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GAO Challenges DOD on Corrosion

Wednesday, March 2, 2011

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Amid these days of slash-and-burn budgeting, the U.S. Government Accountability Office is actually recommending that the Department of Defense step up its funding to fight corrosion—if the initiatives can prove their worth.

And—unusual for the target of a GAO report—DOD’s director of the Office of Corrosion Policy and Oversight couldn’t agree more.

“It was very accurate,” said Corrosion Office director Daniel Dunmire. “I couldn’t have written it any better.”

Dunmire was referring to “Opportunities to Reduce Potential Duplication in Government Programs, Save Tax Dollars, and Enhance Revenue,” which GAO released this week in response to President Obama’s call Jan. 18 for a government-wide review of regulations.

The 345-page report surveys the federal regulatory landscape from AC (Bureau of Arms Control) to WIC (Special Supplemental Nutrition Program for Women, Infants, and Children), and offers hundreds of cost-cutting strategies for scores of agencies.

Navy corrosion problem

Photos: www.corrdefense.org

Navy photos offer a glimpse of
DOD’s $23 billion annual corrosion
problem.  From left:  an aircraft
carrier flight deck and the fan room
(center) and topside ladder (right)
of a guided missile cruiser.

Interestingly, however, its advice to DOD is to spend more—on fighting corrosion.

‘Billions in Unnecessary Costs’

GAO included DOD’s Corrosion Office in its review because the office plays a critical role in maintaining military readiness and safety—and, it turns out, in saving federal money.

“Improved corrosion prevention and control practices could help DOD avoid billions in unnecessary costs,” the report said. “Corrosion, if left unchecked, can degrade the readiness and safety of equipment and facilities and can result in substantial, sometimes avoidable, costs.”

Citing various DOD studies, GAO said corrosion costs DOD more than $23 billion each year and affects military readiness, taking up to 16% of military assets— most notably aircraft—out of action and causing more than 50 aircraft accidents and 12 fatalities since 1985.

In 2006, DOD spent about a quarter of its $80 billion maintenance budget for ships, aircraft,  missiles, and ground combat and tactical vehicles on corrosion-related efforts. The same year, corrosion efforts ate up about $1.9 billion of the $10 billion maintenance budget for 577,000 military buildings and structures.

And yet, GAO said, citing a 2004 report, 30% of those costs “could be avoided through proper investment in prevention and mitigation of corrosion during design, manufacture, and sustainment.”

Show Me the Money

Given the financial, military and safety stakes, GAO encouraged DOD to fund more corrosion programs—if the Corrosion Office can make the programs prove their value.

For example, GAO said, the Corrosion Office identified 271 projects worthy of funding from FY 2005 to FY 2010. However, DOD funded only $129 million (63%) of the $206 million the projects needed.

“According to DOD, increased corrosion prevention and control efforts are needed to adequately address the wide-ranging and expensive effects of corrosion on equipment and infrastructure,” the report said. “However, DOD did not fund about one-third of acceptable corrosion projects for fiscal years 2005 through 2010.”

Ensuring Value

On the other hand, GAO said, the Corrosion Office must ensure that funding recipients validate the cost effectiveness of their projects, including comparing the actual ROI to the original projection.

For example, the Corrosion Office estimates an average ROI of 50:1 on the 28 projects it funded in FY 2005, according to GAO. To date, however, recipients have validated ROI for only 10 of those projects—and nine of them, involving facilities, showed a validated ROI of 11:1.

“Weapons projects have been estimated to have higher returns on investment (67:1 average),” GAO reported, “but these estimates have not been validated by the military departments. Also, none of those estimates have been independently validated.”

Project Funding

The Corrosion Office favors projects designed to develop and test new technologies. To receive funding, the military departments submit project proposals that are evaluated by a panel of experts. The Corrosion Office currently funds up to $500,000 per project, and the military departments must match the funding.

The level of department funding and the estimated ROI are two key criteria used to evaluate the projects proposals.

Dunmire said that projects undergo “painstaking” review before awards are made. He notes that the Corrosion Defense web site (www.corrdefense.org) includes project ROI Computation Guidelines and a spreadsheet, as well as detailed Project Plan Evaluation Factors.

‘No Agenda’

“We take subjectivity out of it,” said Dunmire. “We pick the best projects—period—because we only have so much money and we are sticklers. We don’t [select] anybody that has an agenda.”

If the ROI projections held up for projects funded from FY 2005-10, DOD “potentially could have avoided $3.6 billion in corrosion-related costs,” GAO said.

Similarly, it said, DOD’s decision not to fund $35 million in FY 2011 projects may cost it $418 million in costs down the road. By underfunding all of its current prevention and control requirements, “DOD may be missing an opportunity for additional cost avoidance totaling $1.4 billion,” GAO said.

“However,” the agency warns, “these calculations are highly contingent on the accuracy of estimated return on investment data provided by the Corrosion Office, much of which have not been validated by the military departments or an independent entity.”

   

Tagged categories: Corrosion; Funding; Government; U.S. Navy

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