Defense Management: Opportunities Exist to Improve Implementation of DOD's Long-Term Corrosion Strategy
Released: 2004-06-23T00:00:00

Letter

Background

DOD acquires, operates, and maintains a vast array of physical assets, ranging from aircraft, ships, and land vehicles to buildings, ports, and other facilities. Corrosion is an extensive problem that affects these assets and has an impact on military funding requirements, readiness, and safety. It is estimated that the direct costs to DOD of corrosion on military equipment and infrastructure is between $10 billion and $20 billion annually.

In our prior work, we reported in July 2003 that, although the full impact of corrosion could not be quantified because of the limited amount of reliable data that DOD and the military services had available, corrosion has a substantial impact in terms of cost, readiness, and safety on military equipment and facilities. Moreover, we found that DOD and the military services did not have an effective management approach to mitigate and prevent corrosion. As a result, we recommended, and DOD concurred, that it should develop a departmentwide strategic plan with clearly defined goals, measurable outcome-oriented objectives, and performance measures.

In recognizing the extent of DOD’s corrosion problem, Congress enacted legislation as part of the Bob Stump National Defense Authorization Act for Fiscal Year 2003 that directed the Secretary of Defense to designate an officer or organization to be responsible for the prevention and mitigation of corrosion of military equipment and infrastructure. The legislation also required the Secretary to develop a long-term strategy to reduce corrosion and the effects of corrosion on military equipment and infrastructure, and submit the report to Congress no later than 12 months after the date of the enactment of the Act.

The mandate required that the strategy include, among other things, policy guidance, performance measures and milestones, and an assessment of the necessary personnel and funding to accomplish the long-term strategy. The mandate also required that DOD include an assessment of these elements for four specific initiatives. These initiatives are: (1) expansion of the emphasis on corrosion prevention and mitigation within DOD to include coverage of infrastructure; (2) application uniformly throughout DOD of requirements and criteria for the testing and certification of new corrosion-prevention technologies for equipment and infrastructure with similar characteristics, similar missions, or similar operating environments; (3) implementation of programs, including supporting databases, to ensure that a focused and coordinated approach is taken throughout DOD to collect, review, validate, and distribute information on proven methods and products that are relevant to the prevention of corrosion of military equipment and infrastructure; and (4) establishment of a coordinated research and development program for the prevention and mitigation of corrosion for new and existing military equipment and infrastructure that includes a plan to transition new corrosion prevention technologies into operational systems.

To prepare a strategy, DOD established a corrosion policy and oversight task force. The task force is located in the Office of the Under Secretary of Defense for Acquisitions, Technology, and Logistics and reports to the Principal Deputy Under Secretary for Acquisitions, Technology, and Logistics. The task force consists of seven working groups responsible for addressing seven corrosion focus areas: (1) policy and requirements; (2) impact, metrics, and sustainment; (3) science and technology, (4) communication and outreach; (5) training and doctrine; (6) facilities; and (7) specifications or standards and product qualification. According to DOD officials, these seven areas were identified to address the congressional concerns that led to the mandate and the issues discussed in our 2003 report. These officials said that because the key elements of the mandate (funding and personnel, performance measures and milestones, and policy guidance) are comprehensive, they each apply one way or another to the seven focus areas in the strategy.

Corrosion Strategy Shortcomings May Hinder Successful Implementation

While the long-term corrosion strategy generally addresses the mandate’s requirements, several shortcomings are likely to hamper the successful implementation of DOD’s long-term corrosion strategy. The strategy (1) does not identify the level of funding and personnel resources needed to tackle corrosion problems; (2) does not provide outcome-oriented performance measures and a baseline study to measure progress; and (3) strengthens existing policy guidance, but some improvements can be made. In addition, we recommended in our July 2003 corrosion report, and DOD concurred with our recommendation, that a long-term strategy should include elements compatible with the Government Performance and Results Act of 1993. Among these elements were the level of resources needed to accomplish the strategy’s goals and objectives and performance measures, such as the expected return on investment and realized net savings of prevention projects that show progress toward achieving the strategy’s objectives.

