THE ESTIMATED EFFECT OF CORROSION ON THE COST AND AVAILABILITY OF ARMY GROUND VEHICLES

Transcription

1 THE ESTIMATED EFFECT OF CORROSION ON THE COST AND AVAILABILITY OF ARMY GROUND VEHICLES REPORT DAC21T2 Eric F. Herzberg Trevor K. Chan Rebecca F. Stroh Norman T. O'Meara FEBRUARY 2013

2 NOTICE: THE VIEWS, OPINIONS, AND FINDINGS CON- TAINED IN THIS REPORT ARE THOSE OF LMI AND SHOULD NOT BE CONSTRUED AS AN OFFICIAL AGENCY POSITION, POLICY, OR DECISION, UNLESS SO DESIGNATED BY OTHER OFFICIAL DOCUMENTATION. LMI ALL RIGHTS RESERVED.

3 The Estimated Effect of Corrosion on the Cost and Availability of Army Ground Vehicles DAC21T2/FEBRUARY 2013 Executive Summary LMI was tasked by the Corrosion Prevention and Control Integrated Product Team (CPC IPT) in August 2011 to measure the effect of corrosion on the availability and cost of Army ground vehicle systems. We present these estimates in this report. Using data from FY2010, 1 we estimated the annual corrosion-related cost for Army ground vehicles to be $1.606 billion, or 12.6 percent of the total maintenance costs for all Army ground vehicles. We also estimated the effect of corrosion on non-available days (s) for all Army ground vehicle assets. Corrosion is a contributing factor in approximately 662,649 s of ground vehicles per year, or 6.6 percent of the total s. These days equate to an average of 1.7 days of corrosion-related nonavailability per year for every reportable ground vehicle or system. The total corrosion-related s (662,649) accounts for 639,352 days the Department of the Army reported as not mission capable in its current method for reporting non-availability. The remaining 23,297 s were categorized as unreported not-available days, which were due to depot maintenance, transit time, temporary storage, etc. This review is part of a multiple year plan to measure the effect of corrosion on DoD weapon systems. It is also the first study to analyze the effect of corrosion on Army ground vehicle availability. Table ES-1 lists previous and future Army studies on the cost of corrosion, while Table ES-2 lists the studies on the effect of corrosion on availability. 2 1 Even though data was collected for FY2008 through FY2010, LMI based the corrosionrelated cost and availability of Army ground vehicles on FY2010 data, the most recent year for which study data was available. 2 DoD funded these cost and availability studies. iii

4 Table ES-1. Army Cost-of-Corrosion Studies Study year a Data baseline Study segment Annual cost of corrosion (in billions) FY2004 Army ground vehicles $ FY2005 Army aviation and missiles $ FY2006 and FY2007 Army ground vehicles $ FY2007 and FY2008 Army aviation and missiles $ FY2008 FY2010 Army ground vehicles $ FY2009 FY2011 Army aviation and missiles Pending a Study period is 1 calendar year. Table ES-2. Army Studies on the Effect of Corrosion on Availability Study year a Data baseline Study segment Annual corrosion-related s Average corrosionrelated s per system FY2008 and FY2009 Army aviation 71, FY2008 FY2010 Army ground vehicles 662, a Study period is 1 calendar year. As noted earlier, the overall Army ground vehicle corrosion-related costs equate to an average of 12.6 percent of total annual Army ground vehicle maintenance costs. This percentage is the lowest of the DoD weapon systems corrosion-related cost studies completed thus far. The overall corrosion-related cost for Army ground vehicles as a percentage of maintenance cost has decreased steadily since the initial study in FY2005. We calculated these most recent cost estimates by aggregating the corrosionrelated costs of 986 types of Army ground vehicles, major systems, and support equipment. The scope of our study accounts for an inventory of more than 501,000 vehicles and systems reporting maintenance cost, and more than 391,000 vehicles 3 and major systems reporting non-availability. To our knowledge, these data include all types of Army ground vehicles. We then segregated corrosion-related costs for Army ground vehicles within three separate schemas: 1) depot or field-level maintenance (DM or FLM) costs, as well as costs outside normal maintenance reporting (ONR); 2) corrective versus preventive maintenance costs; and 3) costs related to structure or parts. We distributed the $1.606 billion corrosion-related costs within each schema to the extent we were able to classify them according to their respective maintenance records. Table ES-3 shows both the costs and percentages within each schema for FY Not all ground vehicle systems that incur maintenance costs are reportable from an availability standpoint. This accounts for the difference between the cost and availability ground vehicle totals. iv

5 Executive Summary Table ES-3. Nature of Corrosion-Related Costs for Army Ground Vehicles (FY2010) Schema for corrosion-related costs Corrosion-related cost (in millions) Percentage within schema total 1 Depot maintenance (DM) $ Field-level maintenance (FLM $ Maintenance outside normal reporting $ $1, Corrective maintenance $ Preventive maintenance $ Unable to classify $252 $1, Structure $ Parts $ Unable to classify $365 $1, Together, DM and FLM account for 86.3 percent ($1.387 billion) of the total combined corrosion-related cost for Army ground vehicles within schema group 1 ($1.606 billion). Corrosion-related DM costs exceed corrosion-related FLM costs in terms of both total cost and percentage of maintenance. Corrosion-related DM costs ($964 million) are more than twice the corrosion-related FLM costs ($423 million). In addition, the corrosion-related DM cost as a percentage of total Army ground vehicle DM is 25.2 percent, significantly exceeding the same FLM measure, 5.9 percent (see Table ES-4). Table ES-4. Comparison of Corrosion-Related Cost for DM and FLM Type of maintenance Maintenance cost (in millions) Corrosion-related cost (in millions) Percentage of corrosionrelated maintenance cost Depot $3,822 $ Field-level $7,218 $ The remaining $219 million for corrosion-related ONR costs for Army ground vehicles in schema 1 is significant because it indicates the maintenance performed on vehicles by operators with a non-maintenance occupation specialty is typically not recorded in standard maintenance systems. Costs incurred to prevent corrosion (e.g., painting, inspection, coating, and quality assurance) were higher ($748 million, or 55.2 percent within schema 2) than corrosionrelated corrective costs ($606 million, or 44.8 percent within schema 2). Structurerelated costs ($704 million, or 56.7 percent within schema 3) were higher than partsrelated costs ($537 million, or 43.3 percent within schema 3). v

6 We also stratified the corrosion-related costs of Army ground vehicle systems by line item number (LIN), total cost, and cost per item. We then ranked the systems by their total and average corrosion-related costs. Vehicles that merit the most attention have both a high total cost of corrosion and a high average cost of corrosion per vehicle. We identified eight ground vehicles that are among the top 20 contributors for both categories corrosion-related costs based on FY2010 results (see Table ES-5). Table ES-5. Vehicles with Both the Highest Average Corrosion-Related Cost per Vehicle and Corrosion-Related Cost (FY2010) Corrosion-related cost LIN Description (in millions) Top 20 rank by total Average cost Top 20 rank by average T13168 T13305 Tank combat full tracked 120mm gun M1A1 Tank combat full tracked 120mm gun M1A2 $129.0 million 2 $98,000 3 $62.6 million 3 $134,000 2 H57642 Howitzer medium self-propelled $34.3 million 5 $50,000 7 F40375 R50681 G78306 T96883 Fighting vehicle full tracked infantry high survivability Recovery vehicle full tracked: medium Generator set: diesel trl./mtd. 60Kw 50/60Hz Trailer flatbed: 5-ton 4-wheel general purpose $32.2 million 6 $22, $21.4 million 9 $19, $13.9 million 15 $32,000 9 $25.8 million 8 $12, YF200R Mine resistant vehicle Cat. 1 $10.7 million 18 $26, Two Abrams tank models, M1A1 and M1A2, were the second and third highest contributors to both average and total corrosion-related cost, making them the greatest contributors from a combined ranking standpoint. Interestingly, these two LINs have been among the top 10 for corrosion-related cost both total and average for each of the 6 study years. Corrosion-related s (662,649 days) account for 6.6 percent of the total nonavailability reported. 4 We show the highest 10 contributors to corrosion-related s in Table ES-6. Two high-mobility multipurpose wheeled-vehicle (HMMWV) variants LINs T61494 and T07679 show the highest total of corrosion-related s (81,156 and 66,464) among all Army ground vehicles. 4 We measured the total corrosion-related non-available days in a manner consistent with how the Army reports its NMC results with the exception of depot NMC. The Army s policy is to transfer property accountability when a ground vehicle enters DM. As a result, the Army typically does not capture NMC days for these vehicles. We established a separate non-availability calculation for vehicles that incurred DM based on production schedules and maintenance records provided by the Anniston (Alabama) and Red River (Texas) Army depots. vi

7 Executive Summary Table ES-6. Top 10 Contributors to Corrosion-Related Non-Availability by LIN (FY2010) Non-available days LIN LIN nomenclature No. of vehicles related to corrosion Percentage related to corrosion Per vehicle corrosionrelated average T61494 Truck utility HMMWV cargo/troop carrier 27, ,540 81, % 3 T07679 Truck utility heavy variant HMMWV 40,479 1,261,536 66, % 2 X40794 Truck cargo drop side 5-ton 6 6 9, ,161 31, % 3 T60081 Truck cargo 4 4 LMTV W/E 11, ,180 27, % 2 T95992 Trailer cargo high mobility 3/4-ton 16, ,571 21, % 1 W98825 Trailer tank water 400 gallon 1-1/2-ton 2-wheel 7, ,406 21, % 3 B83002 Bed cargo demount 17, ,443 17, % 1 X59326 Truck tractor 5-ton 6 6 W/E 4, ,013 15, % 4 W95537 Trailer cargo: 3/4-ton 2-wheel 8, ,466 13, % 2 T92242 Truck utility carrier armored 1-1/4-ton 4 4 6, ,865 13, % 2 The average corrosion-related s per year for Army ground vehicles range from 1 day to 4 days, which indicates the Army rarely places a vehicle into NMC status for corrosion-related reasons. In comparison, the average corrosion-related s for Army aviation and missiles is 17 days. Preventive maintenance accounts for the majority of the total corrosion-related s. Inspection and testing are, by far, the major contributors to corrosion-related total s; however, this is most likely an anomaly related to a lack of detail in field-level maintenance records. Table ES-7 shows a breakdown of the preventive maintenance s. Table ES-7. Non-Availability Related to Preventive Maintenance by Activity (FY2010) Activity Number of total preventive s Percentage of total preventive s Inspect/test (troubleshoot, NDI, check, service, period, scheduled, phased) 304, % Treat (corrosion treatment, prime, paint, coat) 139, % Clean (wash, degrease, decontaminate, blast, bath, buff) 15, % Preserve (lubricate, package, wrap) % 460, % vii

8 The relationship between cost and availability is not strong for Army ground vehicle types with the high corrosion-related cost (see Table ES-8). Only 3 of the top 10 ground vehicle types with the highest corrosion-related cost LINs T61494, T07679, and X40794 are also within the top 10 highest contributors to corrosion-related s. Table ES-8. Corrosion-Related Cost and s by LIN (FY2010) Corrosion-related costs Corrosion-related s LIN LIN nomenclature Rank (in millions) As a percentage of total maintenance Rank (days) As a percentage of total s T61494 T13168 T13305 T07679 Truck utility HMMWV cargo/troop carrier Tank combat full tracked 120mm gun M1A1 Tank combat full tracked 120mm gun M1A2 Truck utility heavy variant HMMWV 1 $ % 1 81, % 2 $ % 26 5, % 3 $ % 55 2, % 4 $ % 2 66, % H57642 Howitzer medium self 5 $ % 76 1, % F40375 L43664 Fighting vehicle full tracked infantry high survivability Launch M60 series 40 and 60 FT bridge 6 $ % 23 5, % 7 $ % 89 1, % X59326 Truck tractor 5-ton $ % 45 3, % R50681 X40794 Recovery vehicle full tracked medium Truck cargo drop-side 5-ton $ % 59 2, % 10 $ % 3 31, % The relationship between corrosion-related cost and corrosion-related s from a percentage standpoint is only slightly stronger. This most likely is due to the overall low level of corrosion-related s for all ground vehicles. Corrosion does not represent a significant risk for operating ground vehicles. viii

9 Contents Chapter 1 Background and Analysis Method STUDY OBJECTIVES BACKGROUND Army Maintenance Structure Ground Vehicle DM Corrosion-Related Army Organization Vehicle List ANALYSIS METHOD Summary of Cost Estimation Method Summary of Availability Estimation Method Study Method Limitations Data Structure and Analysis Capabilities REPORT ORGANIZATION Chapter 2 Determining the Cost of Corrosion COST OF CORROSION FOR DM (NODES A AND B ) Cost of Corrosion for Organic DM (Nodes A1 and B1 ) Cost of Corrosion for Commercial DM (Nodes A2 and B2 ) COST OF CORROSION FOR FLM (NODES C AND D ) Top-Down Analysis Bottom-Up Analysis COST OF CORROSION FOR ONR (NODES E, F, G ) Labor of Non-Maintenance Ground Vehicle Operators (Node E ) Corrosion-Related Cost Tree for Army Ground Vehicles (Nodes A through G ) SUMMARY AND ANALYSIS Corrosion-Related Costs by Army Ground Vehicle Type Corrosion-Related Costs by GWBS COST OF CORROSION CORRECTIVE VS. PREVENTIVE COST OF CORROSION PARTS VS. STRUCTURE ix

