GAO-08-663R DOD’s FY 2009 Corrosion Budget Request 

United States Government Accountability Office

Washington, DC 20548 

April 15, 2008 

Congressional Committees 

Subject: Defense Management: Observations on DOD’s FY 2009 Budget Request for 

Corrosion Prevention and Control 

This letter formally transmits the attached briefing in response to section 371 of the 

National Defense Authorization Act for Fiscal Year 2008 (see encl. I). The act requires 

GAO to provide an analysis of DOD’s budget submission for corrosion control and 

prevention and a DOD report that was to be submitted with defense budget materials 

to the congressional defense committees within 60 days after submission of the 

budget for a fiscal year. On April 3, 2008, we provided the briefing to staff of your 

committees to satisfy the mandate and 60-day reporting requirement. 

We are sending copies of this letter to the appropriate congressional committees. We 

are also sending copies to the Secretary of Defense; the Deputy Secretary of Defense; 

the Under Secretary of Defense (Comptroller); the Under Secretary of Defense 

(Acquisition, Technology, and Logistics); the Secretaries of the Army, Navy, and Air 

Force; and the Commandant of the Marine Corps. This letter will also be available at 

no charge on our Web site at http://www.gao.gov. Should you or your staff have any 

questions concerning this report, please contact me at (202) 512-8365 or 

solisw@gao.gov. Contact points for our Offices of Congressional Relations and Public 

Affairs may be found on the last page of this report. Key contributors to this report 

were Tom Gosling, Assistant Director, and Allen Westheimer. 

William M. Solis 

Director, Defense Capabilities and Management 
List of Congressional Committees 

The Honorable Carl Levin 

Chairman 

The Honorable John McCain 

Ranking Member 

Committee on Armed Services 

United States Senate 

The Honorable Daniel Inouye 

Chairman 

The Honorable Ted Stevens 

Ranking Member 

Subcommittee on Defense 

Committee on Appropriations 

United States Senate 

The Honorable Ike Skelton 

Chairman 

The Honorable Duncan L. Hunter

Ranking Member 

Committee on Armed Services 

House of Representatives 

The Honorable John P. Murtha 

Chairman 

The Honorable C.W. Bill Young 

Ranking Member 

Subcommittee on Defense 

Committee on Appropriations 

House of Representatives 

Page 2 

GAO-08-663R DOD’s FY 2009 Corrosion Budget Request 
Enclosure Enclosure 

1

Observations on DOD’s FY 2009 

Budget Request for Corrosion 

Prevention and Control

Briefing for Congressional Defense Committees

April 3, 2008

Page 3 GAO-08-663R DOD’s FY 2009 Corrosion Budget Request 
Enclosure 

Page 4 GAO-08-663R DOD’s FY 2009 Corrosion Budget Request 

2

Section 371 of the National Defense 

Authorization Act for Fiscal Year 2008*

• Requires the Secretary of Defense, for each budget for a fiscal year

beginning with FY09, to submit, with defense budget materials, a report on

• Funding requirements for DOD’s long-term corrosion prevention and 

control strategy.

• Return on investment that would be achieved by implementing this

strategy.

• Funds requested in the budget compared with funding requirements.

• An explanation if requirements are not fully funded in the budget.

• Requires GAO to provide an analysis of DOD’s budget submission for 

corrosion control and prevention and an analysis of the report described 

above to the congressional defense committees within 60 days after

submission of the budget for a fiscal year.

*Pub. L. No. 110-181, §371 (2008) amended 10 U.S.C. §2228 to include, among other things, 

the reporting requirements for the Secretary of Defense and the Comptroller General.
Enclosure 

Page 5 GAO-08-663R DOD’s FY 2009 Corrosion Budget Request 

3

Engagement Objectives

In response to the mandate, GAO

1. Analyzed DOD’s fiscal year 2009 budget request for OSD’s

Corrosion Prevention and Control Program Element (CPC PE).

2. Compared the budget request with requirements and analyzed the

projected return on investment (ROI) for funded and unfunded

requirements.

3. Obtained information on DOD’s process for developing its CPC 

PE budget submission.

This briefing is intended to satisfy the mandate to review DOD’s

FY09 budget request for corrosion prevention and control.
Enclosure 

Page 6 GAO-08-663R DOD’s FY 2009 Corrosion Budget Request 

4

Scope and Methodology

• Scope -- DOD's fiscal year 2009 budget submission and 

requirements for the CPC PE.

• Methodology -- Analyzed DOD budget and requirements data, as

well as corrosion strategy documents. We calculated the potential 

ROI for DOD’s funded and unfunded FY09 requirements based on 

DOD validated requirements data and overall ROI averages.

Interviewed officials at the Under Secretary of Defense 

(Comptroller) and the Corrosion Policy and Oversight Office, within

the Under Secretary of Defense for Acquisition, Technology, and 

Logistics (USD/ATL).

