The Government Accountability Office (GAO) revealed this discovery in a July 25 report, noting that the DoD has faced challenges in accurately valuing defense articles sent to Kyiv due to unclear accounting definitions. This valuation errors applied to missiles, ammunition and other equipment, according to the report.
Last year, the Defense Department claimed that staff used "replacement value" instead of "depreciated value" to tabulate the billions in materiel sent to Ukraine. This resulted in a $6.2 billion error that created a path for additional billions more to be sent to Kyiv. Coupled with the $2 billion error disclosed in the July 25 GAO report, the total improperly valued military materiel has now reached $8.2 billion.
GAO was established to provide Congress, the 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, according to its website. Its work is done at the request of congressional committees or subcommittees or is statutorily required by public laws or committee reports, per Congressional protocols. (Related: No more! European countries call for end to Ukraine funding.)
According to the GAO, a vague definition of value in the Foreign Assistance Act (FAA) and the absence of valuation guidance for the Presidential Drawdown Authority (PDA) have led to inconsistent numbers in the reporting of military aid. One example indicated in the report was 10 vehicles being valued at $7 million, contrary to their supporting documentation that showed their actual value of zero as indicated in their net book value.
Singh defends Pentagon's inflated valuation
DoD Deputy Press Secretary Sabrina Singh told 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, making the amount on paper bigger than it actually is.
"In a significant number of cases, services used replacement costs rather than net book value, thereby overestimating the value of the equipment drawn down from U.S. stocks and provided to Ukraine," Singh said.
The spokeswoman added that the DoD overvalued by $3.6 billion for the 2023 fiscal year, and by $2.6 billion for the 2022 fiscal year. Singh nevertheless reiterated: "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 surfaced alleging 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 more than doubled since then. 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 Sept. 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 made some recommendations to Congress about the matter. It told the legislative branch to clarify how value is defined in the context of defense articles under PDA.
It has also issued 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 said it has concurred with all of the GAO's recommendations and has outlined actions to address these issues.
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