do something, but it doesn't change the fact we're still -- we're still -- have a hard problem, and we need the House to act.
GEN. RYDER: All right. Ladies and gentlemen, that is all the time we have for today. Again, thank you for joining us. Just as a reminder, this was on background attributable to "senior defense officials". It's also embargoed until the national security advisor, Mr. Sullivan, goes to the podium later this afternoon. Again, we'll have much more info on the details of the PDA in our press release from DOD later today.
Thanks very much, everyone. Out here.
