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Corrosion Office Updates its 2009 Report on the Cost of Corrosion Within DoD

New Report Updates Data through Fiscal Year 2013

Congress, concerned with the high cost of corrosion, enacted legislation in December 2002 that assigned the Office of the Under Secretary of Defense for Acquisition, Technology and Logistics (USD[AT&L]) with the policy and oversight responsibilities for preventing and mitigating the effects of corrosion on military equipment and infrastructure1. To perform its mission of preventing and mitigating corrosion, fulfilling congressional requirements, and responding to Government Accountability Office (GAO) recommendations, the USD(AT&L) established the Corrosion Prevention and Control Integrated Product Team (CPC IPT), a cross-functional team of personnel from all the military services as well as representatives from private industry.

In response to a GAO recommendation to "develop standardized methodologies for collecting and analyzing corrosion cost, readiness, and safety data,"2 the CPC IPT created standard methods to measure both the cost3 and availability4 impact of corrosion for DoD’s military equipment and infrastructure.

In April 2006, the CPC IPT published the results of the first corrosion-related cost study5, con-ducted by LMI, which used the standard corrosion-related cost estimation method. In July of 20096, the CPC IPT published the first report to assess the total cost of corrosion for DoD, including study segments that previously had not been measured. The amalgamation of those unmeasured segments (such as small arms, ammunition, communications equipment, and various watercraft) were called "DoD-other equipment."

This report is an update to that first report of the total cost of corrosion for DoD. LMI presents the results of the cost studies for all years in Table 1.

Table 2 highlights the costs for FY2009, the most current year for which all studies had data. Using FY2009 as a common baseline, LMI estimates the total cost of corrosion for DoD to be $23.1 billion, which includes costs outside normal reporting. This cost equates to 20.5 percent of the total maintenance funds expended by the DoD for weapon systems, infrastructure, and facilities.

The method used to measure corrosion-related cost focuses on direct material and labor costs as well as indirect costs, like research and development and capital expenditures for corrosion-related facilities (e.g., paint booths). The corrosion cost estimation is based on a combined top-down and bottom-up approach. The top-down portion uses summary-level cost and budget documentation to establish maintenance spending ceilings for depot and field-level maintenance for both organic and commercial activities. This establishes a maximum cost of corrosion for each area. The bottom-up portion uses detailed work order records to aggregate actual occurrences of corrosion maintenance and activity to define a minimum level of corrosion costs in each maintenance area. Statistical methods are then employed to bridge any significant gaps between the top-down and bottom-up figures to derive a final estimate for the cost of corrosion.

The CPC IPT–approved cost estimation method also segregates costs by their source and nature, using the following three schemas:

Corrosion Cost Trends

LMI compared the corrosion cost information from the previous DoD total cost studies, which used FY2006 data, and compared the totals to the more recent studies that used data from FY2009. LMI shows the results in Table 3. These figures exclude the ONR costs8.

The total corrosion cost for DoD (excluding ONR) was $19.3 billion in FY2006. In FY2009, the DoD corrosion cost estimate was $21.6 billion. While this was more than a $2.0 billion increase, the entire change can be explained by looking at the increase in maintenance spending overall. Maintenance expenditures rose by nearly $17 billion. A more useful figure to examine is the corrosion cost as a percentage of maintenance cost, which actually decreased from 21.8 percent to 20.5 percent. This is a significant improvement.

LMI can also see another interesting trend after examining the results by commodity grouping. This trend is shown in Table 4.

Significant progress is being made in the aviation/missile and ground vehicle communities, where corrosion costs have either held steady or dropped in the three (3) years between FY2006 and FY2009, and where corrosion costs as a percentage of maintenance costs have improved significantly. For the ships/vessels and facilities/infrastructure groups, however, both corrosion costs and corrosion as a percentage of maintenance have increased.

Most alarming is that corrosion costs have nearly doubled for facilities and infrastructure. This is of concern because the amount of deferred maintenance for infrastructure and facilities (maintenance that is not completed because of budget concerns or other priorities) has been steadily rising. This means corrosion costs for facilities and infrastructure could rise even further.

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1The Bob Stump National Defense Authorization Act for Fiscal Year 2003, Public Law 107-314, 2 December 2002, p. 201; Public Law 107-314 was enhanced by Public Law 110-181, The National Defense Authorization Act for Fiscal Year 2008, Section 371, 28 January 2008.

2GAO, Opportunities to Reduce Corrosion Costs and Increase Readiness, GAO-03-753, July 2003, p. 39.

3LMI, Proposed Method and Structure for Determining the Cost of Corrosion for the Department of Defense, Report SKT40T1, Eric F. Herzberg, August 2004.

4DoD CPC IPT, The Impact of Corrosion on the Availability of DoD Weapon Systems and Infrastructure, October 2009.

5LMI, The Annual Cost of Corrosion for Army Ground Vehicles and Navy Ships, Report SKT50T1, Eric F. Herzberg et al., April 2006.

6OSD, DoD Annual Cost of Corrosion, Prepared by the Under Secretary of Defense (Acquisition, Technology and Logistics), July 2009.

7These costs are not distributed within the other two schema.

8LMI excludes the ONR costs because some of these costs are not maintenance costs such as research and development and capital expenditures. In order to properly estimate the corrosion cost as a percent of maintenance cost, only maintenance costs can be included

 

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