US readies new Ukraine arms package despite tumult in Congress

By Mike Stone

WASHINGTON (Reuters) - The Biden administration is expected to announce a new weapons package for Ukraine next week as the Pentagon continues to use up funds discovered due to a multi-billion dollar accounting error, U.S. officials said.

Those funds have allowed the Biden administration to send Kyiv arms, supplies and munitions despite the exclusion of new Ukraine aid from a stopgap spending bill passed by the House of Representatives last weekend to prevent a government shutdown.

Biden has been asking Congress to approve another $24 billion related to Ukraine, which the country's supporters - Republicans as well as Democrats - had hoped could become law as part of a spending bill. The request is still pending.

But the Pentagon still has about $5.4 billion of congressionally granted presidential drawdown authority (PDA), after the Pentagon found in June it had overestimated the value of arms shipped to Ukraine by $6.2 billion due to an accounting error.

The composition of the next round of weapons aid is still being formulated and is set to be unveiled on Wednesday at the 16th meeting of the Ukraine Defense Contact Group in Brussels where security assistance will be a key topic, the officials said.

It was expected to have a value of around $200 million and could include similar ammunition and ground vehicles that have been in recent aid packages.

Biden has vowed to replenish stocks of arms sent to Ukraine. The true cost of shipping weapons is measured when the replacement is purchased.

If Congress does not provide new funds to buy replacements, and the Pentagon runs out of funds it can reprogram to keep corporate contracts flowing, the U.S., Ukraine and arms makers may be forced to take other steps to backfill stocks.

Reprogramming, a tool used to shift funds within Department of Defense accounts to meet urgent needs, could be used to buy arms from weapons makers like Lockheed Martin, which makes the Guided Multiple Launch Rocket System (GMLRS), and General Dynamics, which makes the 155 millimeter artillery ammunition. Both have been essential to Ukraine's operations.

Congress could continue to increase the PDA, which authorizes the president to transfer articles and services from U.S. stocks without congressional approval during an emergency. Increasing the PDA would not require approval of new funds, though replacing the weapons would require new money.

The Biden administration is also considering using a State Department grant program to send Ukraine additional military aid, a U.S. official said.

U.S. aid to Ukraine may hinge in part on who takes over as House speaker after Republican Kevin McCarthy was ousted from the role this week. Some of his possible successors strongly support assisting Kyiv, with others staunchly opposed.

Democrats, who strongly support aid to Ukraine, insist that Congress will back continued assistance. Many Senate Republicans, including influential figures like Republican Leader Mitch McConnell, also say so.

(Reporting by Mike Stone; editing by Rami Ayyub)