The Pentagon has identified an additional $2 billion worth of errors in its valuation of ammunition, missiles, and other equipment sent to Ukraine, bringing the total improperly valued material to $8.2 billion. This revelation was disclosed in a US government report released on Thursday.
Inaccurate valuation
The US Department of Defense has struggled to accurately value defense articles sent to Ukraine due to unclear accounting definitions, according to a new report from the Government Accountability Office (GAO). In 2023, the Pentagon acknowledged that staff had used “replacement value” instead of “depreciated value” to calculate the billions of dollars in materials sent to Ukraine, resulting in a $6.2 billion error. This miscalculation paved the way for additional aid to be sent to Kyiv.
Further overstatements discovered
The Pentagon informed the GAO that an additional $2 billion in overstatements have been identified. Consequently, another $2 billion worth of arms can now be sent to Ukraine to meet the aid approved by the Biden administration. The GAO attributed these discrepancies to a vague definition of value in the Foreign Assistance Act and the lack of specific valuation guidance for the Presidential Drawdown Authority, leading to inconsistencies in the reported value of military aid.
Example of valuation error
One notable example cited in the GAO report involved 10 vehicles that were valued at $7,050,000, despite supporting documentation indicating they should have been valued at zero, reflecting their net book value.
Recommendations for improvement
The GAO has recommended that Congress clarify the definition of value in the context of defense articles under the Presidential Drawdown Authority.
Additionally, the GAO has issued seven recommendations to the Defense Department, urging it to update its guidance to include a PDA-specific valuation section and develop component-specific valuation procedures.
The Defense Department has concurred with all recommendations and has outlined actions to address these issues. This latest discovery underscores the need for clearer accounting practices and definitions to ensure the accurate valuation of defense articles. As the Pentagon continues to support Ukraine, addressing these accounting challenges will be crucial in maintaining transparency and accountability in the provision of military aid.