Strategy Does Not Identify Specific Funding and Personnel Resources

While DOD’s corrosion strategy generally addresses the issue of funding, it does not include any estimates of the specific dollar amounts that are needed for its near- or long-term implementation. According to the strategy, the newly formed Corrosion Policy and Oversight task force will develop inputs to the Future Years Defense Program based on corrosion requirements and projects. DOD corrosion officials told us, however, that funding estimates were not included in the strategy because DOD and the military services are still in the process of determining the requirements. The officials said they expect to have firm estimates by December 2004.

In a separate study during the preparation of the strategy, however, DOD’s corrosion task force developed a preliminary schedule of funding requirements for corrosion reduction efforts. These estimates projected that DOD and the military services would need a total of about $1.9 billion in departmentwide corrosion prevention and mitigation resources for fiscal years 2004 through 2009. DOD corrosion officials said that the task force’s figures represent an initial attempt to estimate DOD’s and the military service’s funding needs. Table 1 shows the task force’s estimated funding requirements for corrosion prevention and mitigation efforts for both military equipment and infrastructure for the period from fiscal year 2004 through fiscal year 2009.

The task force’s estimates indicated that the services would need about $74.4 million in fiscal year 2004 for corrosion prevention and mitigation projects, but this funding has not been allocated or obligated. The task force identified 93 projects that had high potential returns on investment and were ready to be undertaken immediately. These projects included, for example, the installation of sensors to monitor fuel tanks and pipes for corrosion and the use of corrosion-inhibiting lubricants for avionics equipment on military aircraft. Corrosion officials told us that the $74.4 million was not included in DOD’s fiscal year 2004 budget request because the task force developed the estimate too late to be incorporated in the budget request. Corrosion officials said they hoped to obtain funding that would become available during fiscal year 2004, but, as of April 2004, DOD and the services had not allocated or obligated these funds.

The task force also estimated that the services would need about $312 million for equipment and infrastructure corrosion projects in fiscal year 2005. However, DOD's Comptroller officials told us that the services included only $27 million, less than 10 percent of the projected amount for departmentwide corrosion prevention and mitigation projects in their fiscal year 2005 budget request. To fund these projects, DOD Comptroller officials approved a budget change of $27 million from a special project designed to counter threats to the Civil Reserve Fleet and other aircraft to the services’ operation and maintenance accounts ($9 million each for Army and Air Force, $7 million for the Navy, and $2 million for the Marine Corps). DOD corrosion officials told us that they are using these service accounts because DOD does not have an account that is dedicated to departmentwide corrosion reduction. These officials also said that, after the funds are appropriated, they plan to issue a letter of instruction to the services requiring them to obtain approval from DOD’s corrosion office for the use of these funds. Of the $27 million, DOD corrosion officials said they expect to use $24 million for corrosion projects (e.g., for rinse facilities for the services’ helicopters and other aircraft and temporary shelters for military equipment and vehicles), $2.5 million to begin a corrosion impact baseline study; and $500,000 for the corrosion task force’s operating expenses. DOD corrosion officials told us that, while the $27 million falls far short of the amount needed to fully implement the strategy, it represents the first time that DOD expects to use funds for corrosion reduction on a departmentwide basis, and it demonstrates DOD’s commitment to augment the funding resources that have previously been under the purview of the military services.

DOD Comptroller officials told us that, in future fiscal years, corrosion reduction efforts would likely continue to be funded on a year-to-year basis by program offsets, such as those used for 2005. They said they eventually expect that departmentwide funding will no longer be needed as the military services assume a greater role in funding their own corrosion reduction projects. Comptroller officials said that the services have the knowledge and expertise to manage their own corrosion control projects and, therefore, are in a much better position to identify and allocate funding for these efforts. However, DOD corrosion officials said that the services are not in a position of knowing which corrosion projects have the best potential to provide departmentwide benefits and, furthermore, that these projects are not well coordinated within and among the military services.