• Limitations/data reliability -- DOD had not yet submitted its 

required corrosion report. Also, we did not independently 

validate DOD’s CPC requirements or projected ROI.
Enclosure 

Page 7 GAO-08-663R DOD’s FY 2009 Corrosion Budget Request 

5

Generally Accepted Government Auditing 

Standards (GAGAS) Statement

We conducted this performance audit from February 2008 to

April 2008 in accordance with generally accepted 

government auditing standards. Those standards require that

we plan and perform the audit to obtain sufficient, appropriate 

evidence to provide a reasonable basis for our findings and 

conclusions based on our audit objectives. We believe that

the evidence obtained provides a reasonable basis for our

findings and conclusions based on our audit objectives.
Enclosure 

Page 8 GAO-08-663R DOD’s FY 2009 Corrosion Budget Request 

6

Obj. 1: DOD’s FY09 Budget Request for CPC 

PE

President’s FY09 budget request includes about $14.1 million for

the CPC PE. This amount excludes any funding that the military

services may contribute.

CPC PE Funding (FY 2006-2009)

Dollars in millions

$15.538

7.402

$8.136

FY06

(estimated)

Total $14.460 $26.786 $14.064

RDT&E 7.124 18.917 5.102

O&M $7.346 $7.869 $8.962

FY09

(requested)

FY08

(estimated)

FY07

(estimated)
Enclosure 

Page 9 GAO-08-663R DOD’s FY 2009 Corrosion Budget Request 

7

Obj. 1: DOD’s FY09 Budget Request for CPC 

PE (Con’t)

• According to data provided by OSD, of the $14.1 million

requested for FY09, about $10.7 million is expected to fund 

corrosion projects. The remaining $3.4 million is expected to 

fund corrosion activities.

• While DOD will not make final selections of CPC projects until 

summer 2008, examples of potential projects include:

• Air Force temporary corrosion barrier coatings

• Army primer and topcoat powder coatings

• Navy ultra high solids shipboard coatings

• Army non-metallic cooling towers

• Activities may include such things as cost studies, development

of a corrosion guidebook for acquisition programs, and training.
Enclosure 

Page 10 GAO-08-663R DOD’s FY 2009 Corrosion Budget Request 

8

Obj. 1: DOD’s FY09 Budget Request for CPC 

PE (Con’t)

In addition to the CPC PE funding provided by OSD, the military services

provided an average of about $8.5 million for corrosion projects per year

for FY06-08.

Military Service Contributions for CPC PE Projects (FY06-08)

Dollars in millions

$8.5

1.0

2.5

$5.1

3-Year

Average

FY06 FY07 FY08

Total $9.4 $8.5 $7.7

Air Force 1.6 1.2 0.1

Navy 2.4 2.3 2.7

Army $5.4 $5.0 $4.9
Enclosure 

Page 11 GAO-08-663R DOD’s FY 2009 Corrosion Budget Request 

9

Obj. 2: CPC Requirements and ROI

• Corrosion office updates and validates requirements annually. The 

office submitted FY09 requirements to USD/ATL in December

2007.

• DOD validated total CPC PE requirements of $33.8 million for

FY09. This amount includes $28.5 million for projects and $5.3 

million for activities.

• As part of the project selection process, DOD requires that an “ROI” cost-benefit analysis be submitted with project plans. Projects costs

are to consist of the up-front investment cost and annual operating 

and support costs. Benefits are to consist of annual savings or cost

avoidance over the useful life of the project. As of June 2007, the 

ROI calculations are required to use a net present value approach.

• ROI varies by individual project and activity and may span several

years. Based on historical averages for FY05-08, DOD calculates

an overall ROI of 40-1 for projects and 2-1 for activities.
Enclosure 

Page 12 GAO-08-663R DOD’s FY 2009 Corrosion Budget Request 

10

Obj. 2: CPC Requirements and ROI (Cont.)

Using DOD requirements data and overall ROI averages,* we calculate that:

• FY09 budget request, if approved, would result in a total ROI of $435 

million.

• If all FY09 validated requirements were funded, the total ROI would be 

$1.15 billion.

• Therefore, the total ROI for unfunded requirements—that is, projects and 

activities not included in the budget request—is $715 million ($1.15 billion 

minus $0.435 billion)

* We did not validate DOD’s overall ROI averages. We noted that until last year, DOD

allowed the submission of project plans to include ROI calculations that did not use a net 

present value approach in their ROI calculations. Using this approach would inflate the

ROI since the time-value of costs and savings are not considered. However, DOD

corrosion officials told us that less than 5% of the projects did not use the net present

value ROI approach.
Enclosure 

Page 13 GAO-08-663R DOD’s FY 2009 Corrosion Budget Request 

11

Obj. 3: Process for Developing CPC PE 

Budget

• According to USD/ATL, global commitments, constrained budgets, 

and competing requirements preclude fully funding CPC 

requirements. 

• 2006 Program Objective Memorandum (POM) cycle included about 

$14 million for the CPC PE in FY09. This funding level was set with

the expectation that the services would provide more CPC funding

in their budgets.

• Corrosion officials told us they submitted a $14.1 million budget 

request in accordance with USD/ATL guidance capping FY09

funding requests at POM levels.

• Comptroller officials told us that while program offices may consider 

ROI benefits in developing budget submissions, requirements for

systems and services, rather than ROI, drive funding levels in

DOD’s annual budget request.
Enclosure 

Page 14 GAO-08-663R DOD’s FY 2009 Corrosion Budget Request

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Agency Views

To obtain agency views, we discussed a draft of this briefing with 

officials from the Corrosion Policy and Oversight Office.

They concurred with the facts presented. On the basis of their

comments and supporting documentation they provided, we 

modified the briefing regarding their revised methodology for

calculating ROI. 

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