THE EFFECT OF CORROSION ON THE COST AND AVAILABILITY OF NAVY AND MARINE CORPS AVIATION WEAPON SYSTEMS

Transcription

1 THE EFFECT OF CORROSION ON THE COST AND AVAILABILITY OF NAVY AND MARINE CORPS AVIATION WEAPON SYSTEMS REPORT OSD0GT1 Eric F. Herzberg Trevor K. Chan Paul N. Chang Mitchell L. Daniels Norman T. O Meara AUGUST 2011

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 Effect of Corrosion on the Cost and Availability of Navy and Marine Corps Aviation Weapon Systems OSD0GTI/AUGUST 2011 Executive Summary Study year a LMI was tasked by the Corrosion Prevention and Control Integrated Product Team (CPC IPT) to measure the effect corrosion has on the availability of all DoD aviation systems and the effect it has on the cost of Navy, Marine Corps, and Air Force aviation systems. This report documents both the cost and availability effects of corrosion for Navy and Marine Corps aviation equipment using FY2008 and FY2009 as a measurement baseline. This review is part of a multiple-year plan to measure the impact of corrosion on cost and availability. It is the first of the availability studies. The most recent past and future cost study areas are listed in Table ES-1; the availability studies are listed in Table ES-2. Study segment Table ES-1. Cost of Corrosion Studies Annual cost of corrosion Data baseline Air Force $5.7 billion FY2006 and FY2007 Army ground vehicles $2.4 billion FY2006 and FY2007 Navy ships $2.5 billion FY2006 and FY2007 DoD other equipment $5.1 billion FY Marine Corps ground vehicles $0.5 billion FY2007 and FY2008 DoD facilities and infrastructure $1.9 billion FY2007 and FY2008 Army aviation and missiles $1.4 billion FY2007 and FY Navy and Marine Corps aviation $2.6 billion FY2008 and FY2009 Air Force Pending FY2008 and FY Army ground vehicles and Navy ships FY2008 FY Repeat FY2009 FY2011 a Study period is one calendar year. The first cost-of- corrosion studies occurred in Study year a Table ES-2. Effect of Corrosion on Availability Studies Study segment Annual non-available days due to corrosion Data baseline Navy and Marine Corps aviation 95,237 FY2008 and FY2009 Air Force Pending FY2008 and FY2009 Army Aviation Pending FY2008 and FY Marine Corps ground vehicles FY2008 FY2010 a Study period is one calendar year. iii

4 We estimate the annual corrosion-related cost for Navy and Marine Corps aviation is $2.6 billion, or 26.1 percent of maintenance costs. Corrosion also results in 95,237 non-available days per year for all Navy and Marine Corps flying assets, which equates to an average of 25 days of corrosion-related non-availability per year for each aircraft on active status. 1 Navy and Marine Corps aviation corrosion costs 2 as a percentage of total maintenance costs are in the mid range of the studies completed thus far. The overall Navy and Marine Corps aviation corrosion cost percentage has been fairly stable over the years, averaging 26.6 percent of maintenance costs. We used three schema groups to categorize corrosion costs associated with aviation equipment. Group 1 includes depot maintenance costs ($548 million, or 21.4 percent), field-level maintenance costs ($1,914 million, or 74.9 percent), and costs that are outside normal reporting ($94 million, or 3.7 percent). Group 2 compares corrective costs ($625 million, or 25.4 percent), preventive costs ($1,619 million, 65.7 percent), and neither corrective nor preventive costs ($218 million, 8.9 percent). Group 3 compares structure-related costs ($328 million, or 13.3 percent) and parts-related 3 costs ($2,134 million, or 86.7 percent). We stratified the corrosion costs of Navy and Marine Corps aviation systems by type, model, series (TMS); total cost; and cost per item. We then ranked the top 10 systems for total and average corrosion cost (see Table ES-3). In FY2009, the SH-60B, CH-53E, and P-3C are the top three greatest contributors in terms of total and average corrosion cost for Navy and Marine Corps aviation. The total corrosion-related non-available days (95,237) includes 69,094 not mission capable (NMC) days that are included in the Department of the Navy s current method for reporting non-availability, and 26,143 non-available days that are unreported not available (UNA) days. UNA days include unreported non-availability due to depot maintenance, transit time, temporary storage, etc. Corrosion-related non-available days account for 17.2 percent of the total non-available days. For consistency with current policy on availability reporting, the estimated effect of corrosion is 22.4 percent of the total reported NMC for all Navy and Marine Corps aircraft. We show non-availability results by TMS in Table ES-4. 1 Percentages reflect the relative ratio of the different schemas. We distributed the $2.6 billion corrosion cost within each schema separately to the extent we could classify the respective maintenance records. 2 The cost estimation and availability methods were documented in a separate report issued by the CPC IPT: Proposed Method and Structure for Determining the Cost of Corrosion for the Department of Defense, August 2004, and The Impact of Corrosion on the Availability of DoD Weapon Systems and Infrastructure, October Our estimated corrosion costs apply to 98 types of Navy and Marine Corps aviation equipment, including 14 different models of engine. The scope of the study included an inventory of 3,784 aircraft. iv