DOD’s corrosion officials said that the corrosion reduction strategy may continue to be underfunded because of the lack of an effective long term funding mechanism that would better ensure that corrosion reduction projects have sustained funding over a period of years. At the present time, the corrosion prevention program is being supported piecemeal through budget change proposals or offsets. Corrosion officials told us that with a long-term funding mechanism dedicated to departmentwide corrosion prevention and mitigation, the program might be able to secure a commitment for funding these projects for future years. Such a mechanism could also fund projects that crosscut the services and that have the greatest potential for cost savings. Corrosion officials said that they prefer to have a long-term funding mechanism, such as a program element, but the DOD Comptroller does not think that this is necessary at this time.

As we reported in July 2003, the corrosion mitigation program may continue to be underfunded because DOD and the military services continue to give corrosion prevention a lower priority than other requirements. According to DOD corrosion officials, corrosion reduction projects must compete with other operation and maintenance programs. Because DOD and the military services give higher priority to projects that show immediate results, they have limited funding for corrosion reduction efforts whose benefits may not be apparent for many years. Corrosion officials told us that one of the biggest challenges to getting needed funding is to change DOD and military service personnel attitudes—from thinking that money spent on corrosion prevention detracts from other projects to realizing that it saves money in the long run.

According to DOD corrosion officials, if DOD and the services do not request more funding for corrosion prevention projects, DOD may lose or delay the opportunity to realize savings amounting to billions of dollars in avoidable maintenance costs for military equipment and facilities now and in the future. According to corrosion officials, the average potential return on investment for a corrosion prevention project is about 10 to 1, with some projects showing a return as high as 80 to 1, and with the savings realized about 5 years after funding begins. DOD corrosion officials said that this means, for example, that if DOD invests $500 million in a corrosion project today, it could realize a potential savings of about $4.5 billion 5 years from now.

In terms of personnel resources, the strategy generally provided an assessment of the personnel necessary to manage the corrosion program effectively in DOD and the services, but the strategy did not identify the level of personnel resources needed to implement the strategy. The strategy noted the establishment of an Office of Corrosion Policy and Oversight that is responsible for developing and implementing the corrosion strategy and specified that the office would have a director. DOD corrosion officials told us the office also includes a deputy director and engineer and that these positions are temporary. The strategy also indicated that a corrosion prevention and control working group, consisting primarily of corrosion professionals from DOD, would provide support for the corrosion office. DOD corrosion officials said these individuals are not permanently assigned to the office but serve on a part- time basis. These officials added that, because the strategy was recently established, DOD and the military services have had little time to determine the number of personnel needed to implement it. These officials told us that the requirements would likely be minimal and they expect to have a firmer estimate by December 2004.

The strategy does not identify the specific amount of funding or personnel needed to move ahead with the four initiatives specified in the congressional mandate. While the strategy includes descriptions of military equipment and facilities projects that address in varying ways these four areas, it states that these projects require an assessment of funding and other resources needed to support them. DOD corrosion officials told us that they plan to systematically evaluate each project and that this assessment will include determining the resources needed to implement the effort.

Lack of Outcome-Based Performance Measures and Baseline Study Hamper Tracking Progress and Setting Priorities

While DOD’s corrosion strategy includes performance measures and milestones, they are not the outcome-oriented metrics that are needed to successfully monitor the department’s progress in mitigating corrosion and its impacts. Instead, the strategy contains output-oriented metrics that measure the number of program activities. For example, DOD plans to measure progress toward achieving the strategy’s goals by counting the number of major acquisition programs that have developed corrosion prevention plans, tracking the number of injury-related incidents related to corroding equipment or facilities, and recording the number of maintenance personnel enrolled in corrosion-mitigation training modules. By contrast, an outcome-oriented performance metric would allow DOD to determine how much corrosion-prevention projects have reduced the amount of maintenance costs for Navy aircraft carriers, decreased the failure rates for the Army’s 155 millimeter medium-towed howitzer, or decreased Air Force Base fuel pipeline ruptures—all within a certain timeframe.

In addition, the development of meaningful performance metrics will be hampered until a baseline study of the costs and the extent of corrosion problems departmentwide is completed. In our July 2003 report, we indicated that the lack of reliable data made it difficult to adequately assess the overall impact of the corrosion problem. A baseline study would identify the cost of corrosion on military equipment and facilities across the services as well as corrosion’s impact on military personnel safety and operational readiness. Such a study would document where corrosion problems exist, identify their causes, and prioritize them according to their relative severity.