10 Chapter 3 Determining Corrosion s Effect on Availability ARMY AVAILABILITY REPORTING Reporting Metrics Reporting Results UNREPORTED NON-AVAILABILITY NON-AVAILABLE DAYS DETERMINING THE EFFECT OF CORROSION ON AVAILABILITY Analysis of NMC and UNA Status Analysis of Corrosion-Related Maintenance Summary Results Effect of Corrosion on Availability Corrosion-Related s ANALYSIS OF CORROSION-RELATED S Corrosion-Related Non-Availability by LIN Corrosion-Related Non-Availability by System Corrosion-Related Non-Availability by Nature of Work Chapter 4 Relationship between Corrosion-Related Cost and Non-Availability CORROSION-RELATED RELATIONSHIP BY LIN CORROSION-RELATED COST AND NON-AVAILABILITY BY GWBS CORROSION-RELATED COST AND NON-AVAILABILITY BY NATURE OF WORK Appendix A Army Ground Vehicle Equipment Appendix B Army Corrosion Cost Data Sources by Node Appendix C Corrosion-Related Keywords Appendix D Ground Vehicle Work Breakdown Structure Coding Appendix E Army Survey Results Appendix F Corrosion by LIN, FY2008 through FY2010 Appendix G Abbreviation x

11 Contents Figures Figure 1-1. Army Organizational Structure Figure 1-2. Army Materiel Command Structure and Depot Maintenance Responsibility Figure 1-3. Army Corrosion Prevention and Control Organization Figure 1-4. Army CCPE Organization Figure 1-5. Preventive and Corrective Corrosion-Related Cost Curves Figure 1-6. The Relationship between Availability and Spending on Corrosion-Related Maintenance Figure 1-7. Availability over Time at Zero Corrosion-Related Spending Figure 1-8. Data Structure and Methods of Analysis Figure 2-1. Army Ground Vehicle Corrosion-Related Cost Tree (FY2010) Figure 2-2. DM Cost of Corrosion for Army Ground Vehicles ($ in millions) Figure 2-3. Cost of Corrosion for Army Ground Vehicles Organic DM ($ in millions) Figure 2-4. Army Ground Vehicle Organic DM Labor Cost Tree ($ in millions) Figure 2-5. Example of a Corrosion-Related Keyword Search from Army Organic Depot Databases Figure 2-6. Organic DM Material Costs for Army Ground Vehicles ($ in millions) Figure 2-7. Cost Tree for Commercial DM ($ in millions) Figure 2-8. Example of Determining Corrosion-Related Commercial DM Costs for HMMWV Using Corrosion-Related Ratios Figure 2-9. FLM Costs for Army Ground Vehicles ($ in millions) Figure Organic FLM Labor Costs for Army Ground Vehicles ($ in millions) Figure Organic FLM Material Costs for Army Ground Vehicles ($ in millions) Figure Commercial FLM Cost Tree for Army Ground Vehicles ($ in millions) Figure Army Ground Vehicle Cost of Corrosion for ONR ($ in millions) Figure Cost of Corrosion for Army Ground Vehicles Figure Largest Contributor of Corrosion to Army Ground Vehicles LIN T61494, HMMWV Utility Truck (1-1/4 Ton, M998) Figure LIN T13305: M1A2 Abrams Tank Figure 3-1. Calculating Non-Available Days xi

12 Tables Table 1-1. DoD Cost-of-Corrosion Studies to Date and Future Efforts Table 1-2. DoD Corrosion-Related Availability Studies to Date and Future Efforts Table 2-1. Cost of Corrosion for Army Ground Vehicle at Organic and Commercial Depots ($ in millions) Table 2-2. Example of Allocation Material Costs to Labor Records Table 2-3. GWBS Codes for End-Item Type Table 2-4. GWBS Codes for Maintenance Activity Table 2-5. GWBS Maintenance System Codes Table 2-6. Example of GWBS Subsystem Codes and Descriptions for System Table 2-7. Staffing Levels and Costs by Army Component for Organic FLM Personnel (FY2010) Table 2-8. Parts-Related Budget for Army Organic FLM Material (FY2010) Table 2-9. Number of Personnel and Costs by Army Component for Ground Vehicle Field-Level Maintainers Table Parts-Related Budget for Army Ground Vehicle Materials (FY2010) Table Ratios for Sample Commercial FLM LINs Table Number of Army Ground Vehicles by Vehicle and Army Component Table Number of Army Ground Vehicles Operated by Non-Maintenance Personnel by Type and Military Component Table Summary of Time Spent on Corrosion-Related Maintenance by Non-Maintenance Personnel Who Operate Ground Vehicles Table Corrosion-Related Cost of Non-Maintenance Personnel Who Operate Ground Vehicles Table Trend Analysis of Corrosion-Related DM and FLM Costs for Army Ground Vehicles in FY2008 FY Table Corrosion-Related Costs for Army Ground Vehicles by Node and Sub-Node Table Top 10 Contributors to the Corrosion-Related Costs of Army Ground Vehicles (FY2010) Table Top 10 LINs by Average Corrosion-Related Cost per Vehicle for FY Table Army Vehicles with the Highest Average Corrosion-Related Cost per Vehicle and Corrosion-Related Cost (FY2010) Sorted by Combined Rank xii

13 Contents Table Corrosion-Related Costs and Cost Ranking by Maintenance Activity (Second GWBS Character) Table Top 10 Corrosion-Related Cost Ranking by Major System Characters of GWBS Table Top 10 Hull or Frame (GWBS Code 02 ) Cost by LIN ($ in millions) Table Corrosion-Related Corrective and Preventive Costs for Army Ground Vehicles Table Corrosion-Related Costs for Army Ground Vehicles by Parts vs. Structure Table 3-1. Army Availability Reporting Metrics Table 3-2. Example of Army Availability Reporting Table 3-3. FY2010 Army Availability Reporting for the 20 Army Ground Vehicle LINs with the Highest Average Inventory Table 3-4. FY2010 Army Availability Reporting of the Number of NMC Days for the 20 Army Ground Vehicle LINs with the Highest Average Inventory Table 3-5. Number of UNA Days for the 20 Ground Vehicle LINs with the Highest Average Inventory (FY2010) Table 3-6. s for the 20 Army Ground Vehicle LINs with the Highest Average Inventory (FY2010) Table 3-7. Examples of Calculating the Effect of Corrosion on s Table 3-8. FY2010 Maintenance and Availability for Army Ground Vehicles Table 3-9. Summary of Corrosion-Related s and NMC Days for Army Ground Vehicles (FY2010) Table Corrosion-Related s Table Effect of Corrosion on FLM s for the 10 Army Ground Vehicles with the Highest s (FY2010) Table Corrosion-Related DM UNA Days for Army Ground Vehicles with the Highest UNA Days (FY2010) Table Corrosion-Related s for Army Ground Vehicles with the Highest s (FY2010) Table Effect of Corrosion on s by the Army Ground Vehicles with the Highest s (FY2010) Table Effect of Corrosion on s for the Hull/Frame System (GWBS System 02) by Vehicles with the Highest Corrosion-Related s (FY2010) Table Effect of Corrosion on FLM NMC Days by Nature of Work (FY2010) Table Effect of Corrosion on DM UNA Days by Nature of Work (FY2010) xiii

14 Table Effect of Corrosion on by Nature of Work (FY2010) Table Corrosion-Related s by Preventive Maintenance Activity (FY2010) Table 4-1. Corrosion-Related Cost and s by LIN (FY2010) Table 4-2. Average Corrosion-Related Cost and by LIN (FY2010) Table 4-3. Corrosion-Related Cost and s by the 10 Army Ground Vehicles with the Highest Corrosion-Related Cost Systems (FY2010) Table 4-4. Corrosion-Related Cost and by Nature of Work (FY2010) xiv

15 Chapter 1 Background and Analysis Method Congress, concerned with the high cost of corrosion, enacted legislation in December 2002 that assigned the Office of the Under Secretary of Defense for Acquisition, Technology and Logistics (USD[AT&L]) the policy and oversight responsibilities for preventing and mitigating the effects of corrosion on military equipment and infrastructure. 1 To perform its mission of preventing and mitigating corrosion, fulfilling congressional requirements, and responding to Government Accountability Office (GAO) recommendations, the USD(AT&L) established the Corrosion Prevention and Control Integrated Product Team (CPC IPT), a cross-functional team of personnel from all the military services as well as representatives from private industry. In response to a GAO recommendation to develop standardized methodologies for collecting and analyzing corrosion cost, readiness, and safety data, 2 the CPC IPT created standard methods to measure both the cost 3 and availability 4 impact of corrosion for DoD s military equipment and infrastructure. In April 2006, the CPC IPT published the results of the first corrosion-related cost study, 5 which used the standard corrosion-related cost estimation method. We present the results of the cost studies in Table 1-1 and the availability studies in Table 1-2. More recently, LMI was tasked by the CPC IPT with measuring both the corrosionrelated cost and the effect of corrosion on weapon system availability for all DoD aviation and ground vehicle assets. 1 The Bob Stump National Defense Authorization Act for Fiscal Year 2003, Public Law , 2 December 2002, p. 201; Public Law was enhanced by Public Law , The National Defense Authorization Act for Fiscal Year 2008, Section 371, 28 January GAO, Opportunities to Reduce Corrosion Costs and Increase Readiness, GAO , July 2003, p LMI, Proposed Method and Structure for Determining the Cost of Corrosion for the Department of Defense, Report SKT40T1, Eric F. Herzberg, August DoD CPC IPT, The Impact of Corrosion on the Availability of DoD Weapon Systems and Infrastructure, October LMI, The Annual Cost of Corrosion for Army Ground Vehicles and Navy Ships, Report SKT50T1, Eric F. Herzberg et al., April

16 The current annual cost of corrosion for DoD is $20.8 billion. We derived this total by aggregating the most recent cost of each study segment (less the totals from the Coast Guard aviation and vessels study). 6 Table 1-1. DoD Cost-of-Corrosion Studies to Date and Future Efforts Study year a Data baseline Study segment Annual cost of corrosion FY2004 Army ground vehicles $2.0 billion FY2004 Navy ships $2.4 billion FY2005 DoD facilities and infrastructure $1.8 billion FY2005 Army aviation and missiles $1.6 billion FY2005 Marine Corps ground vehicles $0.6 billion FY2005 FY2006 Navy and Marine Corps aviation $2.6 billion FY2005 FY2006 Coast Guard aviation and vessels $0.3 billion FY2006 FY2007 Air Force $3.6 billion FY2006 FY2007 Army ground vehicles $2.4 billion FY2006 FY2007 Navy ships $1.8 billion b FY2006 DoD other equipment $5.1 billion FY2007 FY2008 Marine Corps ground vehicles $0.5 billion DoD facilities and infrastructure $1.9 billion Army aviation and missiles $1.4 billion FY2008 FY2009 Air Force $4.5 billion Navy and Marine Corps aviation $2.6 billion FY2008 FY2010 Navy ships $3.2 billion FY2008 FY2010 Army ground vehicles $1.6 billion FY2009 FY2011 Repeat Pending a Study period is 1 calendar year. b This represents a change from an estimate from our 2010 report ($2.5 billion). This new estimate accounts for a recent adjustment in the algorithm we use to identify Navy ship corrosionrelated costs. Although this new estimate is closer to reality, it likely remains an under-estimate because we lacked full access to organic shipyard data for surface ships. 6 We disregarded the Coast Guard aviation and vessels total of $0.3 billion in this study, because they are part of the Department of Homeland Security. 1-2

17 Background and Analysis Method Table 1-2. DoD Corrosion-Related Availability Studies to Date and Future Efforts Study year a Data baseline Study segment Annual non-availability due to corrosion Avg. annual corrosion-related s per vehicle FY2008 FY FY2008 FY2010 FY2008 FY2010 Note: = non-available days. a Study period is 1 calendar year. Army aviation 1,717,898 hours 17.4 days Navy and Marine 95,237 days 26.5 days Corps aviation Air Force 2,102,476 hours 15.9 days Army ground vehicles 662,649 days 1.7 days Marine Corps ground vehicles Pending Pending We completed our most recent studies on the effects of corrosion on the maintenance cost and availability of DoD aviation assets in The availability studies represented the first effort of its kind to quantify the effect corrosion has on weapon systems as a result of their non-availability due to maintenance activities. Future cost and availability studies will produce updates to help the services identify trends over time. This report presents the results of our analysis on the effects of corrosion on the maintenance cost and availability of Army ground vehicles. This is the first study to quantify the effects of corrosion on the availability of ground vehicles. STUDY OBJECTIVES We had five specific objectives for this study: 1. Estimate the most recent annual sustainment cost of corrosion for Army ground vehicle assets. 2. Estimate the most recent corrosion-related effect on availability for Army ground vehicle assets. 3. Identify corrosion cost reduction opportunities for Army ground vehicle assets. 4. Identify corrosion-related availability improvement opportunities for Army ground vehicle assets 5. Analyze trends and draw conclusions using both the initial and most recently concluded Army ground vehicle cost-of-corrosion studies. 1-3