5 Executive Summary Table ES-3. Highest Combined Ranking for Average and Total Corrosion Cost (FY2009; $ in millions) TMS Description Corrosion cost per item Per-item corrosion cost rank Total corrosion cost Corrosion cost rank Combined rank SH-60B Twin turbo shaft engine, multi-mission helicopter $1.2 2 $ CH-53E Heavy-lift transport helicopters $1.1 3 $ P-3C Long-range, anti-submarine patrol aircraft $1.1 4 $ EA-6B Twin-engine electronic warfare aircraft $1.4 1 $ UH-1N E-2C Utility helicopter (search and rescue, command and control, maritime special operations) Carrier-capable tactical airborne early warning aircraft FA-18C Supersonic, all-weather carrier-capable multirole fighter jet C-2A High wing, twin-engine monoplane cargo aircraft designed to land on aircraft carriers $1.0 7 $ $1.0 6 $ $ $ $1.0 5 $ MH-60S Twin- engine medium lift utility helicopter $ $ CH-53D Heavy-lift transport helicopters $1.0 8 $ Note: The order in which aircraft are listed suggests a priority for further examination from a corrosion cost standpoint. The highlighted items ranked among the top 10 for both total and average corrosion cost for each of the study years. Table ES-4. Corrosion Impact on Total Non-Available Days by TMS (FY2009) TMS Description NMC days UNA days Total nonavailable days Nonavailable days related to corrosion % of nonavailable days related to corrosion P-3C Long-range, anti-submarine warfare 11,858 23,426 35,284 8, % patrol aircraft SH-60B Twin turbo shaft engine, multi-mission 17,814 9,517 27,331 8, % helicopter FA-18C Supersonic, carrier-capable multirole 35,211 35,697 70,908 7, % fighter jet CH-53E Heavy-lift transport helicopters 14,717 12,855 27,572 6, % CH-46E Medium-lift tandem rotor transport 12,974 9,698 22,672 5, % helicopter EA-6B Twin-engine electronic warfare aircraft 11,060 7,880 18,940 4, % AV-8B Vertical-lift aircraft 12,490 7,893 20,383 4, % MH-60S Twin- engine medium lift utility 11,573 8,734 20,307 3, % helicopter FA-18F Supersonic, carrier-capable multirole 23,786 8,163 31,949 3, % fighter jet AH-1W Attack helicopter 12,471 7,047 19,518 3, % There is a strong relationship between corrosion cost and corrosion-related nonavailable days. Seven of the nine aircraft with the highest corrosion costs are also among the greatest contributors to corrosion-related non-available days. The P-3C, v

6 SH-60B, and EA-6B are among the top 10 highest total corrosion costs, average corrosion cost per aircraft, total non-available days, and average non-available days per aircraft. They present an opportunity for corrosion-related improvement. There also appears to be a strong relationship between corrosion cost and corrosion-related non available days by nature of work (preventive versus corrective maintenance). We show this relationship in Table ES-5. Table ES-5. Total Corrosion Cost and Non-Available Days by Nature of Work Nature of cost Corrosion cost (in millions) Percentage of total corrosion cost Total corrosionrelated nonavailable days Percent of total corrosion related non-available days Corrective $ % 31, % Preventive $1, % 63, % Preventive maintenance accounts for nearly 67 percent of all corrosion related nonavailable days for all aircraft. Table ES-6 shows a breakdown of the non-available days related to corrosion prevention. Inspection is by far the major contributor to corrosion-related non-available days. Table ES-6. Preventive Total Non-Available Days by Activity (FY2009) Corrosion prevention activity Number of prevention-related non-available days Percentage of total preventionrelated non-available days Inspect/test 45, % Clean 10, % Treat 4, % Preserve 1, % All preventive activities 63, % There are more than 8.4 million maintenance records classified as corrective or preventive maintenance. The fact that preventive work percentages for both corrosion cost and corrosion-related non-availability are so close is significant. It would imply there is an opportunity to closely examine preventive maintenance activity to determine if both corrosion costs and non-available days can be reduced. vi

