Summary

  • DOD estimated in March 2026 that its F-35 program held roughly 26 million parts worth about $31 billion at more than 700 contractor- and government-managed sites. GAO found the official property records inaccurate, incomplete and unable to show real-time movements from the prime contractors' systems.
  • A 2023 GAO investigation identified losses of more than one million parts worth over $85 million. A contractor later submitted about $28 million in losses from a wider period, but the program office had not retained an outstanding-loss ledger and could not tell whether the sets overlap. The figures cannot be added as separate losses.
  • The first full auditable inventory had a March 2027 target when GAO reported. Four new recommendations on loss monitoring and accountable-property officers were open, and DOD concurred with all four. The test is an item-level chain joining contractor movement, government record, physical count and loss adjudication.

The asset belongs to Washington; the movement lives elsewhere

The GAO's 9 November 2026 audit puts an enormous government asset inside a simple bookkeeping question: where is each part, in what condition, and who can prove it? As of March 2026, the F-35 program estimated about 26 million parts with a combined value near $31 billion. Engines, tires, equipment and small components are held at more than 700 facilities worldwide. The government owns the parts, while contractors and government sites manage them. The estimated $1.9 trillion life-cycle cost of the aircraft program is a separate figure; the $31 billion describes this parts pool.

The F-35 Joint Program Office uses the Enterprise Logistics Management System, ELMS, as the accountable property system of record. A system with that title should know when an item moves. ELMS did not interface directly with the property systems of the program's two prime contractors. The office therefore imported information from several sources, some as periodic change reports, rather than receiving a continuous record of contractor-held items. GAO found the resulting data still inaccurate and incomplete as of August 2026. The program office had not fully developed procedures for validating what it imported.

The distinction between a part's legal owner and its daily recordkeeper is the central governance problem. A contractor can move or repair a government-owned item before the government's system reflects the event. DOD cannot use a contract clause saying “ours” to locate an engine or reconcile a serial number. Its operational and financial decisions depend on the quality and timing of the information crossing that organizational boundary.

A count built on records the auditors distrust

Physical inventory should test two propositions: each part recorded in the ledger exists at the stated site, and each part at the site appears in the ledger. GAO found the F-35 inventory procedures did not fully verify either side. Some records used in the count came from a prime contractor whose property management system had received a “disapproved” rating from the Defense Contract Management Agency. That assessment included failures to document relocations and preserve auditable records throughout an item's life. Counting against an unreliable list can certify the wrong universe very efficiently.

Program officials said a wall-to-wall count at more than 700 facilities was not feasible under existing constraints, including the difficulty of pausing warehouse production and visiting every location. In March 2026, DOD's comptroller asked the Defense Contract Audit Agency to help build an auditable baseline. As of June 2026, the plan was at an early stage and targeted March 2027 for a first full inventory. That date is a planned milestone, not a count already completed. Until a baseline joins physical items to validated records, a new purchase plan rests partly on a stock figure the owner cannot fully verify.

The $85 million that cannot be joined to $28 million

The loss trail makes the data problem concrete. In a 2023 GAO report, one prime contractor had incurred losses from May 2018 through October 2022 involving more than one million parts worth over $85 million. About 940,000 parts worth over $66 million had not yet been submitted for adjudication at the time. “Loss” in this reporting includes unintended loss, damage or destruction of government property. It is a property-accountability category, not a finding that each item was stolen.

The Defense Contract Management Agency later authorized a one-time bulk process for outstanding contractor losses. By March 2026, the contractor had submitted about $28 million in losses incurred from 2012 through 2025. The agency had determined financial liability for roughly $6 million of that submission. But the F-35 program office had not kept a list of its earlier outstanding cases. It could not determine whether the $28 million filing contained any of the $85 million identified before. The two dollar amounts may overlap; adding them would create a fictional total.

The missing record is an item-level reconciliation between the old loss set, the new submissions, adjudication results and present locations.

Government-managed facilities followed another reporting path. For losses reported on the DD Form 200 before September 2025, the program office lacked complete visibility into quantities, values, locations, reasons and outcomes. It had no effective procedure to monitor all loss submissions or analyze them for patterns. Without a single view across the contractor and government routes, management cannot tell whether a recurring loss mechanism is being fixed or merely reappearing in a different channel.

Six officers, a side job, and a $31 billion pool

DOD guidance gives the component property lead an oversight role and accountable property officers direct duties such as maintaining records, reconciling inventories and evaluating losses. The F-35 office appointed a lead in 2021 and six officers during 2024–2025. GAO found that program-specific procedures, training and a functioning officer structure were still missing. Some DOD officials argued the scale demanded full-time officers. The program office treated the role as an ancillary duty, as in other DOD components. A side assignment can be reasonable for a settled ledger.

It looks different when the ledger itself has yet to establish an auditable opening balance.

GAO made four new recommendations covering loss monitoring, property-officer procedures, training and the officers' structure. DOD concurred with all four. The GAO recommendation record listed them all open when checked on 13 November 2026. Across earlier GAO and DOD inspector-general work, 26 of 34 property-accountability recommendations remained open as of August 2026. Auditors had flagged an F-35 material weakness since fiscal year 2019, and DOD's fiscal 2025 statements omitted or misrecorded certain parts. The size of the resulting misstatement could not be quantified from the available records.

The program office is responsible for the asset even when another organization holds the shelf, the scanner or the first version of the data. The next credible receipt is a verified opening inventory, a reliable feed of movements into ELMS, and a loss register that follows every case to an adjudicated outcome. The parts do not become less governmental when they leave a government-managed warehouse. The government's ability to account for them should not become less exact either.

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