The data on quarterly expenditures in the federal government show that by the end of the last fiscal year in March, the department had spent $2.3 billion less than allocated by Parliament.
That's more than 10 per cent of the annual defence appropriation, also the single biggest discretionary line item in the federal budget.
Figures for previous years show that $9.6 billion has gone unspent in defence since the 2006-07 budget year — a trend defence officials have blamed on late equipment projects and an inefficient bureaucracy.
A former commander of the army says this calls for an explanation from the Harper government.
"I am not aware of any other Western armed forces, who are all going through budget reductions, underspending by such a dramatic amount over such a relatively long period of time," said retired lieutenant-general Andrew Leslie.
He said the spending pattern is either a matter of managerial incompetence or a deliberate policy.
"If it is deliberate, the government of Canada needs to explain why."
Some of the unspent funds, mostly earmarked for equipment, can be moved to other budgets in an exercise known as re-profiling, but a university expert in defence spending say the continuing pattern raises questions about intentions.
Dave Perry, of Carleton University and the Conference of Defence Associations, says if it was simply a matter of a faulty process, a government committed to ending inefficiency would have fixed it.
"I really cannot conceive of how this is could not be considered a major problem and why they couldn't, over the span of three years, address this," he said.
Perry said he doesn't believe "that this is entirely accidental" and he's heard of plans and projects being delayed as a way to make DND's books look better and make an even greater contribution to deficit reduction.
The numbers released this week are not final, officials at the budget office acknowledged.
A Defence Department official said the final tabulation of unspent funds will be "significantly lower" than the numbers cited by the watchdog agency. The federal government will present a final tally on revenue and spending later this year when the public accounts are tabled in Parliament.
"The vast majority of the amount of unused appropriations was beyond the department's control," said spokesman Daniel Blouin in an email.
He denied there was any "stealth" cutting going on and claimed the underspending was the result of "decisions that flowed from the deficit reduction action plan" after the 2012-13 budget was tabled.
The effect on operations and equipment is magnified by the government's parallel deficit-fighting plans, which aim to cut baseline appropriations.
Leslie claimed the effect is like absorbing three big budget cuts all at once. He pointed to Senate testimony from the current army commander and former head of the navy, who both said their operations budgets have taken major hits.
Ultimately, the military's ability to quickly respond to emergencies and mount sustained operations is affected, he said.
National Defence isn't alone in not spending what Parliament gives it. The budget office numbers show the federal government as a whole only spends about 90 per cent of what is appropriated.
The RCMP, Transport Canada and Natural Resources and Aboriginal Affairs had a tougher time spending their budgets last year, according to the data.
Also on HuffPost