7 Contents Chapter 1 Objectives, Method, and Background STUDY OBJECTIVES STUDY METHOD Summary of Cost Methodology Summary of Availability Methodology Relationship Between Cost and Availability BACKGROUND Aviation Maintenance Structure Aviation Corrosion Organization Aircraft and Engine Equipment List DATA STRUCTURE AND ANALYSIS CAPABILITIES REPORT ORGANIZATION Chapter 2 Navy and Marine Corps Aviation Corrosion Costs and Analysis DM COST OF CORROSION (NODES A AND B ) Organic DM Corrosion Costs (Nodes A1 and B1 ) Commercial DM Corrosion Costs (Nodes A2 and B2 ) FLM COST OF CORROSION (NODES C AND D ) Top-Down Analysis Bottom-Up Analysis ONR COST OF CORROSION (NODES E, F, AND G ) Labor of Non-Maintenance Aviation Equipment Operators (Node E ) Priority 2 and 3 Costs (Node F ) Purchase Cards (Node G ) FINAL NAVY AND MARINE CORPS AVIATION EQUIPMENT CORROSION COST TREE (NODES A THROUGH G ) SUMMARY AND ANALYSIS OF AVIATION AND MISSILE EQUIPMENT CORROSION COSTS Corrosion Cost Comparison by Study Year and Node vii

8 Corrosion Costs by Equipment Type Corrosion Costs by Work Unit Code and AWBS CORROSION COSTS CORRECTIVE VERSUS PREVENTIVE COSTS CORROSION COSTS PARTS VERSUS STRUCTURE Chapter 3 Navy and Marine Corps Aviation Corrosion Impact on Availability CURRENT NAVY AND MARINE CORPS AVAILABILITY REPORTING Reporting Metrics Reporting Results UNREPORTED NON-AVAILABILITY RESULTS TOTAL AIRCRAFT NON-AVAILABLE DAYS DETERMINING THE IMPACT OF CORROSION ON AVAILABILITY Determining NMC and UNA Status Determining Corrosion-Related Work Summary Results Corrosion Impact on Availability Calculation Method Corrosion Impact on Availability Corrosion Impact on Availability Various Data Views Chapter 4 The Relationship Between Corrosion-Related Cost and Corrosion-Related Availability CORROSION-RELATED COST AND AVAILABILITY BY TMS CORROSION-RELATED COST AND AVAILABILITY BY WBS CORROSION-RELATED COST AND AVAILABILITY BY NATURE OF WORK Appendix A Navy and Marine Corps Aircraft and Engine Equipment Appendix B Navy and Marine Corps Aviation Equipment Corrosion Cost Data Sources by Node Appendix C Key Corrosion Words Appendix D Aviation Work Breakdown Structure Coding Appendix E Navy and Marine Corps Survey Results Appendix F Mission Capable and Not Mission Capable Rates by Aircraft Appendix G Difference in Navy and Marine Corps Aircraft Inventory Used in Cost and Availability Studies viii

9 Objectives, Method, and Background Appendix H Corrosion NMC and UNA Days by Aircraft for FY2009 Appendix I Total Non-Available Days by System Appendix J Abbreviations Figures Figure 1-1. Preventive and Corrective Corrosion Cost Curves Figure 1-2. The Relationship Between Spending on Corrosion-Related Maintenance and Availability Figure 1-3. The Relationship Between Zero Spending on Corrosion-Related Maintenance and Availability Figure 1-4. Navy Systems Command Structure Figure 1-5. Navy SYSCOM Structure with DM and Supply Aviation Maintenance Responsibility Figure 1-6. Data Structure and Methods of Analysis Figure 2-1. Navy and Marine Corps Aviation Equipment Corrosion Cost Tree (FY2009) Figure 2-2. Navy and Marine Corps Aviation DM Corrosion Costs (in millions) Figure 2-3. Navy and Marine Corps Aviation Equipment Organic DM Corrosion Costs (in millions) Figure 2-4. Organic DM Navy and Marine Corps Aviation Labor Cost Tree (in millions) Figure 2-5. Organic DM Navy and Marine Corps Aviation Equipment Materials Cost Tree Section (in millions) Figure 2-6. Commercial DM Navy and Marine Corps Aviation Equipment Cost Tree Section (in millions) Figure 2-7. Use of Corrosion Ratios to Determine Commercial DM Corrosion Cost Figure 2-8. Navy and Marine Corps Aviation Equipment FLM Corrosion Cost (in millions) Figure 2-9. Navy and Marine Corps Aviation Equipment Organic FLM Labor Corrosion Cost (in millions) Figure Navy and Marine Corps Aviation Equipment Organic FLM Materials Corrosion Cost (in millions) Figure Navy and Marine Corps Aviation Equipment Commercial FLM Labor Corrosion Cost (in millions) ix

