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Reuters: Pentagon discovers $3 billion accounting error in valuing Ukraine weapons aid

by The Kyiv Independent news desk May 19, 2023 1:09 AM 2 min read
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The Pentagon has acknowledged  a significant accounting error that overestimated the value of ammunition, missiles, and other equipment provided to Ukraine by approximately $3 billion. This miscalculation may potentially result in increased weapon shipments to Kyiv to strengthen its defense against Russian forces.

According to confidential sources, a Senate aide and a defense official confirmed to Reuters on May 18 that the overvaluation occurred due to assigning a higher value to weaponry taken from U.S. stockpiles and subsequently delivered to Ukraine.

The senior defense officials, who spoke on the condition of anonymity, explained that inconsistencies were found in the valuation process of the equipment provided to Ukraine. The necessary notifications regarding this accounting adjustment are being conveyed to Congress today.

While the current estimation suggests an overvaluation of $3 billion, the defense official cautioned that further examination might reveal a larger amount. The Pentagon's erroneous accounting stemmed from employing replacement cost as the basis for valuing the weapons aid, rather than considering the original purchase value of the equipment, accounting for depreciation.

Since August 2021, the United States has dispatched weapons valued at approximately $21.1 billion from its stockpiles to Ukraine. The revised valuation of the weaponry could potentially alleviate the Biden administration's need to seek additional funds from Congress, especially as the debate on the debt ceiling intensifies.

Senator Roger Wicker, the top Republican on the Senate Armed Services Committee, expressed concern over the Department of Defense's alteration of military aid calculations, emphasizing that it may underestimate future requirements for European allies. He called the change a "major mistake," stating that it hinders the ultimate objective of ensuring a Ukrainian victory over Russian dictator Vladimir Putin. Wicker labeled the adjustment an attempt at deception that undermines the shared goal.

Revising the accounting for billions of dollars' worth of equipment sent to Ukraine will require considerable time and effort, as stated by the senior defense officials. For instance, the cost of each 155-millimeter ammunition shell for Howitzer cannons, of which over 1.5 million were sent to Ukraine, is currently around $800. However, the actual cost of each shell, which has been supplied to the U.S. military for several decades, can be averaged out to a significantly lower price, according to one of the senior defense officials.

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