Report Finds F-35 Program Cannot Track Millions in Spare Parts

June 1, 2023

A new 35-page report published by the Government Accountability Office (GAO) finds that the Department of Defense's (DoD) F-35 Joint Program Office has lost track of millions of dollars in spare parts because of the way they're managed at more than 50 non-prime domestic and international facilities.

According to the report, the F-35 Joint Program Office does not oversee or account for spare parts in its global spares pool that have been accepted and received by the government and are located at non-prime contractor facilities. The F-35 Joint Program Office does not track or enter these spare parts into an accountable property system of record that would enable it to capture and store real-time changes to property records. Currently, the prime contractors maintain this information.

While DoD technically owns certain spare parts managed by contractors, it does not directly account for or oversee the active status of those parts. This is in part because various DoD offices and contractors haven't agreed on whether the spare parts should be categorized as government-furnished property.

This lack of agreement affects how DOD processes lost parts. For example, of about a million lost parts worth $85 million, DOD only reviewed the circumstances surrounding 2 percent of identified losses since 2018. One contributing factor to DOD's lack of accountability over these spare parts is the lack of agreement among various organizations as to whether the spare parts are both accountable under a contract and government-furnished property.

If the spare parts, which include engines; tires; landing gear; and other parts, such as bolts, screws, and fasteners, are not accountable under a contract and are not government-furnished property, the contractor will not enter these parts into the system DOD uses to track losses and disposition. Without DoD taking steps to ensure that these spare parts are accountable under a contract, the F-35 Joint Program Office will be unable to either gain or maintain accountability over these spare parts and will not have data, such as locations, costs, and quantities, needed for financial reporting or to ensure that government interests are protected.

The organizations' inability to reach consensus has also affected the F-35 Joint Program Office's processing of losses (spare parts that are lost, damaged, or destroyed) and disposition of spare parts in the global spares pool. Because the F-35 Joint Program Office does not maintain complete records on losses and disposition of spare parts, GAO used a combination of data provided by both the F-35 Joint Program Office and one prime contractor and found the following:

Since May 2018, one F-35 prime contractor incurred losses of over 1 million spare parts totaling over $85 million, of which less than 2 percent has been reviewed by the F-35 Joint Program Office. Further, due to the lack of a process for reporting losses, as of October 2022, the same prime contractor has not reported over 900,000 spare parts valued at over $66 million to the F-35 Joint Program Office for review. In one example, the contractor identified 34 actuator doors with a total cost of over $3.2 million that were lost in the fourth quarter of 2019 and have yet to be reported to the F-35 Joint Program Office.

As of October 2022, DOD has over 19,000 spare parts in the global spares pool that have been awaiting disposition instructions from the F-35 Joint Program Office for anywhere from a few months up to 5 years.

The organizations' inability to reach consensus has also affected the F-35 Joint Program Office's processing of losses (spare parts that are lost, damaged, or destroyed) and disposition of spare parts in the global spares pool. Because the F-35 Joint Program Office does not maintain complete records on losses and disposition of spare parts, GAO used a combination of data provided by both the F-35 Joint Program Office and one prime contractor and found the following:

• Since May 2018, one F-35 prime contractor incurred losses of over 1 million spare parts totaling over $85 million, of which less than 2 percent has been reviewed by the F-35 Joint Program Office. Further, due to the lack of a process for reporting losses, as of October 2022, the same prime contractor has not reported over 900,000 spare parts valued at over $66 million to the F-35 Joint Program Office for review. In one example, the contractor identified 34 actuator doors with a total cost of over $3.2 million that were lost in the fourth quarter of 2019 and have yet to be reported to the F-35 Joint Program Office.

• As of October 2022, DOD has over 19,000 spare parts in the global spares pool that have been awaiting disposition instructions from the F-35 Joint Program Office for anywhere from a few months up to five years.

Without developing procedures for contractors to both (1) report global spares pool losses and (2) dispose of spare parts that staff have determined are excess, obsolete, or unserviceable, DOD does not have assurance that lost spare parts or those in need of disposition are being accurately reported and tracked. This increases the risk of misstatement on DoD's financial statements and increases the risk of mismanagement of F-35 global spares pool losses. It also potentially raises government expenditures.

Check out the full report here. 

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