However, while the long-term strategy acknowledges the critical importance of developing a baseline of corrosion costs, including those related to safety and readiness, DOD does not plan to complete such a baseline until 2011. DOD corrosion officials told us they plan to allocate $2.5 million of the $27 million provided for fiscal year 2005 corrosion- related projects to begin such a study. DOD corrosion officials told us that the task force estimated that it would take an additional $1.25 million for each of the next 6 fiscal years (2006 through 2011) to complete the study, for a total cost of $10 million. They said that it would take that long primarily because of the limited funding available for the strategy, which has forced them to stretch out funding for the baseline over a period of several years. The officials also said that the study would take some time to complete because of data reliability issues, the lack of consistency in corrosion data within and among the military services, and the incompatibility of information systems that contain the data.

Without a corrosion baseline, DOD will not be able to develop adequate performance metrics to measure—or report on—its initial progress toward reducing corrosion and its impacts. Furthermore, DOD will not have an overall picture of the extent of corrosion problems, making it difficult to effectively identify areas that are most severely impacted by corrosion and that require high-priority attention and resources.

While DOD’s corrosion strategy includes some performance measures and milestones for the four initiatives, the metrics are not the results-oriented performance measures needed to successfully implement the strategy.

Strategy Strengthens DOD’s Corrosion Mitigation Policy Guidance but Could Be Improved

As part of the long-term corrosion strategy, DOD strengthened its policy guidance for corrosion prevention and control activities, but there are opportunities to build on these improvements. The new guidance explicitly calls for the consideration of corrosion prevention and control planning during the earliest stages of the acquisition process for military weapon systems and military infrastructure programs; earlier guidance did not single out the need for such planning. DOD also included the need to consider corrosion prevention and control in an existing guidebook for weapons systems program managers.

While the strategy contains a policy memorandum that sets up a review process for corrosion-related issues for major weapon systems programs (e.g., Joint Strike Fighter), it does not extend this review to non-major weapon systems (e.g., Torpedo Defense System Program) and infrastructure programs. The guidance directs the corrosion prevention and control working group to regularly review the adequacy of corrosion prevention plans of all weapon system programs subject to Defense Acquisition Board review. If they identify an issue, the product group will bring it to the attention of the board. Furthermore, the policy memorandum states that the Acting Undersecretary of Defense for Acquisitions, Technology, and Logistics will personally evaluate the corrosion plans for programs subject to board review. According to DOD corrosion officials, the guidance did not extend this review to the non-major weapons programs, which are under the responsibility of individual military services. The corrosion officials said this was done so that the services could retain flexibility in managing their own programs. Military service officials told us that they have not established a corrosion prevention plan review process for their programs because the policy memorandum is relatively new, and they prefer to wait to see how the process works before they establish a similar review process. However, these service officials and DOD officials said that they recognize that all programs, both major and non-major weapon systems and infrastructure, experience significant corrosion impacts and that all of their corrosion prevention plans would benefit from a review process.

In addition, DOD’s new corrosion strategy does not include any corrosion planning or review requirements for the Chairman, Joint Chiefs of Staff’s Focused Logistics Capabilities Board. However, Joint Chiefs of Staff officials said they will include corrosion prevention planning in the board’s sustainability assessments of military weapon systems. DOD corrosion officials told us that this effort by the Joint Chiefs of Staff would support the strategy and enhance DOD’s overall corrosion reduction programs.

While the strategy provides general policy guidance, it does not specifically provide policy guidance for the four initiatives.

