Under Secretary of Defense Comptroller Mike McCord speaks during a press conference presenting the 2021 Department of Defense’s audit results. (DoD photo by U.S. Air Force Staff Sgt. Brittany A. Chase)
WASHINGTON — The Pentagon’s inspector general plans to audit the military’s books to make sure everything was above board related to the department’s determination earlier this year that it had essentially discovered $6.2 billion due to “valuation errors” for weapons bound for Ukraine, according to a new IG letter.
“The objective of this audit is to determine the extent and impact of the March 2023 estimation change for valuing assets provided under Presidential Drawdown Authority (PDA), determine whether DoD components followed the current policy when updating the value of items provided to Ukraine through PDA, and assess whether the current PDA valuation policy complies with federal laws and regulations,” the Pentagon’s IG office wrote in a letter dated Sept. 5 and addressed to the Pentagon’s comptroller, along with several of the services’ auditor general offices.
The office is giving the department and services five days to pick their point people to field questions.
“We may revise the objective as the audit proceeds, and we will also consider suggestions from management for additional or revised objectives,” the Pentagon IG added. “We plan to perform this audit in accordance with the Government Accountability Office’s generally accepted government auditing standards.”
The audit comes at a time when a political fight is brewing on Capitol Hill over the budget and whether American dollars and weapons should continue flowing to Kyiv. As of Aug. 29, there was approximately $5.75 billion in restored Presidential Drawdown Authority funding that remains available for Ukraine, according to DoD spokesman Lt. Col. Garron Garn. That figure was reduced by $175 million today when the Biden administration announced a new weapons package bound for Ukraine.
Reuters first reported in May that the Pentagon had realized it had been miscalculating the cost of security aid via presidential drawdown — weapons taken straight from US stocks and sent to Ukraine — because it had calculated as if it was providing new weapons and platforms, rather than used ones, accidentally inflating the total expenditure. At that time, the Pentagon said it was off by some $3 billion but that figure soon jumped to $6.2 billion to account for miscalculations in both fiscal years 2022 and 2023.
“The question was when… a service provided them a piece of equipment, how is that valued? Is it valued as a brand-new item? Is it valued as depreciated?” Undersecretary of Defense for Acquisition and Sustainment Bill LaPlante told reporters on Aug 28 during a National Defense Industrial Association conference.
“So that was the rule set that was changed… was how we value things,” he said. “If you’ve had to have something replaced from an insurance company, and you talk to an insurance company about how you value the thing you replaced, it was that conversation.”
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