Watchdog: Pentagon doesn’t know where $2.1B was spent on F-35 parts

Pentagon officials did not account for and manage $2.1 billion worth of F-35 Joint Strike Fighter parts and must now rely on the aircraft’s maker, Lockheed Martin, to tell them where and when it spent the funds, according to a new watchdog report.

The scathing report from the Defense Department’s (DOD) Office of Inspector General found that Pentagon officials “failed to implement procedures, and failed to appoint and hold officials responsible, to account for and manage government property for more than 16 years.”

As a result of major oversights, “the DoD does not know the actual value of the F‑35 property and does not have an independent record to verify the contractor‑valued government property of $2.1 billion for the F‑35 Program,” the report states.{mosads}

The implications are significant, the inspector general noted, since without accurate records, F‑35 program officials have no metrics to hold Lockheed accountable for how it managed 3.45 million pieces of government property.

“The lack of asset visibility restricts the DoD’s ability to conduct the necessary checks and balances that ensure the prime contractor is managing and spending F‑35 Program funds in the government’s best interest and could impact the DoD’s ability to meet its operational readiness goals for the F‑35 aircraft,” the report finds.

The $400 billion F-35 program, the most expensive weapons program in history, has been decried by critics as a boondoggle. The fifth-generation fighter jet has been plagued with numerous issues over the years, including cost overruns, software delays, corrosion and even problems with tire durability.

It has also long been the target of lawmakers, most notably the late Sen. John McCain (R-Ariz.). McCain, the former chairman of the Senate Armed Services Committee, said in 2016 that the program has “been a scandal and the cost overruns have been disgraceful.”

President Trump has also repeatedly bashed the F-35, including shortly after he was elected when he wrote on Twitter that the program’s costs were “out of control.”

The inspector general’s report found, among other oversights, that the F‑35 program office did not make sure it recorded F-35 parts in an accountable property system of record (APSR) from August 2002 until October 2017.

And even though an APSR was selected in October 2017, F-35 program officials have not entered any property records into it as of December 2018. That means the only record of the F-35 parts is with Lockheed and its subcontractor Pratt & Whitney, which makes the fighters’ engines.

Lockheed has valued the government property at $2.1 billion, but both F-35 program and Defense Contract Management Agency (DCMA) officials “had no way to verify the property records provided by the prime contractor” were accurate.

What’s more, DCMA relies on Lockheed to pull information from its separate management system when the agency needs it. 

In another misstep, the F-35 program office did not appoint the required personnel to make sure there was accountability throughout the life of the program.

Lockheed Martin did not immediately respond to a request for comment Friday.

The F-35 Joint Program Office said in a statement to The Hill that it appreciates the DOD IG effort to provide “feedback on the progress of the F-35 program with respect to management of government-owned property.”  

“This report was completed with the F-35 program’s full cooperation and unfettered access to information. There were no surprises in the report and the items mentioned are well known to the F-35 Enterprise. In fact, the F-35 Program has actions in work to address the DoD IG’s recommendations,” according to the statement.

“The F-35 Program will continue to inventory, track and contractually account for all [government furnished parts] associated with the F-35 system, and will diligently strive for opportunities to improve as highlighted by the DoD IG report.”

The DOD Office of Inspector General recommended that the under secretary of Defense for acquisition and sustainment review the F‑35 program office accounting and management and “take appropriate action, if warranted, to hold the necessary officials accountable.”

The watchdog also suggested that, before a decision is made to begin full-rate production of the F-35, the program office “immediately appoint” two Pentagon officials to work with the DCMA and Lockheed “to verify the existence and completeness of all F‑35 property and account for it on the appropriate financial statements.”

Pentagon officials agreed with the inspector general’s recommendations and plan to address them, according to the report. The office noted the recommendations as resolved “but will remain open until we review the specific actions taken and the associated documentation.”

Updated: 3:48 p.m.