18 BACKGROUND The U.S. Army Materiel Command (AMC) is the Army organization that has overall responsibility for procuring weapon systems and components and for maintaining readiness for all Army equipment. The Office of the Army Deputy Chief of Staff (DCS) for Logistics (G-4) establishes maintenance policy for combat and tactical vehicles and their associated systems. Figure 1-1 highlights these organizations. Figure 1-1. Army Organizational Structure Secretary of the Army Army staff Direct reporting units Army commands and component commands Secretariat staff DCS G-4 TRADOC Chief of Engineers AMC ACSIM FORSCOM Other Army staff Other Army staff Other Army commands Other component commands Note: ACSIM = Assistant Chief of Staff for Installation Management (U.S. Army); FORSCOM = United States Army Forces Command; TRADOC = Training and Doctrine Command. Maintenance strategies for most combat and tactical vehicles are the responsibility of the respective program managers and the U.S. Army Tank-Automotive and Armaments Command (TACOM) Life Cycle Management Command (LCMC). Research, development, and engineering support is provided by the Tank- Automotive Research, Development, and Engineering Center of the Research, Development, and Engineering Command (RDECOM). Maintenance strategies for some of the associated weapon systems for combat vehicles, such as the Patriot launcher, are the responsibility of the Aviation and Missiles Command (AMCOM) LCMC. 1-4

19 Background and Analysis Method These three organizations, highlighted in yellow in Figure 1-2, are subordinate commands of AMC. Figure 1-2. Army Materiel Command Structure and Depot Maintenance Responsibility U.S. AMC U.S. AFSC U.S. Army CECOM LCMC Tobyhanna Communications systems U.S. Army AMCOM LCMC Corpus Christi Aviation Letterkenny Tactical missiles Primary maintenance and engineering responsibility for Army ground vehicle platforms U.S. RDECOM U.S. Army TACOM LCMC Red River Bradley vehicles Anniston Wheeled/tracked vehicles Note: AFSC = Army Field Support Command; CECOM = Communications and Electronics Command. Army Maintenance Structure Army maintenance tasks and costs are typically categorized as either depot or field-level: Depot maintenance (DM) is the most complex repair work performed by civilian artisans in a government-owned and -operated Army facility (called an organic depot) or at a commercial contractor facility. Field-level maintenance (FLM) includes the AFSC, a subordinate command of AMC (see Figure 1-2). AFSC provides maintenance and supply technicians to soldiers in the field and in direct support of a particular system or end item. For tracked and wheeled vehicles, AFSC is the intermediary between TACOM and the soldier in the field. Operating units and in-theater sustainment organizations perform fieldlevel maintenance. These capabilities can be quite extensive and may include remove-and-replace operations for components and subcomponents. Major amounts of Army FLM are performed at more than 100 different posts, camps, and stations throughout the world. 1-5

20 Ground Vehicle DM Maintenance at the five Army depots is typically managed according to the reporting relationships shown in Figure 1-2 (highlighted in green). However, there are exceptions depending on the major assemblies and where they are maintained. For example, the Multiple Launch Rocket System (MLRS) is maintained at Red River with the maintenance strategy determined by AMCOM instead of TACOM as Figure 1-2 shows. The vehicle platform for the MLRS is maintained at Anniston Army depot under the management of TACOM. For most weapon systems, however, the relationships are as shown in Figure 1-2. The following two TACOMmanaged Army depots maintain the majority of ground vehicle platforms: Anniston Army Depot (A), Anniston, AL, is the primary Army installation with DM responsibility for wheeled and tracked vehicle platforms. Red River Army Depot (RRAD), Texarkana, TX, has DM responsibility for the Bradley family of vehicles. Two other Army depots perform DM on Army ground equipment and associated weapon systems: Letterkenny Army Depot (LEAD), Chambersburg, PA, is managed by the AMCOM LCMC. In addition to ground vehicles, LEAD is also responsible for the maintenance of tactical missiles and associated ground support equipment. Tobyhanna Army Depot (TYAD), Tobyhanna, PA, is managed by the U.S. Army CECOM LCMC. TYAD is responsible for communication and satellite systems, communication shelters, and much of the associated ground support equipment on which the shelters are mounted. We focused our research and analysis of the Army s organic DM on the aforementioned depots A, RRAD, LEAD, and TYAD as these depots are the ones with primary responsibility for DM of Army ground vehicles. The Corpus Christi Army Depot does not perform DM on ground vehicles. DoD assigns the Marine Corps limited DM responsibility for certain Army tactical, combat, and engineering equipment that are similar to existing Marine Corps equipment. The two Marine Corps depots with DM responsibility for Army ground systems are Marine Corps Logistics Base Albany, Albany, GA, and Marine Corps Logistics Base Barstow, Barstow, CA. 1-6

21 Background and Analysis Method Corrosion-Related Army Organization The National Defense Authorization Act for 2009, Section 905, Corrosion Control and Prevention Executives (CCPE) for the military departments, requires that each military department designate a CCPE. It also lists specific responsibilities for those designees. On January 21, 2009, the Army designated the Deputy Assistant Secretary of the Army for Acquisition, Policy, and Logistics (DASA[AP&L]) as the Army Corrosion Prevention and Control Executive. As Figure 1-3 depicts, the DASA(AP&L) is located within the office of the Assistant Secretary of the Army for Acquisition, Logistics and Technology (ASA[ALT]). Figure 1-3. Army Corrosion Prevention and Control Organization Note: ASA (IE&E) = Assistant Secretary of the Army for Installations, Energy, and Environment; CERL = Construction Engineering Research Laboratory; ERDC = Engineering Research and Development Center; IMCOM = Installation Management Command; PEO = Program Executive Officer; PM = Program Manager; USACE = U.S. Army Corps of Engineers. 1-7

22 Figure 1-4 shows the Army CCPE organizational chart as well as other key personnel in the Army corrosion organization. Headquarters Army Materiel Command (HQAMC) has overall responsibility to establish policy concerning corrosion management within the Army to assist the CCPE fulfill his responsibilities. The Army CCPE is supported by the Army Corrosion Board, which includes representatives from the Army staff, Army commands, Army component commands, and Army secretariat staff. The working arm of the Corrosion Board is the Army corrosion integrated product team (CIPT), which includes representatives from 16 Army offices, components, and commands. The CIPT forms corrosion-prevention advisory teams (CPATs) at the weapon systems level during the acquisition process for new and pending acquisitions to help ensure design decisions take potential corrosion-related issues into account. Figure 1-4. Army CCPE Organization Army CCPE ASA(ALT) ASA(ALT) ASA(IE&E) AMC TRADOC FORSCOM Army Corrosion Board DCS G-4 ACSIM PEOs DCS G-4 ACSIM USACE LCMCs RDECOM LIA IMCOM TRADOC USAR ATEC ERDC FORSCOM NGB AMC-FAC DUSA-TE Army CIPT CPAT CPAT CPAT CPAT CPAT CPAT CPAT CPAT Note: AMC-FAC = Army Material Command Forward Air Control; ATEC = Army Test and Evaluation Command; DUSA-TE = Deputy Under Secretary of the Army Test and Evaluation; LIA = Logistics Innovation Agency; NGB = National Guard Bureau; USAR = U.S. Army Reserve. 1-8

23 Background and Analysis Method Vehicle List The Army also employs corrosion assessment teams (CATs) to inspect and assess Army equipment. Vehicles deemed in need of corrosion-related maintenance receive a CAT review that may result in surface preparation and repairs at one of its corrosion treatment centers. Corrosion treatment centers are in the following locations with the following capabilities: Fort Polk, Louisiana (both corrosion prevention and control [CPC] applications and surface repair) Fort Hood, Texas (both CPC application and surface repair) Schofield Barracks, Hawaii (both CPC application and surface repair) Okinawa, Japan (both CPC application and surface repair) Camp Carroll, South Korea (both CPC application and surface repair) Fort Stewart, Georgia (both CPC application and surface repair) Charleston Seaport, South Carolina (both CPC application and surface repair) Fort Bragg, North Carolina (CPC application only) Fort Lewis, Washington (CPC application only) Bluegrass Station, Kentucky (CPC application only). Per the most recent data available, the corrosion treatment center program has treated more than 64,000 pieces of equipment and repaired more than 6,400 since FY The scope of this study includes all wheeled, tracked, and towed Army vehicles. There are 986 different types of vehicles or vehicle systems at the line item number (LIN) level of detail, totaling more than 501,000 individual pieces of equipment. We compiled inventories for Army wheeled, tracked, and towed ground vehicles at the LIN and national item identification number (NIIN) levels of detail using data supplied by the AMC Logistics Support Activity (LOGSA) Logistics Analysis Support Division. We incorporated non-unit authorizations and assets (for example, Army prepositioned stocks), including war reserves and operational projects, operational readiness float (ORF), and repair cycle float (RCF). In Appendix A, we provide a complete listing of all Army ground vehicles included in this study. 7 VSE Corporation, Impact of Corrosion on Ground Vehicles, Field Site Operations, Greg Brock, briefing, February 2010, 1-9

24 ANALYSIS METHOD We applied the same analysis methods to Army ground vehicle assets as those we outlined in the first corrosion-related study on Army ground vehicles that we produced for the CPC IPT. For the sake of brevity, we only provide a brief description of those methods here. Chapter 1 of that first report, The Annual Cost of Corrosion for Army Ground Vehicles and Navy Ships, contains more information on how we measure the cost of corrosion. 8 Chapter 2 of a later study, The Impact of Corrosion on the Availability of DoD Weapon Systems and Infrastructure, contains more information on how we measure the effect of corrosion on availability. 9 To ensure consistency, we used the definition of corrosion that Congress developed: The deterioration of a material or its properties due to a reaction of that material with its chemical environment. 10 We have applied this definition of corrosion to each of the corrosion-related studies we produce for DoD. Our estimation method for both corrosion-related cost and availability impact segregates maintenance activities by their source and nature, using the following three schemas: Depot maintenance corrosion-related costs incurred while performing depot maintenance Field-level maintenance corrosion-related costs incurred while performing organizational or intermediate maintenance Outside normal maintenance reporting (ONR) corrosion-related costs not identified in traditional maintenance reporting systems Corrective maintenance costs incurred while addressing an existing corrosionrelated problem 11 Preventive maintenance costs incurred while addressing a potential future corrosion-related issue Structure-related costs direct costs of corrosion costs incurred by the body frame of a system or end item Parts-related costs direct costs of corrosion incurred by a removable part of a system or end item. 8 LMI, The Annual Cost of Corrosion for Army Ground Vehicles and Navy Ships, Report SKT50T1, Eric F. Herzberg et al., April LMI, The Impact of Corrosion on the Availability of DoD Weapon Systems and Infrastructure, Report DL907T1, Eric F. Herzberg, October Public Law , p According to International Organization for Standardization 9000:2000, preventive costs involve steps taken to remove the causes of potential nonconformities or defects. Preventive actions address future problems. Corrective costs are incurred when removing an existing nonconformity or defect. Corrective actions address actual problems. 1-10

25 Background and Analysis Method Summary of Cost Estimation Method The method we used to estimate costs focused on the direct costs of material, labor, and services, as well as some indirect costs, such as research, development, and evaluation (RDT&E), facilities, and purchase card expenditures (i.e., those materials and services purchased using a charge card). To estimate the overall corrosion-related cost for Army ground vehicles, we used a top-down to bottom-up approach. For the top-down portion, we use summarylevel cost and budget documents to establish spending ceilings for DM and FLM at both organic and commercial maintenance depots and facilities. This establishes a maximum cost of corrosion for each of these maintenance areas. For the bottom-up portion, we use detailed work order records to aggregate any specific occurrences of corrosion-related maintenance and activity. This establishes a minimum level of corrosion-related costs in each activity area. Where necessary, we use statistical methods to bridge any significant gaps between the top-down and bottom-up figures to derive a final estimate for the cost of corrosion in each maintenance area. It is useful to determine the ratio between corrosion-related corrective maintenance costs and corrosion-related preventive maintenance costs. This is typically an inverse relationship; the higher the amount of spending on preventive measures, the lower the corrosion-related corrective spending will be. Over time, it is usually more expensive to fix a problem than it is to prevent one, but it is also possible to overspend on preventive measures. Classifying the cost elements as either corrective or preventive helps decision makers strike the appropriate balance between the two categories and minimize the overall cost of corrosion. We illustrate this visually in Figure 1-5. Figure 1-5. Preventive and Corrective Corrosion-Related Cost Curves Cost of corrosion cost of corrosion curve Minimum overall cost of corrosion Preventive cost curve Corrective cost curve High Ratio of preventive-to-corrective cost Low 1-11

26 Summary of Availability Estimation Method To estimate the overall effects of corrosion on the availability of Army ground vehicles, we use a similar combined top-down to bottom-up approach as our method for estimating corrosion-related costs. For the top-down portion, we use the monthly data the Army reported for notmission-capable hours for each individual ground vehicle. This approach establishes a maximum ceiling for total corrosion-related non-available hours for organic and commercial DM and FLM activities. For the bottom-up portion, we use detailed work order records to aggregate any specific occurrences of corrosion-related maintenance activities. We identify those records that accounted for the reported top-down, non-available hours within the bottom-up data. We then aggregate the corrosion-related non-available hours associated with only these maintenance records. This approach establishes a minimum level of corrosion-related non-availability in each maintenance activity area (i.e., organic DM, commercial DM, organic FLM, and commercial FLM). Where necessary, we use statistical methods to bridge any significant gaps between the top-down and bottom-up figures to derive a final estimate for the effects of corrosion on non-availability within each of these maintenance areas. As was the case for the cost portion of the study, we classified each maintenance record into its preventive or corrective nature of work. It is also useful to determine the relationship between corrosion-related spending and corrosion-related availability, as Figure 1-6 illustrates. Figure 1-6 displays two relationships. The first is the relationship between preventive maintenance spending and corrective maintenance spending. This is typically an inverse relationship; the higher the amount of spending on preventive measures, the lower the corrosion-related corrective spending will be. The amount of preventive spending drives the resultant corrective actions. 1-12