10 Figure Navy and Marine Corps Aviation Equipment Commercial FLM Materials Corrosion Cost (in millions) Figure Navy and Marine Corps Aviation Equipment Corrosion ONR Costs (in millions) Figure Final Aviation Equipment Corrosion Cost Tree Figure 3-1. Navy and Marine Corps Aviation Availability Reporting Metrics Figure 3-2. Calculating the Total Number of Navy and Marine Corps Aviation Non-Available Days Figure 3-3. Example Illustrating Calculation Impact of Corrosion on NMC or UNA days Tables Table 1-1. Cost of Corrosion Studies to Date and Future Efforts Table 2-1. Navy and Marine Corps Aviation Equipment DM Organic and Commercial Corrosion Cost (in millions) Table 2-2. Corrosion Search Algorithm Table 2-3. Applying the Corrosion Search Algorithm and Corrosion Cost Percentages Table 2-4. Illustration of Allocation of Materials Costs to Labor Records Table 2-5. AWBS Maintenance Activity Codes Table 2-6. AWBS System Codes Table 2-7. Example of AWBS Subsystem Codes and Descriptions in System 31 Fire Control System & Target Acquisition Table 2-8. Staffing Levels and Cost by Military Component for Navy and Marine Corps FLM Maintainers Table 2-9. Navy and Marine Corps Combined OP-31 and OP-32A Spares and Repair Parts Consumables Budget (FY2009) Table Staffing Levels and Cost by Military Component for Navy and Marine Corps Aviation Field-Level Maintainers Table Navy and Marine Corps Aviation Materials OP-31 Spares and Repair Parts Consumables Budget (FY2009) Table Navy and Marine Corps Aviation Equipment Operator Duty Positions Table DMDC Navy and Marine Corps Aviation Operator Manning Levels Table DMDC Navy and Marine Corps Aviation Operator Labor Costs (in millions) Table Possible Navy and Marine Corps Aviation Weapon System or Equipment Corrosion RDT&E Projects x

11 Objectives, Method, and Background Table Aviation DM and FLM Corrosion Costs Table Aviation and Missiles Corrosion Cost by Node and Sub-Node (in millions) Table Navy and Marine Corps Aviation Cost Trends for Fluctuating Corrosion Cost by Node and Sub-Node Table Top 10 Contributors to Navy and Marine Corps Aviation Corrosion Costs (FY2009) Table Top 10 Aviation Types by Average Corrosion Cost per Item (FY2009) Table Highest Combined Ranking for Average and Total Corrosion Cost (FY2009) Table Corrosion Cost by Two-Digit Work Unit Code (FY2009) Table Corrosion Cost and Maintenance Cost Ranking by the Second AWBS Character Table Corrosion Cost and Maintenance Cost Ranking by the Third and Fourth AWBS Character Table Top 10 Airframe Corrosion Cost by TMS Table Airframe System Corrosion Cost by Subsystem Table Aviation and Missile Equipment Corrective and Preventive Cost Table Aviation and Missile Equipment Corrosion Cost by Parts versus Structure Table 3-1. Illustration of Navy and Marine Corps Aviation Availability Reporting Table 3-2. FY2009 MC and NMC Rates for 20 Navy and Marine Corps Aircraft TMS Table 3-3. FY2009 NMC Days for 20 Navy and Marine Corps Aircraft TMS Table 3-4. FY2009 Total UNA Days for 20 Navy and Marine Corps Aircraft TMS Table 3-5. FY2009 Total Non-Available Days for the Highest 20 Navy and Marine Corps Aircraft TMS by Average Number of Aircraft Reported Table 3-6. Corrosion Search Algorithm Table 3-7. FY2009 Maintenance and Availability for Navy and Marine Corps Aviation Table 3-8. FY2009 Availability for Navy and Marine Corps Aviation Table 3-9. FY2009 Maintenance and Availability for Navy and Marine Corps Aviation UNA and NMC Table Corrosion Impact on NMC Days by TMS (FY2009) xi