Conclusions

By focusing attention on the extensive and costly problem of corrosion and its debilitating impact on military equipment and facilities, DOD’s new long-term corrosion strategy is a step in the right direction. However, because the strategy falls short of providing the basic elements of an effective management plan, DOD’s ability to implement it successfully remains at risk. Because of the strategy’s limited assessment of funding and personnel needs, lack of a baseline study, and weak performance measures, it is not certain that DOD’s corrosion prevention and mitigation efforts will be adequately funded, monitored, or thoroughly evaluated. Without a sufficient assessment of the funding and personnel resources required to reduce the effects of corrosion, Congress does not have the information it needs to make informed, corrosion-related funding decisions in the future. In addition, if DOD and the services do not adequately fund corrosion prevention efforts in the near term, they will lose or delay the opportunity to realize billions of dollars in avoidable maintenance costs over the long term. They will also face increasing degradation in the safety and readiness of military equipment and personnel. Furthermore, without establishing a departmentwide corrosion baseline, DOD cannot reliably estimate its overall resource needs, determine which ones have the highest priority, and track and measure its progress toward meeting these needs. Moreover, without good results- oriented performance metrics, DOD cannot adequately measure its progress in reducing the impact of corrosion. Finally, without expanding its policy guidance to require a review of all corrosion prevention planning, DOD will not be able to ensure that all new programs and activities—including non-major weapon systems and infrastructure—are thoroughly evaluated. As a result, some acquisition and construction programs could slip by without effective planning to prevent and control corrosion. In addition, DOD will miss an opportunity to strengthen its efforts to reduce the impact of corrosion on all new acquisitions and facilities in the future. Without fully addressing the strategy’s weaknesses, the effects of corrosion will continue to exact a tremendous toll on the financial and operational condition of the military.

Recommendations for Executive Action

To provide better assurances that the Department of Defense’s long-term corrosion strategy is successfully implemented as envisioned by Congress, we are making five recommendations. We are recommending that the Secretary of Defense instruct the Undersecretary of Defense for Acquisition, Technology and Logistics, in consultation with the DOD Comptroller, take the following actions: Establish a date to complete the corrosion baseline study well before its original estimated completion date of 2011 in order that cost-effective resource priorities and results-oriented performance measures can be established to monitor progress in reducing corrosion and its impacts on equipment and infrastructure; Establish a funding mechanism to implement the corrosion strategy that would be consistent with the strategy’s long-term focus; and Submit to Congress, as part of the fiscal year 2006 budget submission, a report identifying the long-term funding and personnel resources needed to implement the strategy, a status report of corrosion reduction projects funded in fiscal year 2005, and the status of a baseline study.

In addition, we recommend that the Secretaries of the military services establish policy guidance that would include the review of the corrosion prevention and control plans of non-major weapons systems and infrastructure programs.

Finally, we recommend that the Chairman, Joint Chiefs of Staff direct the Focused Logistics Capabilities Board to include corrosion prevention issues in its sustainability assessments of military weapon systems.

Agency Comments and Our Evaluation

In commenting on a draft of this report, the Director of Defense Procurement and Acquisitions Policy concurred with all five of our recommendations. The comments are included in appendix II of this report.

In concurring with our recommendation to complete a corrosion baseline study as soon as possible, DOD noted that, as part of the long-term strategic plan, it would continue its efforts to evaluate corrosion costs. However, DOD did not indicate when it would complete the overall, departmentwide baseline study of corrosion costs that we believe is essential for establishing cost-effective resource priorities and tracking progress towards reducing corrosion and its impacts on equipment and infrastructure. We continue to believe that this baseline study should be completed as soon as possible. Therefore, we have modified our recommendation to be more specific and stated that DOD should establish a date to complete the corrosion baseline study well before its original estimated completion date of 2011.

In concurring with our recommendation to establish a funding mechanism to implement the corrosion strategy that would be consistent with the strategy’s long-term focus, DOD stated that the corrosion office would submit funding requests through the Planning, Programming, Budgeting, and Execution process. In addition, DOD noted that funding requests for corrosion prevention would compete for funds with other DOD programs based on need priorities and fiscal constraints. Although DOD did not provide specific details, we would expect that funding requests for corrosion would be made during the budget submission process and be included in DOD’s submission to Congress rather than be made through budget change proposals or offsets after funds are obligated. We would also expect that corrosion prevention funding estimates would be included in the Future Years Defense Program. Unless DOD adopts these types of approaches, corrosion prevention funding will continue to receive a lower priority than other DOD efforts, and as a result, DOD will lose the opportunity to save billions of dollars in avoidable maintenance costs and to improve the safety and readiness of military equipment and infrastructure.