27 Background and Analysis Method Figure 1-6. The Relationship between Availability and Spending on Corrosion-Related Maintenance Spending on corrosion Preventive cost curve Point of minimum non-available days Number of non-available days Corrective cost curve Low Effect of corrosion on availability Potentially high The second relationship is the amount of both types of corrosion-related maintenance spending and their effect on availability. An extreme amount of spending on preventive measures that does not result in a reduction of corrective maintenance actions will have an overall negative impact on availability. This result is similar to the effect of changing the oil in a car too often (say, monthly rather than quarterly). This increased frequency of preventive maintenance has only a negligible effect on improving the reliability of the car s engine, yet it reduces the car s availability during the time it is undergoing the maintenance. Of course, spending too little on preventive measures will eventually result in greater corrective spending. This, too, can have a negative effect on availability. This is only a potential negative impact, because organizational units could increase their efficiency when dealing with unplanned corrective requirements, or they could take exceptional measures such as working an extensive amount of unplanned maintenance hours to minimize the effects of corrosion-related corrective actions on availability. The point of minimum s on the curve in Figure 1-6 represents a theoretically optimum preventive-to-corrective maintenance ratio. It is also useful to examine the availability-related effects of not spending on corrosion maintenance. Figure 1-7 shows the effect on availability of not spending any maintenance funds for corrosion. This initial impact is minimal; however, as corrosion starts to degrade all Army ground vehicles over the same period of time, the negative effect on availability accelerates and creates the potential for the compound effect of multiple vehicles undergoing maintenance simultaneously. 1-13

28 Figure 1-7. Availability over Time at Zero Corrosion-Related Spending Effect of corrosion on availability L(X) Amount of non-available days due to corrosion Note: L(0) = initial level of corrosion-related availability; L(x) = level of corrosion-related impact on readiness at time interval x; T(0) = start time; T(x) = time interval x. Study Method Limitations The combined top-down and bottom-up approach, although a useful and comprehensive estimating technique, has its limitations. The most significant of these result from the lack of detailed Army maintenance descriptions and coding, gaps in available data, and the lack of commercial depot records. LACK OF DETAILED TEXT DESCRIPTIONS AND CODING DATA GAPS L(0) T(0) Time To find corrosion-related maintenance records, we searched on both the Army s manually entered corrective action descriptions and any malfunction and maintenance action codes within the data records. Although Army maintenance records contain a number of the necessary data elements to conduct this analysis, they do not contain malfunction codes. In addition, some maintenance records have an insufficient amount of descriptive text, which makes identifying the effect of corrosion, if any, within each data record more challenging, but not impossible. Although we made every effort to accumulate as many of the bottom-up records as possible, gaps exist between the top-down reporting and bottom-up totals. Scaling the bottom-up totals to account for the top-down to bottom-up gaps assumes the gap is represented by the existing bottom-up data. In other words, the gap is assumed to be randomly distributed across the existing data. T(X) 1-14

29 Background and Analysis Method LACK OF COMMERCIAL DEPOT BOTTOM-UP RECORDS No commercial depot bottom-up records are available for Army ground vehicles. Therefore, we applied the results from the organic depot analysis to the total reported spending attributed to commercial DM. Because a portion of the reported spending is attributable to commercial DM, a possible shortcoming exists if commercial depots perform their maintenance in a wholly different method than the Army depot, or if the type of equipment the depot maintains is systemically different. Data Structure and Analysis Capabilities To accommodate the variety of decision makers and data users, we designed a corrosion-related cost and availability data structure that maximizes analysis flexibility. Figure 1-8 illustrates the data structure and different methods of analysis. Figure 1-8. Data Structure and Methods of Analysis Ground vehicle type xxx (Age z years) Cost or s Percentage of total Ground vehicle type 100 (Age 5 years) Cost or s Percentage of total Ground vehicle 001 (Age 12 years) Cost or s Percentage of total Labor Materials WBS DM corrosion-related costs or s FLM corrosion-related costs or s ONR corrosion-related costs Corrective corrosion-related costs or s Preventive corrosion-related costs or s Direct structure-related corrosion-related costs or s Direct parts-related corrosion-related costs or s Note: WBS = work breakdown structure. 1-15

30 Using this data structure, we were able to analyze all available data within the following categories: Equipment type Age of equipment type Corrective versus preventive costs and DM, FLM, and ONR costs and Structure- and parts-related costs and Material costs Labor costs Work breakdown structure (WBS). 12 This structure also enabled us to combine categories to create new analysis categories (i.e., the corrosion-related corrective cost for FLM materials). REPORT ORGANIZATION In this chapter, we explained our analysis approach, the Army maintenance and corrosion-related organizations, the existing maintenance structure, and the specific ground vehicle assets that are within the scope of this study. We are now ready to detail our specific method for determining corrosion s effect on the cost and availability on Army ground vehicles. In Chapter 2, we provide a breakdown of the corrosion-related costs for Army ground vehicles (based on FY2010 costs) and present our analysis of those costs. In Chapter 3, we provide a breakdown and analysis of the corrosion-related data. In Chapter 4, we provide our overall conclusions about the trends and patterns we identified in the corrosion-related cost and data. The appendixes provide supporting data and analysis. 12 WBS coding determines the ground vehicle subsystem on which work is being performed. 1-16

31 Chapter 2 Determining the Cost of Corrosion We estimate the total annual cost of corrosion for Army ground vehicle assets is $1.606 billion. This total is based on FY2010 data, which is the most recent available. To arrive at this estimate, we developed the cost tree in Figure 2-1. It serves as a reference for the remainder of this chapter. Figure 2-1. Army Ground Vehicle Corrosion-Related Cost Tree (FY2010) We developed the cost tree starting with the total FY2010 cost of maintenance throughout DoD of $96 billion. 1 Eliminating non-army costs and segregating the cost tree into three major groups total Army DM, total Army FLM, and Army ground vehicle ONR resulted in the second level of the tree. At this point in the analysis, the cost figures for DM and FLM represent total Army maintenance costs. We then split each of the three groups into the major pertinent cost categories. We labeled the cost categories as cost nodes. Nodes A through G depict the main segments of corrosion-related costs. Using separate detailed cost trees for DM, FLM, and ONR, we determined the overall corrosion-related costs by combining the costs at each node. We document the data sources for each of the cost figures, by node, in Appendix B. 1 Analysis based on method described in LMI report, The Estimated Cost of DoD Materiel Maintenance, Report LG603T3, Earl R. Wingrove, III, et al., July

32 COST OF CORROSION FOR DM (NODES A AND B ) Corrosion-related costs are significant at both organic and commercial DM facilities. We identified a total Army ground vehicle corrosion-related DM cost of $964 million, or 25.2 percent of the total Army ground vehicle equipment DM cost of $3.822 billion. We used a combined top-down and bottom-up approach to determine the costs of corrosion for Army ground vehicles, as we did for our first corrosion-related cost study. 2 The detailed cost tree in Figure 2-2 illustrates how we determined the DM cost of corrosion for Army ground vehicles, starting with a top-down Army DM cost of $7.299 billion. We derived this amount from the relevant annual DM congressional report. 3 The same document details the split between organic DM costs ($4.238 billion) and costs incurred at commercial depots ($3.061 billion), as shown in the second level of the tree in Figure 2-2. Figure 2-2. DM Cost of Corrosion for Army Ground Vehicles ($ in millions) $7,299 DM $4,238 Organic DM $3,061 Commercial DM $1,824 Labor $283 Overhead $2,131 Materials $1,430 Labor $221 Overhead $1,410 Materials $786 Ground vehicle labor $1,038 Non-ground vehicle labor $1,181 Ground vehicle materials $950 Non-ground vehicle materials $690 Ground vehicle labor $740 Non-ground vehicle labor $1,036 $374 Ground vehicle Non-ground materials vehicle materials $644 Noncorrosion $142 Corrosion A1 $861 $320 Noncorrosion Corrosion B1 $516 Noncorrosion $174 Corrosion A2 $708 $328 Noncorrosion Corrosion B2 Note: Numbers may not add precisely due to rounding. Through a continued top-down analysis, we determined the cost at each level in the tree until we reached the cost-of-corrosion nodes. We then used detailed bottom-up data to estimate the corrosion-related cost at each of these nodes. We outline these costs in Table LMI, The Annual Cost of Corrosion for Army Ground Vehicles and Navy Ships, Report SKT50T1, Eric F. Herzberg et al., April Deputy Under Secretary of Defense for Logistics and Materiel Readiness (DUSD[LM&R]), Distribution of DoD DM Workloads: Fiscal Years 2010 through 2012, May 2011, p. 5. This annual report to Congress is also known as the Report in reference to Section 2474(f) of Title 10, United States Code, which requires a 50 percent limit on DM funds each military service may spend to contract maintenance to non federal government personnel. 2-2

33 Determining the Cost of Corrosion Table 2-1. Cost of Corrosion for Army Ground Vehicle at Organic and Commercial Depots ($ in millions) Maintenance provider Army ground vehicle DM costs Corrosion-related costs Labor Material Overhead Labor Material Corrosion-related cost as a percentage of maintenance cost Organic depots $786 $1,181 $69 a $2,036 $142 $320 $ % Commercial $690 $1,036 $60 a $1,786 $174 $328 $ % depots $1,476 $2,217 $129 $3,822 $316 $648 $ % a These overhead totals are slightly different from those in Figure 2-2, because they contain overhead for ground vehicles only. We excluded the overhead for non-ground vehicle maintenance which is outside the scope of this study. As Table 2-1 shows, the corrosion-related DM cost for materials ($648 million) is more than double the corresponding cost for labor ($316 million). The cost of corrosion for organic DM ($462 million) is approximately the same as that of commercial DM ($502 million). We discuss these and other observations in more detail later in this chapter. Cost of Corrosion for Organic DM (Nodes A1 and B1 ) We continued our top-down analysis at the top of the organic side of the DM cost tree in Figure 2-2. We depict the corrosion-related cost tree for organic DM in Figure 2-3. Figure 2-3. Cost of Corrosion for Army Ground Vehicles Organic DM ($ in millions) $4,238 Organic DM $1,824 Labor $283 Overhead $2,131 Materials $786 Ground vehicle labor $1,038 Non-ground vehicle labor $1,181 Ground vehicle materials $950 Non-ground vehicle materials $644 Noncorrosion $142 Corrosion A1 $861 $320 Noncorrosion Corrosion B1 We first separated the $4.238 billion of organic DM costs into labor, material, and overhead categories using the AR(M)1307 report on DoD maintenance depot operating expenses. Labor and materials costs include both organic and contractual labor and materials used in the performance of DM paid for with depot working capital funding. Overhead includes depreciation of ground vehicles and equipment, and other administrative costs. 2-3

34 We then separated the DM labor and material costs into categories for ground vehicles and non ground vehicles using our analysis of DoD depot operating expenses for FY Using the AR(M)1307 data for the five Army depots, we identified and aggregated all of the specific costs for ground vehicles. We then aggregated the data for only the four deports that perform Army ground vehicle maintenance A, RRAD, LEAD, and TYAD and eliminated the data from the Corpus Christi Army Depot, which only performs aviation-related maintenance. Next, we scaled the labor, material, and overhead costs from the AR(M)1307 to match the top-down organic DM totals from the report. We included this step to reconcile the differences between the statements of financial position and the annual report to Congress, 5 in which the amounts for these categories do not precisely match. Based on the depot accounting report information, the organic DM costs depicted in the third level of the organic DM cost tree (from Figure 2-3) are as follows: Labor $0.786 billion. We arrived at this total labor cost by adding up the labor costs from both organic and contractual maintenance for each ground vehicle. These labor costs include potential corrosion-related costs. Materials $1.181 billion. The material cost total is the sum of each vehicle s organic and contractual materials costs. Materials costs include potential corrosion-related costs. These costs represent the labor and material costs of ground vehicle assets within the scope of our study. We excluded the costs associated with non-ground vehicle assets, such as aviation systems, crew served weapons, generic communications equipment, and small arms, because they are out of the scope of the study. To this point, we estimated the labor and material cost figures by using a topdown costing method. We next needed to take the final step and determine the corrosion-related costs at each node using a bottom-up cost analysis. DATA SOURCES FOR ORGANIC DM We used detailed bottom-up data from several DM data sources to conduct the corrosion-related analysis. Our primary DM data sources were the Standard Depot System (SDS), the Logistics Modernization Program (LMP), and the Depot Maintenance Cost System (DMCS). We analyzed the data from these sources at the individual ground vehicle or major system (i.e., engine or transmission) and Production Control Number (PCN) 6 levels of detail. We extracted the data records 4 LMI, DoD Maintenance DM Operating Expenses for FY2010, Report LG902T2, Clark L. Barker, May This report presents a summary of operating expenses for DoD maintenance depots, listing data for each maintenance activity, including the major personnel, materials, contractual, and other expense categories. 5 LMI, DoD Maintenance DM Operating Expenses for FY A PCN serves as a reference to the work package description and associated costs. It is usually an alphanumeric descriptor containing at least 6 characters. 2-4

