Auditors: Over 1 million F

Nov 03, 2023

WASHINGTON — More than 1 million F-35 spare parts worth at least $85 million have gone missing over at least the last five years, according to a new Government Accountability Office report criticizing the program's supply tracking.

Auditors said that because the government doesn't have its own system tracking those parts, officials may not truly know how many spare parts are actually in the global spares pool, where they are, or their total value.

As a result, "the full quantity and value of these [lost] spare parts may be significantly higher" than the 1 million tally determined by the main contractor, Lockheed Martin, the document reads.

And disagreements between Defense Department offices and the main F-35 contractor, Lockheed Martin, over how to categorize missing parts are holding up the government's effort to create its own reliable system to keep track of the parts, the GAO report states.

In short, the F-35 program can't know whether contractors are properly managing spares, according to auditors, who have tracked losses going to back to 2018.

In a statement to Defense News, Lockheed Martin said the tally of spare parts listed as lost in the report cover the last two decades of the program.

Lockheed Martin said it is working with the F-35 Joint Program Office and the Defense Contract Management Agency to make sure they have the documentation needed to support disposing of components that staff judged to be "excess, obsolete or unserviceable."

"Lockheed Martin manages F-35 spare part inventory in compliance with contract requirements," the company told Defense News. "We continue to partner with the Joint Program Office to increase insight into spare part availability and support fleet readiness."

The F-35′s program office said in an email to Defense News that it also agreed with GAO's recommendations on ways to improve tracking of spare parts — but said "we know where the vast majority of F-35 spare parts are in the global supply chain."

The Defense Department office pointed to the Defense Federal Acquisition Regulation Supplement rules that said programs should strive to have their recorded inventories accurate about 95% of the time, and said the F-35 program exceeds that goal.

"At this time, our error rate is around 1%," the program office said. "While this is considered much better than the government goal of 5%, we will continue to work with the services and our industry partners to improve spare parts accountability and drive readiness for our warfighters."

The JPO also said that F-35 spare parts are now being tracked through a non-government system, but that it is working with industry to move the data to a government system.

The international F-35 program, which includes the United States and other nations such as the United Kingdom, Norway, Italy, Canada, Israel, Japan and South Korea, has what GAO called a "unique" system for managing its spare parts. All participants in the program worldwide have access to a global pool of spare parts — everything from engines, tires, landing gear and support equipment down to bolts and screws — that the Defense Department owns until a part is installed on a fighter.

But while DoD owns the spare parts that all nations flying F-35s rely upon, Lockheed Martin, which builds and repairs most of the F-35′s air frame, and Pratt & Whitney, which handles the F-35′s engines, manage the global pool. Those parts are stored in more than 50 domestic and international facilities run by contractors other than Lockheed and Pratt.

Part of the problem with parts tracking lies in the Pentagon's decision a decade ago to shift course on who owns them, GAO said. Originally, the U.S. military didn't intend to own those parts, GAO said, but in 2012 the F-35 program issued a memo that said they belong to the U.S. government until they’re installed on a fighter.

But the Pentagon didn't draw up a plan to maintain accountability over those F-35 parts and equipment, GAO said, as Lockheed and Pratt continued to be responsible for them and provide data on them.

Auditors also said the vast majority of lost F-35 parts don't get adjudicated to review the circumstances behind their loss, figure out whether the government or a contractor was responsible and identify the root causes of what caused a part to go missing.

Of those 1 million lost spare parts over the last five years, Lockheed Martin submitted about 60,000 parts worth about $19 million to the JPO to be adjudicated, GAO said. The JPO finished adjudicating fewer than 20,000 missing spare parts.

Lost parts that were not reported to the JPO include 35 actuator doors worth more than $3.2 million, and 14 batteries worth more than $2.1 million, which were lost in the last three months of 2019, the report said.

A debate that has been going on since 2015 between several Pentagon offices and the two main contractors over how these parts should be categorized is also hampering efforts to better track parts. The JPO, Pratt, the Office of the Undersecretary of Defense for Acquisition and Sustainment, and the Defense Contract Management Agency's aircraft propulsion office believe these spare parts should be considered government-furnished property, GAO said.

But Lockheed and DCMA's office in Fort Worth, Texas, disagree, GAO said.

The JPO wants Lockheed Martin to report lost parts in a system called the GFP Module, which tracks government-furnished property, GAO said. The JPO said it is working with the Pentagon and Lockheed to figure out how to make that happen, considering Lockheed doesn't consider these parts to be government-furnished property — but those talks "are in the early stages," GAO said.

The F-35 program also has more than 19,000 parts in the global spares pool that are unusable because they are either extra, obsolete, or unserviceable, GAO said. Those parts have been sitting anywhere from a few months to five years while the site personnel have awaited instructions on how to dispose of them.

Some of these parts can be reused elsewhere within DoD, donated to other organizations such as state governments, sold as scrap, or destroyed, GAO said. But because Lockheed is not using the GFP Module to ask the JPO for instructions on what to do with these parts, it is instead informing the JPO about unusable parts on an "ad hoc" basis, the report said.

GAO auditors recommend in their report that William LaPlante, the undersecretary of defense for acquisition and sustainment, take steps to make sure all spare F-35 parts worldwide are categorized in the right way and are accountable under a contract, and update policies to make it clearer when parts are considered government-furnished property.

Auditors also said LaPlante should work with the F-35 program executive officer, Lt. Gen. Michael Schmidt, to issue a process for contractors to report lost spare parts, and to make sure instructions are issued on how to get rid of excess or otherwise unusable spare parts, until those parts are entered into the GFP Module to be adjudicated or track their disposal.

Stephen Losey is the air warfare reporter for Defense News. He previously covered leadership and personnel issues at Air Force Times, and the Pentagon, special operations and air warfare at Military.com. He has traveled to the Middle East to cover U.S. Air Force operations.