Uh, Someone Lost Over 1 Million Spare F

An audit released to the public in May by the Government Accountability Office (GAO)—the federal government's top watchdog agency—dropped some truth bombs on the heads of the Pentagon and F-35 Lightning stealth jet-builder Lockheed Martin.

The report revealed that, due to inadequate inventory reporting to the government, over one million spare parts used to keep F-35s operational have gone missing. These parts have a total value of at least $85 million, and the true total could be "significantly higher" due to that aforementioned lack of book-keeping.

‘Spare parts’ here is a term that could refer to items ranging from multi-million dollar F135 turbofan engines to tiny screws used to attach landing gears and flaps. The GAO report cites, in particular, dozens of missing actuator doors costing over $91,000 each, as well as 14 batteries averaging $150,000 each in cost.

Reportedly, the Pentagon has only bothered to investigate roughly 2% (60,000) of the missing parts.

Apparently, this problem is coming to the forefront because the Pentagon and Lockheed simply don't have any sort of comprehensive system to track spare parts. There's also some implied disagreement on how big a deal missing millions of dollars of spare parts truly is.

The U.S. government considers itself the owner of F-35 parts right up until the moment they are installed in another country's aircraft. However, the government's Joint Program Office (JPO) for the F-35 doesn't have any sort of master inventory of F-35 parts in its Government Furnished Property (GFP) Module tracking system. As a result, the Defense Department lacks exact data on how many parts are out there, where they’re located, and what they’re worth.

Lockheed-Martin argues that the level of reporting its providing the JPO already fulfills its contractual requirements, but says it's working on a solution to integrate its own inventory records with GFP Module anyway.

Historically, Lockheed has often sought to beat back the Pentagon's attempts to acquire more data and control over F-35 logistics, due to what the company views as being its intellectual property.

A spokesperson for the JPO argued in their defense that while the number of missing parts and their price tag may seem high, they amount to a loss rate of one percent, and that this rate is actually decent given that the federal government's minimum required standard was 95% inventory accuracy (ie. up to 5% losses).

In other words, while the absolute value may seem large because the F-35 program is so big—with as many as 3,000 eventually expected to be assembled—it's not a high percentage of the total part inventory.

That seems like a reasonable defense if F-35 part losses are on par with or better than those for other aircraft. It also should be said that the $85 million value of the missing parts matches the price to procure one F-35A fighter—obviously an important sum, but not an earthshaking loss.

However, the GAO isn't confident that there aren't a lot more parts missing that they simply don't know about (‘unknown unknowns’), potentially resulting in a rate higher than 1%.

Another complicating factor is that there are 19,000 non-useable F-35 parts taking up shelf space that have either been used up or become obsolete while awaiting paperwork authorizing their disposal or repurposing. The F-35 had many early production configurations rendered obsolete by phased improvements, and the GAO report states that Lockheed has given JPO only ‘adhoc’ reports on these retired parts.

The report recommends that Lockheed and the JPO need to finally institute a comprehensive spare parts inventory regime that can be transparently tracked by the government in real time on its GFP Module database, rather than relying on Lockheed's in-house accounting.

For years, the lack of spare parts has caused frequent long delays and heavily impaired operations of F-35s across the globe.

The F-35 Lightning II was designed to be a relatively affordable multi-role fighter that the U.S. could procure in large numbers and export to allies—bringing with it the greatly coveted advantage of stealth and especially advanced networked sensors. Lightning IIs come in three models—F-35Cs for landing on large carrier decks (F-35C), F-35B jump jets compatible with smaller amphibious carriers, and the land-based F-35A model.

Despite an especially tormented and controversial development process and persistent issues of high operating costs, F-35s have been selling like hot cakes to countries allied closely with the U.S.—aided by the fact their unit price is lower than that of advanced non-stealth fighters like the Rafale and Typhoon. And stealth is a big deal in any conflict facing enemies with substantial air defenses like Russia or China.

Recently, Germany and Canada decided to procure F-35s after spending years attempting to find alternatives. Now, Greece and Romania seem inclined to join the Lightning club as well.

As part of the F-35 program's development and export strategy, production of F-35 parts was distributed across multiple partner states/operators. Designing a logistics system that can absorb globally distributed manufacturing while also efficiently servicing globally distributed demands has proven uniquely challenging— at one point, spare parts shortages were culpable for crippling readiness rates in F-35 units.

A prior GAO report already noted the lack of unified parts accounting, as well as the fact that by late 2018, only one JPO official was dedicated to the problem—and a parts database remained unpopulated.

Lockheed's business strategy focused on maintenance services as the corporation's chief F-35 revenue stream, may make the type's relatively low "fly away" procurement costs possible.

Lockheed has, at times, raised intellectual property objections when the military has sought to implement fixes or work-arounds to broken F-35 systems. This was especially notable for the infamously buggy ALIS ground-based logistics software, which was partially implicated in difficulties tracking spare parts.

Recent comments by the Air Force chief reveal that the service does not like how this business model is working—Air Force Secretary Frank Kendall recently derided it as "acquisition malpractice"—and will insist on holding greater IP rights for its forthcoming Next-Generation Air Dominance stealth fighter over its next-generation fighter procurement.

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