35 Determining the Cost of Corrosion associated with each ground vehicle, which are often identified by serial number. Each data source contributed several important data fields such as the work center performed the maintenance, the description of work, number of labor hours involved. Using the common data fields from each database, we joined the related records, producing a detailed DM history for each piece of ground vehicle equipment. Data Organization and Gaps Data Scoping Although data files across the depots were similar, they still required a significant effort to extract the relevant details, format them digitally, and then place them into a uniform identification and classification structure. In cases where we only had partial or incomplete data, we applied logic processes to fill the gaps. For example, if a record lacked a ground vehicle or engine equipment identification code but provided a serial number, we cross-referenced the serial number to other data sources to match the two data fields. In this fashion, we were able to fill in many blanks in our dataset so as to include complete records and provide a uniform, mostly comprehensive historical database. After resolving data gaps and linking files from each database, we assembled an overall data source that contained the essential elements of information we needed to perform a bottom-up cost-of-corrosion analysis. Our next action was to eliminate data records that were out of scope of our study, mainly those that tracked maintenance performed on equipment not related to ground vehicles or those for which the maintenance cost or labor hours were null or negligible. Scaling Bottom-Up to Top-Down Organic DM Costs Once we trimmed our data down to only in-scope data records containing valid labor costs, we aggregated our bottom-up labor costs and compared the total with our previously established top-down organic depot labor estimate of $0.786 billion (see Figure 2-3). We calculated our bottom-up labor estimate by aggregating the labor hours associated with each record for in-scope items on our equipment list and multiplying those hours by a standard average hourly labor rate ($49.13). 7 In this fashion, we calculated a total bottom-up DM labor cost of $341 million, which is approximately 43 percent of our top-down total. We scaled each depot s bottom-up records by multiplying them by an average factor of 2.30 ($0.786 billion $0.341 billion). In this fashion, we adjusted the bottom-up labor cost data to bring it into balance with our top-down estimate. 7 We derived the per capita rates from FY 2010 actual data in the Department of Defense Fiscal Year 2012 President s Budget. The civilian annualized rate for FY2010 was $87,258, or $49.13 per hour. This rate is a generalized rate for maintenance technicians and not location- or DM-specific. 2-5

36 We did not expect the bottom-up cost total to match the top-down total. For labor, the top-down total is a fully loaded salary total that includes all benefits, vacation time, training, and other indirect labor costs. The bottom-up total includes only the labor hours allocated to each PCN by cost work center essentially it includes only the direct cost of labor. We calculated the DM labor costs for each maintenance action by using the SDS or LMP labor hours. Theoretically, those hours show all the work performed on each ground vehicle and major vehicle systems in each depot. By applying per capita pay rates and the top-down to bottom-up scaling factor previously mentioned to these labor hours, we balanced the detailed DM labor costs from SDS and LMP to the depot s adjusted AR(M)1307 accounting report information. We adjusted the material costs in the same fashion. 8 The top-down organic DM material cost amount from Figure 2-3 is $1.181 billion. Our aggregated initial bottom-up materials total was $650 million, or about 55 percent of our top-down total. We applied a scaling factor of 1.82 ($1.181 billion $0.650 billion) to each materials record to align the top-down and bottom-up totals. COST OF CORROSION FOR ORGANIC DM LABOR (NODES A1 AND A2 ) Our goal was to extract the corrosion-related organic DM labor for the Army ground vehicle assets (node A1, $142 million) from the total DM labor cost. We began our bottom-up organic corrosion-related DM labor analysis using the SDS and LMP data from the four depots (see Figure 2-4). Figure 2-4. Army Ground Vehicle Organic DM Labor Cost Tree ($ in millions) $1,824 Labor $786 Ground vehicle labor $1,038 Non-ground vehicle labor $644 Noncorrosion $142 Corrosion A1 We used a list of keywords (such as rust, paint, and clean ) to identify activities that are related to corrosion. We provide a complete list of these key corrosion-related words in Appendix C. The sample report in Figure 2-5 presents an example of how we isolate the corrosion-related activities from the non-corrosion activities for data records contained in SDS or LMP. 8 We calculated DM materials costs similarly using the materials costs from SDS and LMP for each maintenance action. 2-6

37 Determining the Cost of Corrosion Figure 2-5. Example of a Corrosion-Related Keyword Search from Army Organic Depot Databases 1TASK HK8J DEPOT A JO/PCN DETAIL PERFORMANCE REPORT DATE 07 DEC 2005 PAGE 21 N01DXXD024D 0INQUIRING OFFICE E6000 MONITORING OFFICE A5BCN JO/PCN M04B1H WPC A2 SOW JO/PCN TITLE 0 OVERTIME/ WORK EARNED P CAT CAT 3 CAT 4 HOLIDAY BORROWED BULK ADJ PROJECTED MANHOUR CENTER PERIOD HOURS ACT HRS E EXC HRS ACT HRS HOURS HOURS HOURS HOURS HOURS BALANCE 052J40 MTD YTD CUM CURRENT MONTH ******* CUMULATIVE TO DATE ******** S OP STD EARNED ACTUAL P PROJ ACTUAL P ACT HRS C CODE CAT OPERATION TITLE WORK UNIT TIME PROD HOURS HOURS E SEF PROD HOURS E PER UNIT 01 ECCC REPLACE CORRODED PANEL M1A The yellow circles in our example highlight information concerning a corrosionrelated maintenance activity. The highlighted information tells us the vehicle worked on is an M1A2 Abrams tank, the corrosion-related activity is to replace a corroded panel, six M1A2 Abrams tanks had their panels replaced, a total of 36 hours of labor were expended, and the PCN is M04B1H. When we flagged a record for corrosion, we estimated the corrosion-related cost for that record by applying the corrosion-related percentage to the scaled labor cost. The corrosion-related percentage varies from 1 percent to 100 percent based on the type of maintenance performed. For example, one of the corrosion-related keywords is welding. Welding is a maintenance action that is only occasionally caused by correcting a corrosionrelated issue, so it has a corrosion-related cost percentage of 50. However, a work record flagged for corrosion with the word corroded has a corrosion-related cost percentage of 100 that is, corrosion is clearly the cause of the maintenance action. We developed the corrosion-related cost percentages in collaboration with Army maintenance subject matter experts. Using this corrosion-related keyword search method and aggregating the corrosion-related labor costs of the flagged records, we estimated the overall organic DM ground vehicle equipment corrosion-related labor costs (node A1 ) as $142 million for Army ground vehicle assets. 2-7

38 COST OF CORROSION FOR ORGANIC DM MATERIALS (NODE B1 ) We continued our bottom-up approach by extracting the organic DM material cost of corrosion for ground vehicles (node B1, $320 million) from the total ground vehicle material cost from Figure 2-6. Figure 2-6. Organic DM Material Costs for Army Ground Vehicles ($ in millions) $2,131 Materials $1,181 Ground vehicle materials $950 Non-ground vehicle materials $861 $320 Noncorrosion Corrosion B1 Extracting and Categorizing Corrosion-Related Material Costs for Organic DM To extract organic DM material costs, we analyzed information the four Army depots documented in SDS and LMP. Together, these sources provided us with the maintenance records, both labor and material, for each PCN in the SDS and Project Definition 9 in the LMP, as well as relevant data on material purchases and the labor hours expended for the work performed. The SDS or LMP also link organic depot operations and parts requisitions, but neither source flags records specifically for corrosion. We leveraged an LMI-developed approach to extract and aggregate this information. The first step of our approach was to calculate overall material costs contained within each PCN or Project Definition to allocate the costs among the labor records within the matching PCNs or Project Definitions. As an example, say a PCN associated with a particular vehicle details $15,000 in overall material costs and that the PCN contains three separate labor maintenance records. In such a case, we would use our approach to divide the material cost of $15,000 and spread it out evenly among the three maintenance activities in the PCN that is, an allocation of $5,000 to each of them. Because each labor record was already classified as being corrosion-related as well as having a corrosion percentage determined from the labor analysis described above, we calculate the corrosion materials cost by applying the corrosion percentage of each record to the materials cost for corrosion flagged records. For example, if we calculated a corrosion-related percentage of 50 percent for one of the maintenance records in our earlier example, we multiply the allocated material 9 The Project Definition serves the same purpose as the PCN it is a reference to the work package description and associated costs. 2-8

39 Determining the Cost of Corrosion cost by the percentage ($5, ) to extract the corrosion-related material cost for that record ($2,500). We show an example of this approach in Table 2-2. Table 2-2. Example of Allocation Material Costs to Labor Records PCN Vehicle serial number Maintenance operation Labor cost Allocated material cost Record flagged for corrosion? Corrosionrelated percentage Corrosionrelated labor cost Corrosionrelated material cost M04B1H Repair drive unit M04B1H Weld side panels M04B1H Inspect housing H01B1H H34R1E H34R1E Chemical clean housing Replace driver s seat Prepare door for painting $3,000 $5,000 No 0% $0 $0 $7,500 $5,000 Yes 50% $3,750 $2,500 $1,000 $5,000 Yes 25% $250 $1,250 $2,000 $2,000 Yes 100% $2,000 $2,000 $5,000 $1,000 No 0% $0 $0 $500 $60 Yes 100% $500 $60 B56B1H Paint door $1,000 $2,000 Yes 100% $1,000 $2,000 B56B1H Inspect turret $4,000 $200 Yes 25% $1,000 $50 Using this approach, we calculated a total of $320 million in corrosion-related materials costs for organic depots, as represented in node B1. Categorizing Organic DM Labor Activities After calculating the corrosion-related costs, we performed three additional operations to each labor maintenance record: Determined preventive or corrective nature. Assigned a work breakdown structure code. Classified structure and parts costs. Determine Preventive versus Corrective Nature To classify labor man-hours and associated materials as corrective or preventive, we had to make a case-by-case determination. We examined each maintenance record based on the combination of maintenance activity codes and descriptive text fields to assign a preventive or corrective classification. 2-9

40 To ensure consistency, we classified costs for direct man-hours and associated materials using the following convention: Hours and materials spent repairing and treating corrosion-related damage, including surface preparation and sandblasting, are classified as corrective. Hours and materials spent gaining access to equipment that has corrosionrelated damage so that it can be treated are classified as corrective. Hours spent on maintenance requests and planning for the treatment of corrosion-related damage are classified as corrective. Hours and materials spent cleaning, inspecting, painting, and applying corrosion-related prevention compounds or other coatings are classified as preventive. Hours and materials spent at a facility designed to support corrosionrelated mitigation, such as a wash facility, are classified as preventive. Assign a Work Breakdown Structure Code We developed a ground vehicle work breakdown structure (GWBS) to most effectively identify the types of maintenance and the system, subsystem, and item on which the activity was performed, mainly to provide the relevant detail we needed to conduct our analysis of labor records for Army ground vehicles. The GWBS also benefits the maintenance community by providing maintenance technicians with a useful and easy-to use-tool to classify with greater accuracy each maintenance activity. We applied the GWBS to all previous maintenance records, resulting in the creation of a comprehensive historical archive of all maintenance work performed at maintenance facilities; this identification structure provides a quick snapshot of each record s most relevant details using a uniform format. We patterned the GWBS after the aviation work breakdown structure (AWBS) we created for the most recently completed corrosion-related cost and availability studies for Army, Navy, Marine Corps, and Air Force aviation. This five-digit alphanumeric GWBS code describes the end-item type, maintenance activity, primary system undergoing maintenance (i.e., comprising the third and fourth digits of the code), and the specific subsystem or part being worked. 2-10

41 Determining the Cost of Corrosion The first character in the GWBS denotes the type of end item. Table 2-3 identifies each maintenance action code and corresponding end-item type. Table 2-3. GWBS Codes for End-Item Type Code End-item type G E X a Ground vehicle Engines Common use across ground vehicle types a Some ground vehicle systems and equipment are shared across multiple vehicle platforms and cannot be linked to a specific ground vehicle type. Some examples include transmissions, test sets, and other general support equipment like fire extinguishers. Maintenance work on these systems and equipment is coded with a GWBS end item type of X. The second digit of the GWBS denotes each type of maintenance action. We list these maintenance activity codes in Table 2-4. Table 2-4. GWBS Codes for Maintenance Activity Code Maintenance activity Examples A Assemble Combine parts into subassembly B Calibrate Bring into tolerance, adjust C Clean Wash, decontaminate, blast, bathe D Disassemble Separate subassembly into parts E Dispose Cannibalize, destroy F Fix Remove, repair, reinstall I Inspect/test Troubleshoot, perform non-destructive inspection H Haul Move, relocate, transport L Installation Install equipment, load, reload M Modify Reconfigure, remove but not repair or replace O Administrative Order parts, prepare reports P Preserve Lubricate, package, wrap R Replace Remove and put back a like-new operational part T Treat Prime, paint, coat U Unknown Unknown activity 2-11

42 The third and fourth digits identify the type of system undergoing maintenance. Table 2-5 lists these codes. Table 2-5. GWBS Maintenance System Codes Code Maintenance system type 01 Engines 02 Hull/frame (body and exterior) 03 Wheels and axles 04 Electrical and electronic 06 Transmission 09 Miscellaneous ground vehicles and parts 10 Fuel system 11 Electronic, data processing and recording 12 Measuring and testing instruments 13 Environmental control 14 Ground support equipment 15 Training devices 16 Miscellaneous 19 Communication and electronics 20 Consumables and toolbox hardware 21 Valves and bearings 35 Weapon systems The fifth and last character in the GWBS denotes a specific category of subsystem(s) or part(s) within that maintenance system. Each system has up to nine associated subsystems, including an other category. Table 2-6 shows an example of the subsystem mapping of one ground vehicle system. Table 2-6. Example of GWBS Subsystem Codes and Descriptions for System 35 Sub-system Sub-system description FSC codes a 1 Weapon Fire control equipment , 4931, Pyrotechnics 1055, 1340, Non-missile ammunition Guided missiles , 1111, 1336, Ammunition maintenance Nuclear weapons and fuses b Other type of sub-system or part 1090, 1095, 2541, 4933, 4940 a The Federal Supply Classification (FSC) code indicates the federal class DoD has assigned to each item. The first four numbers of the 13-character national stock number (NSN) make up the FSC code. All parts have an NSN and an FSC code. b The GWBS for System 35 ( weapon systems ) has only eight subsystems codes. 2-12

