US Senator requests for cost review following Pentagon overvaluation

By Al Mayadeen English
Source: Agencies
13 Jun 2023 08:55

US Senator Marco Rubio stresses in a letter to the Government Accountability Office that if the Defense of Department overvalued the equipment and is calculating replacement prices using depreciated values costs, then taxpayers will face heftier bills.

Senate Intelligence Committee Vice Chairman Marco Rubio, speaks to reporters following a classified briefing on China, at the Capitol in Washington, Wednesday, Feb. 15, 2023 (AP)

After the US Defense Department overvalued the cost of military equipment delivered to Ukraine, US Senator Marco Rubio, in a letter, on Monday, to the Government Accountability Office (GAO), requested a thorough review of the costs.

Rubio in his letter explained that the "[Defense Department] DoD plays an important role in supporting our allies and partners, but Congress needs to know the true costs of the use of PDA [Presidential Drawdown Authority]," adding that "For this reason, I ask for a GAO review of DoD’s accounting of all equipment provided to Ukraine under these authorities and a review of the DoD’s process for valuing the equipment and whether it was the depreciated or replacement value."

Rubio remarked that Pentagon appeared to have been calculating replacement prices for all military equipment using depreciated values. This implied, according to the Senator that US taxpayers would face a greater expense to replace the items in question.

'Mistakenly', US could give $3bln more in arms for Ukraine

The Pentagon has overestimated the worth of the weapons it has offered to Ukraine by at least $3 billion; a miscalculation that might negate the need to ask Congress for extra money to maintain the war in Ukraine this spring, according to reports by unnamed sources, cited by the Wall Street Journal earlier in May.

"Accidentally", the Pentagon valued old equipment that existed in US stocks at the price of new equipment and thus, submitted a greater price value to at least some of the weapons that the Pentagon delivered to Ukraine, the sources claimed.

The discrepancy was discovered in March during an internal audit, and the Biden administration may no longer require more financing from Congress for the following year, according to the sources.

It is worth noting that since the start of the war in Ukraine, nearly $40 billion worth of military assistance has been given to Ukraine by the Pentagon. Given the newly-found discrepancies, announcements of military aid have been corrected to show the proper spending.

A Pentagon statement noted that "in some cases, the services used a replacement cost over the net book value cost, so thereby they overestimated the value of the equipment that was drawn down from the stocks."

Currently, and without accounting for the overestimation error, the Pentagon has approximately $2.7 billion remaining to spend on weaponizing Ukraine. The result of the overestimation has effectively now doubled that numbered to reach approximately $5.7 billion, and thus Pentagon argued that the White House needed to decide whether to return to Congress to request further funding for Ukraine aid.

According to Pentagon officials, the provision of those weapons was based on what the Pentagon had on hand in its inventory, not on ledger books, thus the wrong, higher value estimations did not unintentionally deprive Ukraine of the weapons its soldiers may have received under proper accounting.

“In no way did the overvaluation constrain our support to Ukraine,” the official said.