In concurring with our recommendation that the Secretaries of the military services establish policy guidance calling for reviews of corrosion prevention and control plans of non-major weapons systems and infrastructure programs, DOD indicated that it would encourage the Secretaries to implement such reviews. DOD also stated that non-major programs are reviewed subject to the requirements of different acquisition authorities within the military services. We do not believe that DOD’s comments are fully responsive to our recommendation. We continue to believe that non-major weapons systems experience corrosion problems similar to those experienced by major weapons systems and that they would benefit from the same kind of corrosion prevention plan review. Our recommendation also applies to infrastructure programs that are primarily managed by the military services. We recognize that the authority to manage the activities of non-major weapons systems and infrastructure programs lies, for the most part, with the military services and that is why our recommendation is directed to the Secretaries of the services. As a result, we would expect the Secretaries to implement the recommendation by establishing policy guidance appropriate to their respective services.

We are sending copies of this report to the Secretary of Defense; the Director, Office of Management and Budget; and other interested congressional committees. We will also make copies available to others upon request. In addition, the report will be available at no charge on the GAO Web site at http://www.gao.gov.

Please contact me on (202) 512-8365 if you or your staff have any questions concerning this report. Key contributors to this report were Lawson Gist, Jr., Allen Westheimer, Hector Wong, Nancy Benco, and Katherine Lenane.

Appendix I: Scope and Methodology

To assess each of the three key areas of the report, we held numerous discussions with officials of DOD’s Corrosion Policy and Oversight task force and reviewed relevant DOD documents, including the final strategy report to Congress. Furthermore, to determine the adequacy of each key area, we applied internal control tools and results-oriented performance standards that are necessary components for successful management activities in departments and, by extension, individual programs.

To assess whether the DOD’s corrosion strategy identified and obtained resources to prevent and mitigate corrosion on equipment and infrastructure, we reviewed funding requirements and cost estimates for DOD and the military services and spoke to DOD officials about unfunded corrosion prevention project requirements, the identification of funding resources, and future-year funding requirements. We also reviewed the unfunded service requirements list and the fiscal year 2004 corrosion prevention projects list. We interviewed DOD Comptroller officials and discussed the fiscal year 2005 budget request and the prospect for future years funding. We also discussed our review of DOD’s Program Budget Directive document to understand why the task force did not have its own budgeted account.

To determine whether the strategy’s performance measures and baseline data were adequate to prevent and mitigate corrosion DOD-wide, we interviewed the leader of the task force working group for Metrics, Impacts, and Sustainment about the development of the strategy’s performance measures, barriers to gathering cost data across the military services, and plans to develop a corrosion cost baseline. We analyzed the costs used to prepare existing cost impact studies, particularly studies the metrics working groups plan to use to help establish the baseline. We observed meetings and internal discussions of the working group for Metrics, Impacts, and Sustainment at four separate corrosion forums sponsored by the task force. We also reviewed corrosion prevention documents related to the development of performance metrics and the baseline study.

To assess the adequacy of the strategy’s policy guidance for preventing and mitigating corrosion, we met with the Office of the Deputy Undersecretary of Defense for Defense Systems, the Joint Chiefs of Staff for Logistics, and members of the task force’s working group for Policy and Requirements. To determine how the corrosion policy affected military infrastructure, we interviewed officials in the Office of the Deputy Under Secretary of Defense for Installations and Environment, and members of the task force’s working group for Facilities. We also attended the TriService Corrosion Conference, the Army Corrosion Conference, and all four Corrosion Forums sponsored by the corrosion task force to better understand the role of policy and its impact on military equipment and infrastructure. We also reviewed relevant policy documents, memos, instructions, and regulations.

To assess the reliability of the estimated funding needs for corrosion prevention projects for fiscal years 2004 through 2009 by the military services we (1) interviewed officials knowledgeable about the data and (2) assessed related funding requirements studies and reports. We determined that the data were sufficiently reliable for the purposes of this report. We conducted our review between November 2003 and April 2004 in accordance with generally accepted government auditing standards.

Appendix II: Comments from the Department of Defense

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