Lawmakers introduce bill to curb Pentagon’s $6.2 billion accounting mishap.

Sens. Vance and Hawley Introduce Legislation to Prevent Accounting Errors at the Pentagon

Sens. J.D. Vance (R-Ohio) and Josh Hawley (R-Mo.) have introduced legislation to prevent further accounting errors at the Department of Defense (DOD) after a “valuation error” came to light recently at the Pentagon amounting to over $6 billion.

The draft bill (pdf) aims to amend the Foreign Assistance Act of 1961 to require the Pentagon to use accounting methods that capture the true cost to taxpayers of sending weapons to other countries from U.S. stockpiles.

“This legislation will save American taxpayers from footing the bill for shoddy accounting at the Pentagon,” Mr. Vance said in a statement. “There should be no excuse for accounting errors with a seven-figure price tag. With this bill, Congress can ensure that the cost of our military aid is properly and consistently calculated.”

Specifically, the legislation would clarify the term “aggregate value” for the purposes of Presidential Drawdown Authority (PDA), which is a mechanism the Biden administration is using to expedite the transfer of weapons and other equipment to Ukraine.

It would require that the total value of weapons and other equipment sent abroad under the PDA framework is calculated by using either the original acquisition cost to the U.S. government plus the cost of improvements, or the replacement cost, whichever is greater.

A separate provision in the draft bill would require that the Pentagon calculate the full cost to the U.S. government of providing defense services.

In response to an inquiry from The Epoch Times about the proposal, the DOD said it does not comment on draft legislation as a matter of policy.

The legislative action comes in context of a broader push for greater accountability for the DOD over a multibillion-dollar accounting error relating to military aid to Ukraine that came to light last month.

‘Valuation Errors’

On June 20, a DOD spokesperson announced that the Pentagon had overcounted the value of the weapons it sent to Ukraine over the past two years by $6.2 billion, calling the incident a series of “valuation errors.”

The spokesperson said that the mistake occurred because U.S. military officials didn’t count the actual value of depleted weapons stockpiles but instead used the value of replacing the weapons.

“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,” said Pentagon deputy press secretary Sabrina Singh.

Specifically, there was an error of $2.6 billion in the 2022 fiscal year and $3.6 billion in the current fiscal year, which ends on Sept. 30.

“We have confirmed that for FY23, the final calculation is $3.6 billion, and for FY22 it is $2.6 billion, for a combined total of $6.2 billion,” Ms. Singh added.

“These valuation errors in no way limit or restricted the size of any of our PDAs or impacted the provision of support to Ukraine,” the spokesperson added, referring to the acronym for the Presidential Drawdown Authority mechanism.

Legislative Action and Demand for Accountability

The final calculation of the accounting error was almost twice as high as what the Pentagon estimated in May.

“The so-called ‘valuation errors’ around U.S. aid to Ukraine is a transparent attempt to bypass Congress for additional funds, while continuing to prioritize Ukraine over more vital U.S. interests, including deterring China in the Pacific,” Mr. Hawley said in a statement on July 12 that accompanied the announcement of the legislation.

“We must force the DoD to appropriately account for any future aid, not only for Ukraine, but also for all U.S. security assistance going forward,” the Republican senator added.

Earlier this week, Hawley and several of his Republican colleagues sent a letter (pdf) to Secretary of Defense Lloyd Austin, demanding an explanation of the accounting errors in U.S. security assistance to Ukraine.

“These so-called ‘valuation errors’ are particularly concerning given the nature and scope of U.S. aid to Ukraine—over $113 billion thus far,” the GOP senators wrote. “This is a transparent attempt to bypass Congress for additional funds, while continuing to prioritize Ukraine over more vital U.S. interests, including deterring China in the Pacific.”

Hawley earlier introduced the Special Inspector General for Ukraine Assistance Act in order to establish the watchdog position of Special Inspector General to oversee military and other forms of assistance to Ukraine amid questions about whether the aid serves vital American interests or is a needless burden to taxpayers.