43 Determining the Cost of Corrosion To illustrate, the GWBS code GR352 translates as G = Ground vehicle R = Replace 35 = Weapon system 2 = Fire control equipment (specifically designated by FSC codes , 4931, or 5342). One significant advantage of the GWBS over other WBS types of categorizations is that it does not require a maintenance technician to choose the most appropriate category of work among hundreds of possible choices. Instead, the GWBS code is determined after the maintenance has been performed using the parts ordered for each maintenance record as well as the text descriptions of the work. In effect, the assignment of the GWBS code is invisible to the maintenance technicians. Using the FSC and NSN, we mapped each part to an appropriate GWBS code, which, as noted earlier, we also applied to all previous records. If no part is associated with a particular labor record, we used text descriptions to identify the vehicle system and subsystem. The text descriptions are also used to determine the maintenance activity. Appendix D provides a complete list of the GWBS codes we classified for all of the Army s organic depots. Classify Structure and Parts Costs We also classified all labor and materials costs into one of two cost categories, either structure or parts, which we define as follows: A structure is the body frame of the system or end item; it is not removable or detachable. Parts are items that can be removed from the system or end item and can be ordered separately through government or commercial supply channels. Using the GWBS codes we created, we classified all labor and materials costs as related to either structure or parts. For example, if the maintenance was associated with a major system, we would have assigned the second and third digits of the GWBS code as 02, representing the Hull/frame (body and exterior). Segregating all maintenance and corrosion costs into the structure and parts categories provides the Army ground vehicle community with specific, targeted data on the source of its corrosion-related challenges, which in turn can lead to greater efficiencies and more innovation. 2-13

44 There is an additional benefit to classifying maintenance records into structure and parts categories. DoD has a major concern about the effects and costs of aging weapon systems. The age of a typical weapon system is calculated starting the year the individual piece of equipment is manufactured essentially, the structural age of the weapon system itself. The age of a removable part is not tracked, with the exception of major, more expensive components, such as engines. Separating the maintenance and corrosion costs related to the structure of the weapon system, which has an age measurement, from the maintenance and corrosion costs of removable parts, which do not have an age measurement, will provide further insights into the relationship between structural age and the resulting maintenance and corrosion cost effects on aging weapon systems. Cost of Corrosion for Commercial DM (Nodes A2 and B2 ) We followed a slightly different method to determine the cost of corrosion for commercial DM, because we did not have access to the type of extensive bottomup data we had for organic DM. Figure 2-7 represents the commercial DM branch of the overall DM cost tree shown in Figure 2-2. Figure 2-7. Cost Tree for Commercial DM ($ in millions) $3,061 Commercial DM $1,430 Labor $221 Overhead $1,410 Materials $690 Ground vehicle labor $740 Non-ground vehicle labor $1,036 $374 Ground vehicle Non-ground materials vehicle materials $516 Noncorrosion $174 Corrosion A2 $708 $328 Noncorrosion Corrosion B2 We started our analysis of commercial DM at the top of the cost tree in Figure 2-7. We used the annual DM congressional reporting requirement to determine the total commercial DM cost of $3.061 billion. 10 For the organic DM analysis, we used a DM operating expenses report 11 to determine the costs at the second level of the tree. Because commercial DM work has no similar reporting requirement, we used the same percentage breakdowns we used for organic DM to extract the costs associated with ground vehicle maintenance activities from the costs of all commercial 10 DUSD(L&MR), May 2011, p LMI analysis based on, DoD Maintenance Depot Operating Expenses for FY2009, Report LG902T2, Clark L. Barker, May

45 Determining the Cost of Corrosion depot maintenance activities to determine the maintenance amounts for both commercial ground vehicles and non-ground vehicles. (See sample percentages for organic DM in Figure 2-2). Applying the same percentages to the commercial vehicle total of $3.061 billion from Figure 2-7 yielded a commercial ground vehicle maintenance cost of $1.786 billion, which established the totals in the third level of the cost tree in Figure Because we lacked detailed bottom-up data from the commercial depots to help calculate the total commercial ground vehicle maintenance labor and material costs, we used data obtained through the DMCS, which provides total costs at the type/model/series (TMS) level of detail. We calculated the labor-to-materials ratios using the dollar amounts from Figure 2-7 to extract the labor and material costs from the overall DMCS costs at the TMS level. The sum of the DMCS commercial labor costs was $79 million, and the DMCS commercial materials cost was $118 million. The combined DMCS commercial labor and materials costs ($197 million) was slightly more than 11 percent of our total top-down commercial DM ground vehicle labor and materials cost of $1.726 billion from Figure 2-7. Because data was not recorded for commercially performed maintenance, we did not expect to account for as much of our topdown total for commercially performed maintenance as we did for organically performed maintenance, and this, ultimately, proved to be the case. To scale our commercial labor and materials, we applied a factor of 8.75 to our labor and materials totals. This represents our top-down commercial DM labor and materials cost for ground vehicles ($1.726 billion) divided by the DMCS s overall ground vehicle DM cost for commercial labor and materials ($0.197 billion). Our sum of DMCS data at the TMS level now equaled our topdown totals. We show these costs in the third row of Figure 2-7. Our next task was to extract the corrosion-related costs for labor (node A2 ) and materials (node B2 ) from the total ground vehicle costs for commercial DM labor and commercial DM materials, respectively. To do this, we applied the results from our analysis of corrosion-related costs for organic DM to determine the total corrosion-related cost at each node. Because we did not have access to detailed bottom-up work records for commercial DM data, we assumed the corrosionrelated cost percentage for work performed by commercial depots was similar to what we found in the organic depots for similar vehicles and equipment. Past studies have indicated the process maintenance action steps are generally the same for commercial depots, so the resulting corrosion-related cost percentages by ground vehicle TMS would likewise be similar. 12 We also used the same percentages for commercial DM overhead expenses as we used in the organic DM overhead calculation. For FY2010, that percentage was 3.56 percent, which resulted in $60 million in commercial DM overhead for ground vehicles. Therefore, the $1.786 billion of commercial maintenance cost for ground vehicles, shown in the third level of Figure 2-8, breaks down as a labor cost of $0.690 billion, overhead of $0.06 billion, and a material cost of $1.036 billion. 2-15

46 Using the same approach in our corrosion-related analysis for organic DM, we extracted the proportional amount of corrosion-related costs for labor and materials at the TMS level from our commercial data. Figure 2-8 illustrates these steps using the HMMWV as an example. Figure 2-8. Example of Determining Corrosion-Related Commercial DM Costs for HMMWV Using Corrosion-Related Ratios DMCS cost Labor cost Material cost Percentage corrosionrelated labor Corrosionrelated labor cost Percentage corrosion-related Corrosionrelated materials material cost $1,409,913 $294,687 $1,115, % $12, % $284,382 Ratios from LIN T61494 HMMWV Percentage preventive cost Percentage corrective cost Corrosionrelated preventive cost Corrosionrelated Percentage corrective cost parts cost Percentage structure cost Parts-related cost of corrosion Structurerelated cost of corrosion 28.4% 71.6% $84,552 $212, % 5.9% $279,692 $17,656 We used this calculation convention to estimate the corrosion-related cost for each TMS listed in our commercial DMCS data. We then applied the GWBS and related characteristics from our organic DM results to our corrosion-related commercial DM results. This method allowed us to categorize the corrosion-related work for commercial DM into parts versus structure costs and preventive versus corrective costs using GWBS codes. We aggregated all corrosion-related commercial DM for ground vehicle (as shown in the HMMWV example in Figure 2-8) then separated the corrosionrelated labor cost ($174 million, node A2 ) and corrosion-related material cost for commercial DM ($328 million, node B2 ). COST OF CORROSION FOR FLM (NODES C AND D ) Costs for corrosion-related FLM costs are significantly lower than those for corrosion-related DM, from both a total cost standpoint and a percentage of maintenance standpoint. We calculated a total corrosion-related FLM cost for ground vehicles of $423 million, which is approximately 5.9 percent of the total FLM cost of $7.218 billion for ground vehicles. (As a point of comparison, the corrosion-related DM cost was $964 million and 25.2 percent of DM.) The detailed FLM cost tree in Figure 2-9 guides our discussion for the remainder of this section. 2-16

47 Determining the Cost of Corrosion Figure 2-9. FLM Costs for Army Ground Vehicles ($ in millions) $23,683 FLM $15,439 Organic labor $1,598 Organic materials $6,305 Commercial maintenance $341 Overhead $5,710 Ground vehicle labor $9,729 Non-ground vehicle labor $986 Ground vehicle materials $612 Non-ground vehicle materials $388 Ground vehicles $5,917 Non-ground vehicles $134 Ground vehicles $207 Non-ground vehicles $5,366 Noncorrosion $344 Corrosion C1 $924 Noncorrosion $62 Corrosion D1 $324 Labor $8 Overhead $56 Materials $310 Noncorrosion $14 Corrosion C2 $54 $2 Noncorrosion Corrosion D2 Top-Down Analysis ORGANIC FLM COSTS Note that organic FLM consumes a significant amount of labor due to maintenance of non-ground vehicles such as ammunition, communications equipment, and other equipment outside the scope of this study. Unlike for DM, the Army is not required to aggregate and report its FLM costs. Therefore, we began our top-down analysis at the second level of the cost tree from Figure 2-9 to determine the total Army FLM costs at the first level. To do this, we aggregated the respective Army FLM costs for organic labor and materials, commercial maintenance, and organic overhead costs (in the secondlevel of the cost tree in Figure 2-9) then aggregated the costs from all four of these categories to determine the total Army FLM cost of $ billion (at the first level of the cost tree). We drilled down further to analyze organic FLM labor costs at the second level of the cost tree. We pulled the relevant costs from the Defense Management Data Center (DMDC) to identify Army personnel with maintenance skill specialties and the number of personnel by Army component within each specialty. 13 Based on that data along with per-capita pay rates, 14 we estimated the top-down labor 13 These Army personnel hail from different Army components (i.e., active duty, Reserves, and the civilian). 14 DoD, FY2012 President s Budget. The DoD active duty annualized rate for FY2010 was $91,531, while the DoD reserve and National Guard annualized rate for FY2010 was $27,

48 cost for organic FLM was $ billion. Table 2-7 details these staffing levels, rates, and costs. Table 2-7. Staffing Levels and Costs by Army Component for Organic FLM Personnel (FY2010) Army component Number of personnel Annual per capita cost cost (in millions) Active duty 105,082 $91,531 $9,618 Reserves 28,749 $27,434 $789 National Guard 66,277 $27,434 $1,818 Civilian 36,837 $87,258 $3, ,945 $15,439 Continuing our top-down approach, we next analyzed Army organic FLM materials, in the second level of the cost tree. We identified these costs using the Army s OP-31 exhibit (section on Spares and Repair Parts ); 15 the Army Reserves OP- 32A exhibit 16 and the National Guard s OP-73 exhibit (section on Repair Parts ). 17 Table 2-8 provides a summary of the FY2010 data from all three sources. Table 2-8. Parts-Related Budget for Army Organic FLM Material (FY2010) Army component Assets category budget (in millions) Active duty Combat vehicles $334 Active duty Aircraft engines $7 Active duty Airframes $168 Active duty Other $112 Reserves Combat vehicles $129 National Guard Repair parts $848 $1,598 The total cost of $1.598 billion represents the Army s own cost estimate of spares and repair parts for FY2010. We used this amount as our top-down organic materials cost figure. 15 Operations and Maintenance (O&M), Army Data Book, Volume II, submitted in Justification of Estimates, February This document was part of the Army Fiscal Year 2012 Budget Estimates Submission. The costs include the supplemental appropriation. 16 O&M, Army Reserve Data Book, submitted in Justification of Estimates, February This document was part of the Army Fiscal Year 2012 Budget Estimates Submission. The costs exclude the supplemental appropriation. 17 O&M, Army National Guard Data Book, Volume II, submitted in Justification of Estimates, February This document was part of the Army Fiscal Year 2011 Budget Estimates Submission. The costs exclude the supplemental appropriation. 2-18

