Defense Management:

The Department of Defense's Annual Corrosion Budget Report Does Not Include Some Required Information

GAO-12-823R: Published: Sep 10, 2012. Publicly Released: Sep 10, 2012.

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Zina Dache Merritt
(202) 512-5257
merrittz@gao.gov

 

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What GAO Found

In summary, we found that DOD's fiscal year 2013 corrosion budget report to Congress (1) included some, but not all of the six mandated elements; (2) included a funding request that equals DOD's fiscal year 2013 stated requirements for corrosion activities and projects; and (3) lacked information needed to calculate the potential cost avoidance. First, DOD included three of the six mandated elements, did not include two of the elements, and one of the elements was not applicable this year. For example, DOD included the most recent annual corrosion reports of the military departments, attached in an annex. However, it did not include the funds requested in the budget compared to the funding requirements for the fiscal year covered by the report or the previous fiscal year. Second, DOD officials stated that the fiscal year 2013 budget request and the fiscal year 2013 funding requirements for activities and projects are the same this year--$9.1 million. According to these officials, DOD does not have any fiscal year 2013 unfunded requirements for corrosion activities and projects. Third, we did not calculate the cost avoidance DOD could achieve with its fiscal year 2013 budget request, because the analysis that DOD provided does not support the 14 to1 average ROI for projects cited in its report. Further, we did not calculate the cost avoidance that DOD might be missing by not funding its requirements, because DOD officials said that they do not have any unfunded requirements this year. Without all of the required information on DOD's corrosion prevention and control activities and projects, DOD senior leaders and Congress may face challenges in assessing the levels of funding needed to effectively prevent and control corrosion.

Why GAO Did This Study

In 2012, the Department of Defense (DOD) estimates that corrosion costs the Department about $20.9 billion annually. Corrosion can negatively affect all military assets, including both equipment and infrastructure, and is defined as the deterioration of a material or its properties due to a reaction of that material with its environment. Corrosion also affects military readiness by taking critical systems out of action and creating safety hazards.

Section 2228 of Title 10 of the United States Code requires DOD, as part of its annual budget submission, to submit a report to Congress on corrosion funding. In the report, DOD is to include (1) funding requirements for its long-term corrosion reduction strategy, (2) the return-oninvestment (ROI) that would be achieved by implementing the strategy, (3) the current and previous fiscal year funds requested in the budget compared to funding requirements, (4) an explanation if funding requirements are not fully funded in the budget, (5) the amount of funds requested for both the current and previous fiscal years in the budget for each project or activity described in DOD's long-term strategy compared to the funding requirements for the project or activity, and (6) a copy of the annual corrosion report most recently submitted by the corrosion control and prevention executive of each military department as an annex to its report. The military departments' reports are to include recommendations pertaining to the department's corrosion control and prevention program and related funding levels to carry out all of the duties of the corrosion control and prevention executive. Corrosion also affects military readiness by taking critical systems out of action and creating safety hazards.

Section 2228 also requires us to analyze DOD's budget submission and report and provide an assessment to the congressional defense committees within 60 days after the submission of the budget for the fiscal year, which this year occurred on February 13, 2012. DOD submitted its annual report to Congress on May 21, 2012, and we received the report on May 23, 2012. Our objectives were to (1) determine the extent to which DOD's corrosion report included the mandated elements, (2) assess the extent to which DOD's Corrosion Prevention and Control (CPC) funding request met total estimated CPC funding requirements for activities and preliminary project proposals as identified in the fiscal year 2013 corrosion report, and (3) calculate the potential cost avoidance that DOD may achieve by funding CPC at the level requested in its fiscal year 2013 corrosion budget materials report and the cost avoidance DOD may miss by not fully funding its requirements. Enclosure I provides briefing slides for congressional committees detailing the results of our analysis of DOD's CPC budget request and the Office of Corrosion Policy and Oversight's (CPO) accompanying report for fiscal year 2013.

What GAO Recommends

To ensure that Congress has the accurate and comprehensive information it needs to exercise its oversight responsibilities, we recommend for fiscal year 2013 and beyond that the Secretary of Defense direct the Under Secretary of Defense for Acquisition, Technology and Logistics to take the following three actions:

  • Provide in the annual corrosion budget report to Congress a more detailed explanation of the development of DOD’s funding requirements.
  • Include in the annual corrosion budget report to Congress the funds requested in DOD’s budget compared to the funding requirements for the fiscal year covered by the report and the preceding fiscal year.
  • Provide in the annual corrosion budget report to Congress an explanation of DOD’s ROI methodology and analysis, including both projected and, to the extent available, validated ROIs.

For more information, contact Zina Merritt on (202) 512-5257 or merrittz@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: We have reviewed the Department of Defense's (DOD's) corrosion budget reports for Fiscal Year 2014 and Fiscal Year 2015 and found that DOD did not include a more detailed explanation of how it developed its funding requirements to ensure the requests are based on estimates that are complete, realistic, and backed up by historical data.

    Recommendation: To ensure that Congress has the accurate and comprehensive information it needs to exercise its oversight responsibilities, for fiscal year 2013 and beyond, the Secretary of Defense should direct the Under Secretary of Defense for Acquisition, Technology and Logistics to provide in the annual corrosion budget report to Congress a more detailed explanation of the development of DOD's funding requirements.

    Agency Affected: Department of Defense

  2. Status: Open

    Comments: We have reviewed the Department of Defense's (DOD's) corrosion budget reports for Fiscal Year 2014 and Fiscal Year 2015 and found that DOD did not include the funding requirements for either year.

    Recommendation: To ensure that Congress has the accurate and comprehensive information it needs to exercise its oversight responsibilities, for fiscal year 2013 and beyond, the Secretary of Defense should direct the Under Secretary of Defense for Acquisition, Technology and Logistics to include in the annual corrosion budget report to Congress the funds requested in DOD's budget compared to the funding requirements for the fiscal year covered by the report and the preceding fiscal year.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: The Department of Defense's (DOD's) Fiscal Year 2015 corrosion budget report included an explanation of why and, to a degree, how DOD calculates its Return On Investment (ROI) reassessments, including the limitations of the reassessments. DOD reports that it bases its ROI projection for the Fiscal Year 2015 projects on the cumulative historical ROI for past projects that have submitted ROI reassessments. DOD also included in its report a table with the available ROI reassessments for past projects.

    Recommendation: To ensure that Congress has the accurate and comprehensive information it needs to exercise its oversight responsibilities, for fiscal year 2013 and beyond, the Secretary of Defense should direct the Under Secretary of Defense for Acquisition, Technology and Logistics to provide in the annual corrosion budget report to Congress an explanation of DOD's ROI methodology and analysis, including both projected and, to the extent available, validated ROIs.

    Agency Affected: Department of Defense

 

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