Audit of Management of Government‑Owned Property Supporting the F‑35 Program
Inspector General, U.S. Department of Defense
March 13, 2019
DoD officials did not account for and manage F‑35 Program Government property, including recording the property in an accountable property system of record (APSR), as required.

The only record of Government property for the F‑35 Program is with the contractor and its subcontractor, which valued the 3.45 million pieces of property at $2.1 billion.

Specifically, F‑35 Program officials did not:
-- maintain a Government record of GFP;
-- award contracts with complete GFP lists; and
-- coordinate with Defense Contract Management Agency (DCMA) officials to execute contracting actions to transition CAP to GFP, as required.

This occurred because DoD 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.

Specifically, the F‑35 Program Office did not:
-- follow procedures to establish its APSR; instead, officials relied solely on the prime contractor to account for all of the F‑35 Program Government property;
-- appoint the required Government personnel to account for GFP in the Government APSR; and
-- reach an agreement with DCMA‑Fort Worth on how to implement the procedures for transitioning property from CAP to GFP.

As a result, 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.

Without accurate records, the F‑35 Program officials have no visibility over the property and have no metrics to hold the prime contractor accountable for how it manages 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.

In addition, the lack of a DoD record of GFP for the F‑35 Program results in an understatement of either the assets or expenses of DoD financial statements, depending on how the contractor used the property on the contract.

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