49 Determining the Cost of Corrosion COMMERCIAL FLM COSTS OVERHEAD FLM COSTS We next focused on commercial Army FLM (i.e., contract maintenance) at the second level of the cost tree. We identified Army commercial FLM costs using the Army OP-31 exhibit from the same budget document we used for organic FLM materials. 18 Budget line 922, Equipment Maintenance by Contract, of OP-31 captures all commercial maintenance costs. We isolated all costs associated with line 922 for each budget activity, which provided all the FLM contractual maintenance costs. We added up all of the line 922 Army contract maintenance costs, yielding a total commercial FLM cost of $6.305 billion. We extracted the data to estimate FLM labor and material costs in our bottom-up approach, so our next focus was to calculate the overhead cost for Army organic FLM. In our previous study 19 of FLM costs, we estimated that overhead represents approximately 2 percent of total organic FLM costs for both labor and materials. The percentage from our previous study excluded indirect labor and materials but included utilities, fuel, and other miscellaneous expenses. Using the same percentage as that last study, we calculated a total overhead cost of $341 million for the Army organic FLM. 20 SEPARATING GROUND VEHICLE FROM NON-GROUND VEHICLE FLM COSTS The next step was to separate ground vehicle costs from other costs to determine the figures in the third level of the cost tree (see Figure 2-9). For the organic FLM labor (starting with the top-down amount of $ billion from Figure 2-9), we used DMDC data to determine the cost split between ground vehicles and non ground vehicles. We identified the Army military occupation specialties (MOSs) that perform maintenance on ground vehicles, and the number of personnel by Army component within these specialties. To identify the ground vehicle MOSs, particularly those performing FLM, we researched the skill titles within the Army DoD Occupational Codes (DoDOCs). 21 Table 2-9 shows the top-down organic labor costs for FLM personnel who perform maintenance on Army ground vehicles. 18 O&M, Army Fiscal Year 2012 Budget Estimates Submission, February LMI, FLM Cost Visibility, Report LG301T7, Eric F. Herzberg et al., March 2005, p The Army s overhead ($341 million) is 2 percent of all organic Army FLM costs ($ million for labor and $1,598 million for materials). Corrosion-related maintenance costs are not contained in overhead costs. 21 DoD Occupational Conversion Index, March 2001, reissued under the authority of DoD Instruction , Department of Defense Occupational Information Collection and Reporting, August

50 Table 2-9. Number of Personnel and Costs by Army Component for Ground Vehicle Field-Level Maintainers Army component Number of maintenance personnel for ground vehicles Annual per capita rate cost (in millions) Active duty 36,371 $91,531 $3,329 National Guard and Reserves 39,123 $27,434 $1,073 Civilian 14,989 $87,258 $1,308 90,483 $5,710 Table 2-9 above shows that the Army has 90,483 personnel performing ground vehicle FLM for an annual cost of $5.710 billion. This is the organic FLM labor cost at the third level of the cost tree in Figure 2-9. Continuing our top-down analysis, we also separated Army organic materials into cost categories for ground vehicles and non ground vehicles. Using data from the OP-31, OP-32A, and OP-73 exhibits (summarized in Table 2-8), we isolated the organic ground vehicle assets. We show those results in Table Table Parts-Related Budget for Army Ground Vehicle Materials (FY2010) Army component Assets category budget (in millions) Active duty Combat vehicles $334 Active duty Aircraft engines $7 Active duty Airframes $168 Active duty Other $112 Reserves Combat vehicles $129 National Guard Repair parts $523 a ground vehicle $986 a We calculated the ground vehicle portion ($523 million) of the National Guard total ($848 million from Table 2-8) by taking the ratio of ground vehicle materials cost to total materials cost from the active duty and Reserve (68%) and applying it to the National Guard total. We isolated the ground vehicle materials (the shaded rows in Table 2-10) from the total Army FLM material budget. This yielded $986 million in materials cost, our final top-down organic ground vehicle materials cost. We then analyzed commercial FLM costs for Army ground vehicles. Starting with our $6.305 billion in commercial FLM costs, we isolated the ground vehicle labor and material costs. Using the same detailed budget information, we found all costs associated with line 922 of the OP-31 exhibit for each ground vehicle-related budget activity. We added only the FLM ground vehicle-related contract maintenance costs, yielding a total of $388 million (depicted in the third level of the cost tree in Figure 2-9). We then separated ground vehicle-related commercial FLM costs into labor, material, and overhead categories. We applied the ratios of organic FLM labor to 2-20

51 Determining the Cost of Corrosion total organic FLM costs, organic FLM materials to total organic FLM costs, and organic FLM overhead to total organic FLM costs to break down the total commercial cost of $388 million into its labor, materials, and overhead components. The fourth level of the cost tree under commercial maintenance (Figure 2-9) shows these costs. Bottom-Up Analysis COST OF CORROSION FOR ORGANIC FLM LABOR (NODE C1 ) To extract the corrosion-related organic FLM labor cost (node C1 in Figure 2-10) from the top-down cost of $5.710 billion using bottom-up analysis, we used FLM data from two primary maintenance databases Integrated Logistics Analysis Program (ILAP) and Bi-Discoverer. We obtained FY2010 data of closed work records from these two sources, which tracks maintenance at the TMS level of detail. These electronic maintenance action forms provided us with the relevant detailed labor information for the organic FLM of Army ground vehicles. Figure Organic FLM Labor Costs for Army Ground Vehicles ($ in millions) $15,439 Organic FLM labor $5,710 Ground vehicle labor $9,729 Non-ground vehicle labor $5,366 Noncorrosion $344 Corrosion C1 We aggregated these hands-on, organic maintenance labor hours, tracked by TMS, and multiplied them by $51.53, the hourly equivalent of the per capita rate. 22 Using this detailed data for our bottom-up approach, we estimated a total organic FLM labor cost of $992 million. As we had anticipated, a large gap existed between this bottom-up total ($992 million) and the top-down total ($5.710 billion). We attribute this spread to the inherent dichotomy between the available data for our top-down and bottom-up approaches. We obtained the top-down cost figure by multiplying the numbers of maintenance personnel by the annual per-capita DoD labor rate. That is, the top-down costs add up to the total annual labor cost of the 90,483 Army personnel with ground vehicle related maintenance skill specialties. Even if every maintainer recorded his or her labor hours accurately, the bottom-up cost would still 22 According to Office of Management and Budget Circular A-76 (March 2003), a civilian full-time equivalent (FTE) employee works 1,776 hours annually. Therefore, we used the yearly per capita rate divided by 1,776 hours to calculate the equivalent hourly rate. 2-21

52 fall significantly short, because it reflects a calculation based only on actual handson maintenance hours recorded by all maintenance personnel. Yet, we know ground vehicle maintenance personnel do not spend 100 percent of their time performing hands-on maintenance. Applying a customary military maintenance manpower utilization rate of 50 percent, 23 we expected to see bottom-up ground vehicle-related FLM labor costs of approximately $2.86 billion (50 percent of the respective top-down figure). Our bottom-up labor costs ($992 million), which include recorded labor hours from ILAP and Bi-Discoverer, were approximately 17 percent of the expected totals. This could be partly explained by incomplete or inaccurate maintenance labor data recording in Army FLM data systems, which, we know from anecdotal evidence, does occur. Even given this shortfall, we have more than 595,000 labor records distributed among all the Army ground vehicles. This large number gave us confidence that our estimate would be fairly accurate. To account for this top-down to bottom-up gap, we scaled the ILAP and Bi- Discoverer labor costs by a factor of 5.76 ($5.710 billion $0.992 billion) to make the bottom-up cost match the top-down total. To complete our bottom-up analysis, we applied the same algorithm we used for the DM analysis to search for corrosion-related keywords within each maintenance record. We identified corrosion-related FLM activities and calculated their associated costs in the same manner we employed with the DM data. Using this approach, we aggregated a total corrosion-related FLM labor cost of $344 million, as represented at node C1 from Figure COST OF CORROSION FOR ORGANIC FLM MATERIALS (NODE D1 ) Next, we used our bottom-up approach to extract corrosion-related organic FLM material costs (node D1 from Figure 2-11) from the $986 million top-down total. We again used information from ILAP and Bi-Discoverer to accomplish this task. 23 Army Regulation 750-1, Army Materiel Maintenance Policy, 5 September 2006, Section 4-14, p

53 Determining the Cost of Corrosion Figure Organic FLM Material Costs for Army Ground Vehicles ($ in millions) $1,598 Organic materials $986 Ground vehicle materials $612 Non-ground vehicle materials $924 Noncorrosion $62 Corrosion D1 We aggregated the individual materials costs associated with each in-scope maintenance record, resulting in the total in-scope organic FLM material cost of $1.293 billion, which, in this case, exceeded our top-down total of $986 million. While this result was slightly unusual, we still treated our top-down number as the more accurate figure and scaled our bottom-up materials costs accordingly. To account for this top-down to bottom-up gap, we scaled the ILAP and Bi- Discoverer organic materials data by a factor of 0.76 ($0.986 billion $1.293 billion). We applied this factor to the materials costs contained in each maintenance record so that our bottom-up materials costs equals our top-down total. Our approach to extracting the corrosion-related organic FLM material costs was exactly the same as we used to extract the corrosion-related organic DM material costs. We used the same flagged records from our analysis of corrosion-related costs for organic FLM labor to extract the appropriate corrosion-related material costs. This resulted in a total accumulation of $62 million in corrosion-related organic FLM material costs, as depicted in node D1 from Figure COST OF CORROSION FOR COMMERCIAL FLM LABOR AND MATERIALS (NODES C2 AND D2 ) Our next task was to use the bottom-up approach to extract corrosion-related commercial FLM labor and material costs (nodes C2 and D2, respectively, from Figure 2-12) from the top-down labor cost of $324 million and top-down material cost of $56 million. 2-23

54 Figure Commercial FLM Cost Tree for Army Ground Vehicles ($ in millions) $6,305 Commercial maintenance $388 Ground vehicles $5,917 Non-ground vehicles $324 Labor $8 Overhead $56 Materials $310 Noncorrosion $14 Corrosion C2 $54 $2 Noncorrosion Corrosion D2 We applied the same bottom-up to top-down approach that we used in our analysis of commercial DM costs to aggregate commercial FLM costs. We began by aggregating data on contract maintenance costs we received from the TACOM LCMC to determine how contractors expensed the cumulative commercial FLM $388 million cost for Army ground vehicles. We first distributed these costs according to enditem type, then correlated each item within each type to a corresponding LIN from our database. Next, we applied the same contract cost ratios we used for our top-down estimate of commercial DM labor and material costs to the corresponding top-down commercial labor and material costs that we had now assembled by their LIN equivalents (see Figure 2-12 for the resulting distribution). This results in a labor and materials total for each LIN. We used our analysis of the organic FLM to determine the percentages of labor and materials, corrosion-related work, corrective and preventive work, and characterization of parts and structure to apply to the FLM commercial costs. This is similar to the analysis of commercial DM corrosion costs. Table 2-11 shows an example of this analysis. Table Ratios for Sample Commercial FLM LINs LIN Vehicle nomenclature LIN percentages by category Labor Materials Preventive Corrective Parts Structure Corrosion F40375 Fighting vehicle: full K57667 Howitzer medium self-propelled J81750 Fighting vehicle infantry M C18234 Carrier personnel M113A R50681 Medium recover vehicle full tracked T13168 Tank combat 120mm M1A

55 Determining the Cost of Corrosion As Table 2-11 demonstrates, each category percentage applies to the corresponding commercial FLM cost by LIN. We used this information to determine corrosion-related costs and other characterizations by data type. We then aggregated the corrosion-relation commercial FLM labor and materials costs by LIN. This resulted in a corrosion-related commercial FLM labor cost of $14 million at node C2 and a corrosion-related commercial FLM material cost of $2 million at node D2. COST OF CORROSION FOR ONR (NODES E, F, G ) Corrosion-related costs for ONR are a minor contributor to the overall cost of corrosion for Army ground vehicles. The corrosion-related costs for this area total $219 million, with the majority of the costs resulting from maintenance performed by non-maintainers. The cost tree in Figure 2-13 guides this discussion. Figure Army Ground Vehicle Cost of Corrosion for ONR ($ in millions) Labor of non-maintenance vehicle operators RDT&E and Purchase facility costs cards E F G $182 million $0 million $37 million We calculated each of these corrosion-related cost categories and listed them in nodes E, F, and G separately, because they are not recorded elsewhere as part of a standard maintenance reporting system. Labor of Non-Maintenance Ground Vehicle Operators (Node E ) This node represents the aggregated costs of Army ground vehicle operators with non-maintenance specialties who perform corrosion-related tasks, such as inspecting, cleaning, washing, and applying touch-up painting and coatings to vehicles. To obtain the overall cost estimate, we first determined the number of nonmaintenance personnel who worked on ground vehicles within the scope of this study. We assumed each vehicle (both wheeled and tracked) had one operator who was responsible for the operator maintenance of the vehicle and any towed equipment. Table 2-12 presents the number of Army ground vehicles by Army component. 2-25

56 Table Number of Army Ground Vehicles by Vehicle and Army Component Type of vehicle Active duty National Guard Reserves Pre-positioned stock Tracked 12,661 4, ,596 Wheeled 169,712 81,841 36,283 5, ,861 wheeled and tracked 182,373 86,671 37,064 5, ,457 Towed 107,849 52,890 26,579 2, , , ,561 63,643 7, ,237 In all, we aggregated a total of 311,457 wheeled and tracked Army vehicles. We assumed the pre-positioned vehicle stock of 5,349 was maintained by individuals with maintenance specialties, and, therefore, subtracted that number of vehicles from the earlier total of ground vehicles, resulting in a total of 306,108 ground vehicles. We also removed the towed vehicle count because it is common for the vehicle operator to also maintain the towed vehicle. We do not need to count the towed vehicles separately. In FY2010, 236,944 Army personnel (out of 1,129,275 total personnel) held a maintenance specialty. We apply this ratio to the wheeled and tracked vehicles remaining to eliminate vehicles that are operated by an individual with a maintenance specialty. We do this because we already accounted for the cost of maintenance personnel in the FLM cost tree and do not want to count them twice. After we remove the pre-positioned stock and vehicles operated by personnel with a maintenance specialty, we have the number of vehicles by category, as depicted in Table These are the amount of vehicles maintained by personnel with a non-maintenance specialty. Table Number of Army Ground Vehicles Operated by Non-Maintenance Personnel by Type and Military Component Type of vehicle Active duty National Guard Reserves Tracked 10,004 3, ,438 Wheeled 134,103 64,669 28, ,442 wheeled and tracked 144,107 68,486 29, ,880 Next, we used information from a survey we administered on the Army Knowledge Online (AKO) website to determine the amount of time nonmaintenance vehicle operators spend on both general maintenance tasks and corrosion-related maintenance tasks. 24 Table 2-14 provides a summary of the results of this survey. 24 We provide a complete summary of the survey results in Appendix E of this report. 2-26

