For the Pentagon – which has been unable to pass an audit for years – the true enemy is not Russia or China, it’s math.
Case in point: The Defense Department has managed to overestimate the cost of military equipment that it provided to Ukraine by $6.2 billion, Deputy Pentagon Press Secretary Sabrina Singh told reporters on Tuesday.
“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 during a Pentagon news conference.
In other words, the Pentagon estimated the value of some military equipment sent to Ukraine based on how the latest models of the equipment cost when in fact its value had depreciated with age. No information was immediately available on which specific equipment the Defense Department had overvalued.
The Defense Department overestimated the value of military assistance to Ukraine by $2.6 billion in Fiscal Year 2022 and $3.6 billion in this fiscal year, Singh said on Tuesday.
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After the Pentagon discovered the accounting mix-up, the Defense Department’s comptroller issued guidance on March 31 that clarified how the military estimates the value of equipment, Singh said.
President Joe Biden has allocated roughly $40 billion in military assistance to Ukraine so far, including the $6.2 billion in overestimated costs, according to the Pentagon. Because the $6.2 billion has not yet been spent, the Defense Department can use that amount of money to provide Ukraine with more equipment without requiring Congress’ approval.
The Pentagon also has $1.7 billion on top of that in allocated funds for Ukraine that it has not yet spent, according to the Defense Department.
The Ukraine equipment SNAFU is the latest example of the Pentagon having trouble keeping an accounting of its vast resources. The Defense Department has failed annual audits every year since 2018 and defense officials don’t expect the Pentagon to be able to pass an audit until later this decade.
In its latest audit, the Defense Department was unable to account for 61% of its $3.5 trillion in assets.
“We have very big numbers here at DOD, so we can have numbers that may look big that are still quite accurate,” the Pentagon’s Comptroller Michael McCord told reporters in November when the Defense Department’s Fiscal Year 2022 audit was released. “I would not say that we’ve flunked. The process is important for us to do, and it is making us get better. It is not making us get better as fast as we want.”
McCord also cited the Defense Department’s ongoing efforts to provide Ukraine with military assistance provides a “very teachable moment for us on the audit” because it demonstrates why it is so important for the U.S. military to have an accurate inventory of its munitions and other weapons and equipment.
“I mean that’s a, to me, a really great example of why it matters to get this sort of thing right, of counting inventory, knowing where it is,” McCord said.
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