Defense Management:

The Department of Defense's Fiscal Year 2012 Corrosion Prevention and Control Budget Request

GAO-11-490R: Published: Apr 13, 2011. Publicly Released: Apr 13, 2011.

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In 2010, the Department of Defense (DOD) estimated that corrosion costs the DOD over $22.9 billion annually. Corrosion negatively affects all military assets, including both equipment and infrastructure, and is defined as the unintended destruction or deterioration of a material due to its interaction with the environment. Corrosion also affects military readiness, taking critical systems out of action and creating safety hazards. Congress has enacted several legislative requirements to address the high cost of corrosion on military equipment and infrastructure, including legislation that created the Office of Corrosion Policy and Oversight (Corrosion Office) within the Office of the Under Secretary of Defense for Acquisition, Technology and Logistics. The Corrosion Office is responsible for the prevention and mitigation of corrosion of military equipment and infrastructure and, according to officials, manages funding for DOD-wide corrosion prevention and control (CPC) activities and CPC projects proposed by the Military Departments. Section 2228(e) of Title 10 of the United States Code requires DOD to annually report on CPC funding to Congress. Additionally, the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 required each Military Department's corrosion control and prevention executive to submit an annual report with recommendations pertaining to his or her Department's CPC program, including corrosion-related funding levels to carry out all of the duties of the executive. In fiscal year (FY) 2011, Congress expanded the requirement for DOD to report on its CPC efforts by adding to or revising existing elements. Section 2228(e), as recently amended, requires DOD to annually submit a report to Congress on corrosion funding as part of its annual budget submission. In the report, DOD is to address funding requirements for its long-term corrosion reduction strategy, the return on investment (ROI) that would be achieved by implementing the strategy, the current and previous fiscal year funds requested in the budget compared to funding requirements, an explanation if funding requirements are not fully funded in the budget, and the current and previous fiscal year amount of funds requested in the budget for each project or activity described in its long-term strategy compared to the funding requirements for the project or activity. This letter provides our mandated analysis of DOD's CPC budget request and the Corrosion Office's accompanying report for FY 2012. Accordingly, our objectives were to: (1) determine the extent to which DOD's corrosion report addressed the mandated requirements, (2) assess the extent to which the CPC budget request met total estimated CPC funding requirements for activities and preliminary project proposals as stated in the FY 2012 DOD corrosion report, and (3) calculate the potential cost avoidance for DOD's CPC budget request and reported budget shortfall identified in the FY 2012 DOD corrosion report.

Of the six mandated elements, DOD's corrosion report addressed five elements and did not address one element. DOD's corrosion report addressed elements such as funding requirements for a long-term corrosion reduction strategy, ROI that would be achieved by implementing the strategy, the funds requested in the budget compared to funding requirements (for the current and previous fiscal year), and an explanation if funding requirements are not fully included in the budget request. DOD's corrosion report also included the Military Departments' annual corrosion reports in an annex. DOD's corrosion report did not the address the requirement to compare the amount of funds requested in the budget to funding requirements for each project or activity in the strategy. Corrosion Office officials stated that they did not have enough time to incorporate this newly-required information into the report. The Military Departments' reports included recommendations pertaining to the CPC program, but did not include the funding levels required to carry out all duties of the corrosion control and prevention executive. According to Military Department officials, this is because it is difficult for the Military Departments to develop a comprehensive estimate of its departmentwide corrosion costs. Without such an estimate, they are unable to recommend the funding levels needed to carry out the executive's duties. Without all of the required information, DOD senior leaders and Congress may face challenges in assessing the levels of funding needed to effectively and cost efficiently prevent and control corrosion. DOD reported that the FY 2012 total estimated CPC funding requirement for all CPC activities and preliminary project proposals is $43.2 million. Of this total, DOD requested $11.1 million in its FY 2012 budget. Therefore, DOD's reported budget shortfall is about $32.1 million. However, the actual shortfall is somewhat less than the reported budget shortfall because the Corrosion Office develops its estimated CPC funding requirement based on the Military Departments' preliminary project proposals, which have historically exceeded the number of actual project proposals submitted for funding consideration. Using DOD's estimated ROIs, we calculated that if the amount requested in DOD's FY 2012 budget request is funded, the potential cost avoidance could be about $291.8 million. By applying DOD's estimated ROIs to the reported budget shortfall identified in its corrosion report, DOD may be missing an opportunity for additional cost avoidance totaling around $721.4 million by not funding all of its estimated CPC activity requirements and preliminary project proposals. The accuracy of these calculations is contingent on the accuracy of the estimated ROIs that have not been validated. Moreover, due to historical differences between the number of preliminary project proposals and actual project proposals, the actual shortfall--and therefore the potential cost avoidance--could be somewhat less. We are making recommendations to the Secretary of Defense to help ensure that the Corrosion Office and Military Department annual reports provide information on all of the mandated elements. Specifically, to ensure that Congress has all of the information it needs to exercise its oversight responsibilities, we recommend that the Secretary of Defense take the following two actions: (1) Direct the Under Secretary of Defense for Acquisition, Technology and Logistics to include all required elements in DOD's future corrosion reports. (2) Direct the Secretary of each Military Department to provide the required information on funding levels necessary to carry out all duties of the corrosion control and prevention executive. As the Military Departments develop the elements needed to provide the full funding levels, they should include the information on these elements in their annual reports.

Recommendations for Executive Action

  1. Status: Open

    Comments: DOD did not include all of the required elements in either its Fiscal Year 2014 or Fiscal Year 2015 corrosion budget reports.

    Recommendation: To help ensure that the Corrosion Office and Military Department annual reports provide information on all of the mandated elements, and, specifically, to ensure that Congress has all of the information it needs to exercise its oversight responsibilities, the Secretary of Defense should direct the Under Secretary of Defense for Acquisition, Technology and Logistics to include all required elements in DOD's future corrosion reports.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: In their respective corrosion reports for fiscal year 2013, the Army, Air Force, and Navy each identified funding requests to carry out the duties of the Corrosion Control and Prevention Executive established in Public Law 110-417, section 903. Each report provided some breakdown of the elements and activities that the funding will go to support. In its Annual Report on Corrosion for Fiscal Year 2013, the Navy identified a request of $1.132 million to carry out the duties of the Corrosion Control and Prevention Executive per P.L. 110-417, section 903. The Air Force, in its Annual Corrosion Prevention and Control Report for Fiscal Year 2013, identified the cost of carrying out the duties of the Corrosion Control and Prevention Executive as laid out in P.L. 110-417, section 903, as $1.31 million. It also identified the need for an additional $1.5 million to fund Air Force technology demonstration projects. The Army, in its Fiscal Year 2013 Annual Report on Corrosion Prevention and Control, identified the cost of resourcing the Corrosion Control and Prevention Executive office, per P.L. 110-417, as well as funding the Army Corrosion Integrated Product Team, as $2.096 million. Each of the reports cited the law and the CCPE duties as the basis for the funding, and identified some breakdown of the elements that the funding will go to support.

    Recommendation: To help ensure that the Corrosion Office and Military Department annual reports provide information on all of the mandated elements, and, specifically, to ensure that Congress has all of the information it needs to exercise its oversight responsibilities, the Secretary of Defense should direct the Secretary of each Military Department to provide the required information on funding levels necessary to carry out all duties of the corrosion control and prevention executive. As the Military Departments develop the elements needed to provide the full funding levels, they should include the information on these elements in their annual reports.

    Agency Affected: Department of Defense

 

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