Defense Department wrongly used valuation for new equipment, rather than for used equipment drawn from U.S. stocks
WASHINGTON—The Pentagon has overcounted the value of the weaponry it has sent to Ukraine by at least $3 billion, an error that could eliminate the administration’s need to ask Congress for more money to keep Kyiv in the fight this spring, people familiar with the situation said.
The military services inadvertently used a higher value for at least some of the weaponry the Pentagon sent to Ukraine, using valuations for new equipment instead of the older gear pulled out of U.S. stockpiles, the people said.
The Pentagon, which has an annual budget of about $860 billion, has long been plagued by accounting errors and has never had a clean, departmentwide audit, most recently failing an external study by multiple firms last year.
An internal audit of the Ukraine transfers discovered the error in March, and officials said the newly identified surplus could obviate the Biden administration’s need to seek additional funding from Congress for next year. The Pentagon has earmarked more than $44 billion in military aid to help Ukraine defend itself since Russia invaded in February 2022, and the Pentagon says the error leaves it with $3 billion more to spend.
“During our regular oversight process of presidential drawdown packages, the Department discovered inconsistencies in equipment valuation for Ukraine,” said Pentagon spokeswoman Sabrina Singh in a statement. “In some cases, ‘replacement cost’ rather than ‘net book value’ was used, therefore overestimating the value of the equipment drawn down from U.S. stocks.”
For example, the Pentagon overstated the cost of replacing the M777 howitzers it provided to Ukraine by looking at the price tag on the Himars mobile missile launcher system, a far more advanced system slated to succeed the older artillery pieces in the U.S. arsenal. Overall, that cost difference resulted in an overcounting of $75 million, a Pentagon official said.
Pentagon officials have previously said they would look to replace stocks with more modern versions of the equipment being sent to Ukraine, such as Javelin antitank missiles and the replacement for the Stinger antiaircraft missile, known as Shorad.
Accounting used in announcements of military aid since the error was discovered have all been correct, Pentagon officials said. Military officials are reviewing past announcements of assistance to ensure they didn’t miss anything else. The overall value of the accounting error could grow, officials said.
Sasha Baker, deputy undersecretary of defense for policy, and Mike McCord, the Pentagon’s comptroller, briefed lawmakers on the matter Thursday. The two senior Pentagon officials indicated that the error was identified at lower levels within the Defense Department, individuals familiar with the matter said. The services most affected by the drawdowns of equipment for Ukraine are the Army and the Marine Corps, officials said.
Two senior congressional Republicans, who have generally supported the massive provision of military aid to Ukraine, criticized the Pentagon and said the funds could have been used to send more weapons ahead of Ukraine’s widely anticipated spring offensive.
“The revelation of a $3 billion accounting error discovered two months ago and only today shared with Congress is extremely problematic, to say the least,”
said House Armed Services Committee Chairman Mike Rogers (R., Ala.) and House Foreign Affairs Committee Chairman Michael McCaul (R., Texas), in a statement.
Rogers and McCaul urged the Biden administration to use the funds to provide Ukraine with cluster munitions and long-range missiles “to fuel the counteroffensive and win the war.”
Singh said that the overvaluation had not constrained the amount of military assistance the U.S. provided to Ukraine.
The accounting error could prompt other calls for the Biden administration to provide additional military assistance to the Ukrainians that so far it has yet to do, including F-16 jet fighters, by freeing up such a large sum of unspent money.
Not counting the error, the Pentagon has about $2.7 billion remaining in its coffers for Ukraine, so the error effectively doubles the sum left to be spent, officials said. The White House would have to decide whether to return to Congress to ask for more funding for military assistance for Ukraine, Pentagon officials said.
Fresh funding for Ukraine wasn’t included in the Pentagon’s budget request for the fiscal year 2024, which begins Oct. 1. Department officials and defense contractors had expected funding to come from a separate, supplemental request this summer, and hinge on the progress of any Ukrainian offensive.
It was unclear whether the accounting error would affect the war effort. Pentagon officials said the incorrect, higher value estimates didn’t inadvertently deprive Ukraine of weaponry its forces might have gotten under the correct accounting, since the provision of that weaponry was based on what the Pentagon had available in its arsenal, not on ledger books.
“In no way did the overvaluation constrain our support to Ukraine,” the official said.
Pentagon officials have said financial management is improving but it has failed at five successive efforts to pass the audit required by law.
“I would not say that we’ve flunked,” McCord told reporters last November. “We have very big numbers here at DOD, so we can have numbers that may look big that are still quite accurate.”
Write to Gordon Lubold at gordon.lubold@wsj.com and Doug Cameron at Doug.Cameron@wsj.com
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