The Department of Defense (DoD) has recently uncovered accounting errors totaling $2 billion in aid sent to Ukraine. This discovery was made by the Government Accountability Office (GAO), which revealed that the DoD had faced challenges in accurately valuing defense articles sent to Kyiv due to unclear accounting definitions. The valuation errors affected missiles, ammunition and other equipment, according to the report.
In the previous fiscal year, the Defense Department reported that staff used “replacement value” instead of “depreciated value” when calculating the billions in materiel sent to Ukraine. This resulted in a $6.2 billion error that paved the way for additional billions to be allocated to Kyiv. Combined with the $2 billion error disclosed in the July 25 GAO report, the total improperly valued military materiel has now reached $8.2 billion.
The GAO is tasked with providing Congress, heads of executive agencies and the public with timely, fact-based, non-partisan information that can be used to improve government and save taxpayers billions of dollars. Its work is done at the request of congressional committees or subcommittees or is statutorily required by public laws or committee reports, in accordance with Congressional protocols.
According to the GAO, an ambiguous definition of value within the Foreign Assistance Act (FAA) and the lack of valuation guidance for the Presidential Drawdown Authority (PDA) have led to inconsistent numbers in the reporting of military aid. One example cited in the report was 10 vehicles valued at $7 million, despite their supporting documentation showing their actual value as zero, based on their net book value.
DoD Deputy Press Secretary Sabrina Singh explained to reporters that weapons sent to Ukraine from U.S. military stockpiles using the PDA were overvalued. She added that the department used the cost to replace the arms rather than the depreciated value, which inflated the amount on paper.
The spokeswoman stated that the DoD had overvalued by $3.6 billion for the 2023 fiscal year and by $2.6 billion for the 2022 fiscal year. Despite this, she maintained: “These valuation errors in no way limit or restricted the size of any of our PDAs or impacted the provision of support to Ukraine.
In May, reports first emerged suggesting that the Defense Department may have overvalued weapons it was sending to Ukraine. At the time, the estimated error would account for at least $3 billion in new funds, which has since more than doubled. The additional funds meant that the White House might not need to ask Congress to authorize more spending on Ukraine before the end of the 2023 fiscal year, which is September 30 for the federal government.
A month prior, a massive foreign aid bill – which included $61 billion for Kyiv – was signed into law. The April aid bill came despite Kyiv’s inability to win the war or reclaim significant territory already seized by Russia.
Given the findings of the July 25 report, the GAO has provided some recommendations to Congress about the matter. It suggested that the legislative branch should clarify how value is defined in the context of defense articles under PDA.
The GAO also offered seven recommendations to the DoD. These include updating its guidance to include a PDA-specific valuation section and developing component-specific valuation procedures. The Defense Department later confirmed that it had agreed with all of the GAO’s recommendations and had outlined actions to address these issues.