The Government Accountability Office (GAO) released another report on the F-35 Fighter Jet program. It’s a doozy.
Totaling an estimated $1.12 trillion, the F-35 program is the costliest weapon system in history. Though the program was initiated in 2001, they are just now rolling out the first 360 of an expected 3400 fighter jets over the next 30 years.
Right now, they cost about $90 million apiece. And they barely work.
Last year, the F-35s were only capable of fulfilling all of their tasked missions’ 26.8 percent of the time – far below the targeted goal of 75 percent.
These shortcomings are in large part due to the spare parts supply chain’s inability to provide the aircraft with timely and necessary replacement parts. The supply chain for all the F-35 users (4 U.S. military branches and 13 countries) is controlled by Lockheed Martin. And the extent of their control should drive taxpayers crazy.
For starters, the DoD spends $1 billion annually on spare parts for the F-35. But the DoD does not have a clue how much individual spare parts cost. Nor do they track where the parts wind up.
The DoD has no records of where the billions of dollars in individual parts wind up and dedicated only one member of its staff to overseeing property accountability in the F-35 system. GAO says that DoD has not “prioritized property accountability in negotiations with [Lockheed Martin] because the program office has been focused on the production and fielding of aircraft and developing contracts to which [Lockheed Martin] will agree.”
Ah yes, because knowing where parts go is such an unreasonable ask.
Moreover, DoD does not track how much individual parts cost. Instead, the costs for repair and replacement parts are aggregated into one contract line item. For one of the F-35s that line item was a whopping $276 million.
A simple fix would be to just get the spare part cost data from the contractor, right?
GAO talked to DoD officials that said they “face significant hurdles in obtaining cost data from [Lockheed Martin] for individual F-35 spare parts because the contracts have not been written to require those data from the outset of the program.”
DoD’s efforts to negotiate for that information have been unfruitful because of the “high price” Lockheed Martin demands for access to that information. It just so happens that the DoD’s inability to access this cost data puts the Pentagon “at risk of overpaying [Lockheed Martin] while not receiving the expected level of sustainment support.”
Yes, that’s right. The contractor that was awarded the most expensive weapons system in history refuses to turn over basic cost data to help the DoD manage their supply lines.
This is likely due in part to the fact that DoD is letting Lockheed Martin handle the entire global supply chain for the F-35. Instead of F-35 users owning physical parts, the military branches and international partners pay to access a common pool of spare parts controlled by Lockheed Martin.
This “global spares pool” concept has worked to abysmal results.
The spare part packages that F-35 users are receiving often do not even contain the right parts. For example, 44 percent of the parts that the Marine Corps purchases were incompatible with the system’s needs.
Moreover, shortages have driven the average time to repair an F-35 to 188 days, far exceeding the objective of 60-90 days. GAO also found a backlog of 4,300 spare parts awaiting repairs at depots or manufacturers. The goal was to have the supply chain systems in place by 2016, but the projected date to meet supply chain demands is now 2024.
Again, these supply shortages are keeping these expensive jets on the ground. The training fleets at Eglin Air Force base could not operate 56 percent of the time due supply shortages.
In the absence of the needed spare parts, the DoD is resorting to “cannibalization,” which is the term for stripping parts off of other airplanes. The rate of cannibalization in the F-35 program is SIX times higher than the targeted goal.
Who within the DoD is responsible for this colossal mess? Nobody knows.
The DoD Comptroller has been finalizing a memorandum to identify which component is responsible for maintaining financial accountability for spare parts since 2015. The designation has “not yet been finalized and the timeline for completion is unclear.”
Fortunately, DoD finally started looking around for alternatives to the Lockheed Martin supply chain and found that 7,300 of the F-35 parts are common to other DoD fighter systems – of which 6000 are in stock at the DoD already. The identification of these common parts could create cost savings by allowing DoD to procure spare parts from other contractors besides Lockheed Martin. DoD is also contemplating on taking a larger role in the supply chain management, supplanting Lockheed Martin’s dominant position.
Regardless of what they decide, the importance of getting the spare parts supply chain right is of critical importance. The DoD is targeting to purchase enough supply parts to achieve an 80 percent mission-capable rate – which could cost hundreds of million in additional dollars. At the same time, they are trying to meet cost containment goals for the entire F-35 program.
It’s clear that DoD must get a handle on the costs, location and alternative availability of spare parts in order to simultaneously improve performance and contain costs. Otherwise, Lockheed Martin will continue their stranglehold over DoD contracting officials and taxpayers’ wallets.