57 Determining the Cost of Corrosion Table Summary of Time Spent on Corrosion-Related Maintenance by Non-Maintenance Personnel Who Operate Ground Vehicles Level of maintenance number of responses Avg. number of maintenance hours per workday Avg. number of corrosionrelated maintenance hours per workday Ratio of correctiveto-preventive maintenance Active duty :50 National Guard :50 Reserves :50 1, :50 Based on the survey results, the total number of wheeled and tracked vehicles, and the average pay rate for an E-4 in the Army, we calculated the final cost of ONR non-maintenance labor for Army ground vehicles as $182 million, as Table 2-15 shows. This is the corrosion cost at node E. Table Corrosion-Related Cost of Non-Maintenance Personnel Who Operate Ground Vehicles Military component No. of vehicles with operators Hourly rate a No. of days worked per year b Corrosionrelated work hours per day Cost Active duty 144,107 $ $151 million National Guard 68,486 $ $22 million Reserves 29,287 $ $9 million 241,880 $182 million a We calculate this hourly rate by dividing the composite annual FY2010 DoD pay rate for Army E-4 personnel ($59,993) by the annual hours for a full-time equivalent (1,776 hours). b We determined the number of days worked for the National Guard and Army Reserves through their respective pay rates derived from the Department of Defense Fiscal Year 2010 President s Budget. RDT&E AND NEW FACILITY COSTS (NODE F ) Node F shows corrosion-related costs for the following two categories: Research, development, testing, and evaluation (RDT&E) Facilities. Cost of Corrosion for Army Ground Vehicle RDT&E Corrosion-related RDT&E costs are potentially traceable to an RDT&E program that develops methods or technologies for mitigating or preventing corrosion to Army ground vehicles. We began our analysis of ground vehicle RDT&E costs by examining all of the Army s budget requests, including any Army-specific RDT&E requests contained in the FY2010 President s Budget. We searched these budget documents using 2-27

58 keyword queries to locate any program elements that contained possible corrosionrelated terms, such as paint, corrosion, or coat, but we did not find any such projects. We also reviewed the list of CPC IPT projects, which did not contain any projects related to Army ground vehicles. Based on this research, we concluded the Army had zero corrosion-related RDT&E costs in FY2010. Cost of Corrosion for Army Ground Vehicle Facilities Corrosion-related facility costs are expenditures that primarily prevent or correct corrosion. Examples of facility-related costs include paint booths, curing ovens to heat-treat protective coatings, and dehumidification tents or buildings. We began our analysis of ground vehicle facility costs by examining all of the Army s military construction requests contained in the FY2010 President s Budget. In particular, we searched the text descriptions of the military construction projects for corrosion-related keywords but found no projects that contained a keyword match. We, therefore, concluded the Army had no corrosion-related facility costs in FY2010. PURCHASE CARDS (NODE G ) Corrosion-related purchase card costs represent expenditures for corrosion-related materials or services paid for through the use of a purchase card, similar to a credit card. We obtained a list of the FY2010 Army charge card purchases, 25 including the names of each purchasing organization, their respective merchant category codes (MCCs) and merchant descriptions, as well as transaction dates and amounts. Each MCC also describes the material or service purchased, in much the same way the government s Federal Supply Catalog (FSC) codes do. We began our analysis of corrosion-related purchase card costs by using our keyword database search to identify FSCs that contained corrosion-related consumable keywords, such as paint, preservative, cleaning supplies, and coating or coatings. We then identified the potential corrosion-related products bought using purchase cards by segregating the MCCs that are similar to the corrosionrelated FSCs. We also performed a second keyword search to flag merchant descriptions that contained corrosion-related keywords, such as paint, wash, coatings, and clean from among the millions of potential corrosion-related purchase card records. Finally, we examined each flagged transaction to determine whether the corrosion was associated with a material or service purchase. We did this by eliminating flagged merchant descriptions that were obviously not related to corrosion (e.g., Bill s Dry Cleaning) or purchasing organizations that are obviously not associated with ground vehicles (e.g., Training and Doctrine Command). 25 Provided by each respective service. 2-28

59 Determining the Cost of Corrosion Based on the valid corrosion-related Army ground vehicle transactions that remained, the cost of corrosion based on purchase card expenditures in FY2010 was $37 million. Corrosion-Related Cost Tree for Army Ground Vehicles (Nodes A through G ) In Figure 2-14, we present the Army ground vehicle cost tree, identifying corrosion-related costs at each node. Figure Cost of Corrosion for Army Ground Vehicles $96.0 billion DoD maintenance $65.0 billion Non-Army maintenance $7.3 billion Army DM $23.7 billion Army FLM $0.2 billion Army ground vehicle ONR Army ground vehicles only Laborrelated cost of corrosion Materialrelated cost of corrosion Laborrelated cost of corrosion Materialrelated cost of corrosion Labor of non-maintenance vehicle operators RDT&E and facility costs Purchase cards A B C D E F G $316 million $648 million $359 million $64 million $182 million $0 million $37 million $1.6 billion estimated annual cost of corrosion for Army ground vehicles SUMMARY AND ANALYSIS During this study, we created a data structure that supported various views of corrosion-related costs far too many views to depict within the body of this report. In the following section, we extract highlights from these summaries and discuss their significance. We also present trend analysis for three previous years of corrosion-related costs for Army ground vehicles based on our research for this report (see Table 2-16). We excluded corrosion-related ONR costs from this analysis because this category contains costs that are not maintenance costs. 2-29

60 Table Trend Analysis of Corrosion-Related DM and FLM Costs for Army Ground Vehicles in FY2008 FY2010 DM and FLM costs Corrosion-related costs Corrosion as a percentage of maintenance Data baseline (in millions) Change from FY2008 (in millions) Change from FY2008 Percentage Change from FY2008 FY2008 $10,474 $1, % FY2009 $10, % $1, % 11.7% 1.6% FY2010 $11, % $1, % 12.6% 0.7% $31,710 $4, % Overall corrosion-related costs have decreased slightly since FY2008 ( 0.6 percent). This occurred despite an increase in maintenance-related costs during the same time frame. Corrosion-related costs as a percentage of maintenance costs have also decreased since FY2008. These trends indicate some progress in mitigating the effects of corrosion on Army ground equipment costs. Table 2-17 lists corrosion-related ground vehicle costs by node and sub-node. Table Corrosion-Related Costs for Army Ground Vehicles by Node and Sub-Node Node Description of corrosion-related cost node Corrosion-related costs ($ in millions) FY2008 FY2009 FY2010 A1 Organic DM labor B1 Organic DM materials A2 Commercial DM labor B2 Commercial DM materials DM total 1, C1 Organic FLM labor D1 Organic FLM materials C2 Commercial FLM labor D2 Commercial FLM materials E FLM total Labor of non-maintenance ground vehicle operators F RDT&E and facilities G Purchase cards ONR total all corrosion-related costs 1,590 1,434 1,606 Note: s may not add because of rounding. 2-30

61 Determining the Cost of Corrosion We found no notable changes in year-over-year costs at the node or sub-node level of detail. 26 This is somewhat surprising as we expected to see a notable change in maintenance labor costs due to the increase in labor rates themselves. 27 The lack of a significant change at any of the node or sub-node levels indicates a stable process and consistent approach to corrosion-related maintenance over the 3-year period. Corrosion-Related Costs by Army Ground Vehicle Type We calculated the total corrosion-related cost by LIN and the average corrosionrelated cost per item for each ground vehicle type. Table 2-18 shows the 10 largest contributors to total Army corrosion-related costs for FY2010. Table Top 10 Contributors to the Corrosion-Related Costs of Army Ground Vehicles (FY2010) Rank LIN Vehicle description maintenance cost ($ in millions) corrosionrelated cost ($ in millions) Corrosion-related cost as a percentage of maintenance 1 T61494 Truck, Utility HMMWV $1,229 $ % 1-1/4-Ton, M998 2 T13168 Tank Combat Full Tracked $679 $ % 120mm gun M1A1 3 T13305 Tank Combat Full Tracked $286 $ % 120mm gun M1A2 4 T07679 Truck Utility Heavy Variant $650 $44 6.7% HMMWV H57642 Howitzer Medium Self Propelled $177 $ % 6 F40375 Fighting Vehicle Full Tracked $169 $ % Infantry Hi Survivability 7 X40009 Truck Cargo 2-1/2-Ton 6 6 W/E $141 $ % 8 T96883 Trailer Flatbed: 5-Ton 4 Wheel $95 $ % General Purpose 9 R50681 Recovery Vehicle Full Tracked: $136 $ % Medium 10 X40794 Truck Cargo Drop Side 5-Ton 6 6 $209 $20 9.7% As we reported for study years FY2004 and FY2006/FY2007 in our previous reports on Army ground vehicles, 28 LIN T61494, a HMMWV (see Figure 2-15), remains the largest contributor to the corrosion-related costs of Army ground vehicles at more than $328 million for FY For the purpose of this study, we define a notable change as one with a 20 percent or higher increase or decrease, with a consistent rising or falling pattern, over the 3-year period. 27 Labor rates for active duty personnel with maintenance specialties increased nearly 9 percent from FY2008 to FY LMI, The Annual Cost of Corrosion of Army Ground Vehicles and Navy Ships, Report SKT50T1, April 2006; The Annual Cost of Corrosion for Army Ground Vehicles: Update, Report MEC81T1, May

62 Figure Largest Contributor of Corrosion to Army Ground Vehicles LIN T61494, HMMWV Utility Truck (1-1/4 Ton, M998) In Table 2-18, the rows highlighted in gray show Army ground vehicles that are among the top 20 contributors of corrosion-related costs for each of the 6 study years. These vehicles provide an opportunity for the Army to focus resources to mitigate the effects of corrosion on this LIN. Table 2-19 presents the top 10 LINs by average corrosion-related cost per vehicle. We include only vehicle types that had more than 10 vehicles in the Army inventory to avoid portraying a skewed picture of the data. The M1A1 and M1A2 Abrams tanks (highlighted in the gray rows in Table 2-19) have been among the top 20 average per-vehicle corrosion-related cost contributors for each of the 6 study years. These vehicles provide an opportunity for the Army to focus resources to mitigate the effects of corrosion on these LINs. Table Top 10 LINs by Average Corrosion-Related Cost per Vehicle for FY2010 Rank LIN Nomenclature 1 T13374 Tank Combat Full Tracked 105mm M1 2 T13305 Tank Combat Full Tracked 120mm Gun M1A2 3 T13168 Tank Combat Full Tracked 120mm Gun M1A1 4 G17460 Generator Set: Diesel Trl/Mtd 60Kw 400Hz Number of vehicles Average per vehicle corrosion cost cost of maintenance (in millions) cost of corrosion (in millions) 17 $202,077 $14.8 $ $134,293 $286.0 $62.6 1,318 $97,863 $679.2 $ $85,888 $11.1 $2.5 5 T67816 Truck Cargo M $84,779 $28.3 $4.0 6 YF206Z Chassis, Truck 32 $55,506 $2.8 $1.8 7 H57642 Howitzer Medium Self Propelled 682 $50,306 $176.6 $ YG108V Tractor, Full Tracked 55 $48,199 $7.8 $2.7 9 G78306 Generator Set: Diesel 430 $32,288 $63.9 $13.9 Trl/Mtd 60Kw 50/60Hz 10 T88847 Truck Tractor M $27,691 $68.6 $

63 Determining the Cost of Corrosion The vehicle with the highest average corrosion-related cost is the original M1 Abrams tank, LIN This vehicle model is being upgraded to the M1A2 Abrams (see Figure 2-16) and will no longer exist in the U.S. inventory. Figure LIN T13305: M1A2 Abrams Tank Note: The M1A1 and M1A2 Abrams tanks have the highest combined total and average corrosion-related cost per vehicle based on FY2010 data. Vehicles that merit the most attention have a high total cost of corrosion as well as a high average cost of corrosion per vehicle. Eight vehicles fall into both categories of top 20 contributors to corrosion-related costs for Army ground vehicle based on FY2010 results (see Table 2-20). Table Army Vehicles with the Highest Average Corrosion-Related Cost per Vehicle and Corrosion-Related Cost (FY2010) Sorted by Combined Rank LIN Description Corrosion-related cost (in millions) Rank in top 20 by total Average corrosion-related cost Average (in millions) Rank in top 20 by average Combined rank (total + average) T13168 Tank Combat Full Tracked $ $ mm Gun M1A1 T13305 Tank Combat Full Tracked $ $ mm Gun M1A2 H57642 Howitzer Medium Self $ $ Propelled F40375 Fighting Vehicle Full Tracked $ $ Infantry High Survivability R50681 Recovery Vehicle Full $ $ Tracked: Medium G78306 Generator Set: Diesel Trl/Mtd $ $ Kw 50/60Hz T96883 Trailer Flatbed: 5-Ton 4 $ $ Wheel General Purpose YF200R Mine Resistant Vehicle Cat 1 $ $