12 Table Corrosion Impact on UNA Days by TMS (FY2009) Table Corrosion Impact on Total Non-Available Days by TMS (FY2009) Table Corrosion Impact on NMC Days by Aircraft System (FY2009) Table Corrosion Impact on UNA Depot Days by System (FY2009) Table Corrosion Impact on Total Non-Available Days by System (FY2009) Table Corrosion Impact on NMC Days by Nature of Work (FY2009) Table Corrosion Impact on UNA Depot Days by Nature of Work (FY2009) Table Corrosion Impact on Total Non-Available Days by Nature of Work (FY2009) Table Preventive Total Non-Available Days by Activity (FY2009) Table 4-1. FY2009 Corrosion-Related Cost and Non-Available Days by TMS Table 4-2. FY2009 Average Corrosion-Related Cost and Non-Available Days by TMS Table 4-3. Highest Ranked Contributors to Total and Average Corrosion Cost and Corrosion-Related Non-Available Days by TMS (FY2009) Table 4-4. FY2009 Total Corrosion-Related Cost and Non-Available Days by WUC Table 4-5. FY2009 Total Corrosion-Related Cost and Non-Available Days by WUC Table 4-6. FY2009 Total Corrosion-Related Cost and Non-Available Days by Nature of Work xii

13 Chapter 1 Objectives, Method, and Background According to a recently published study, the cost of corrosion to the Department of Defense for infrastructure and equipment is estimated to be $22.5 billion each year. 1 Congress, concerned with the high cost of corrosion, enacted legislation that endowed the Office of the Under Secretary of Defense for Acquisition, Technology and Logistics (USD[AT&L]) with the overall responsibility of preventing and mitigating the effects of corrosion on military equipment and infrastructure. 2,3 To perform its mission of corrosion prevention and mitigation, fulfill congressional requirements, and respond 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 and representatives from private industry. In response to a GAO recommendation to develop standardized methodologies for collecting and analyzing corrosion cost, readiness, and safety data, 4 the CPC IPT created standard methods to measure both the cost and availabilityrelated effect of corrosion for DoD s military equipment and infrastructure. 5,6 In April 2006, the CPC IPT published the results of its first corrosion cost study using the standard corrosion cost estimation method. We present the results of that first study, other past studies, and the timeline for future corrosion studies in Table Under Secretary of Defense (Acquisition, Technology and Logistics), DoD Annual Cost of Corrosion, July The Bob Stump National Defense Authorization Act for Fiscal Year 2003, Public Law , 2 December 2002, p 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 DoD CPC IPT, Proposed Method and Structure for Determining the Cost of Corrosion for the Department of Defense, August DoD CPC IPT, The Impact of Corrosion on the Availability of DoD Weapon Systems and Infrastructure, October

14 Table 1-1. Cost of Corrosion Studies to Date and Future Efforts Study year a Study segment Annual cost of corrosion Data baseline Army ground vehicles $2.0 billion FY2004 Navy ships $2.4 billion FY DoD facilities and infrastructure $1.8 billion FY2005 Army aviation and missiles $1.6 billion FY2005 Marine Corps ground vehicles $0.6 billion FY Navy and Marine Corps aviation $2.6 billion FY2005 and FY2006 Coast Guard aviation and vessels $0.3 billion FY2005 and FY Air Force $5.7 billion FY2006 and FY2007 Army ground vehicles $2.4 billion FY2006 and FY2007 Navy ships $2.5 billion FY2006 and FY2007 DoD Other equipment $5.1 billion FY Marine Corps ground vehicles $0.5 billion FY2007 and FY2008 DoD facilities and infrastructure $1.9 billion FY2007 and FY2008 Army aviation and missiles $1.4 billion FY2007 and FY Navy and Marine Corps aviation $2.6 billion FY2008 and FY2009 Air Force Pending FY2008 and FY Army ground vehicles and Navy ships FY2008 through FY2010 a Study period is one calendar year. The current annual cost of corrosion for DoD is $22.5 billion. We derived this total by aggregating the most recent cost of each study segment and disregarding the totals from the Coast Guard aviation and vessels study. 7 More recently, LMI was tasked by the CPC IPT with measuring not only the cost of corrosion for Air Force, Navy, and Marine Corps aviation assets but also the corrosion impact on weapon systems availability for all DoD (Army, Air Force, Navy, and Marine Corps) aviation assets. We used data from FY2008 and 2009 to conduct these studies. The corrosion-related cost studies for Air Force, Navy, and Marine Corp aviation assets were follow-on efforts of previously studied segments; the availability studies are initial efforts to quantify the impact on weapon system availability. Future cost and availability studies will continue to update these studies to help the services identify trends over time. 7 We disregarded the Coast Guard aviation and vessels total of $0.3 billion because they are part of the Department of Homeland Security. 1-2

15 Objectives, Method, and Background We present the study results from study year by service in three separate reports to provide ease of use for each service. We combined the cost and availability impact results within the same report by service. This report presents the results of the Navy and Marine Corps aviation portion of the cost and availability impact of corrosion study. STUDY OBJECTIVES STUDY METHOD We had five specific objectives for this study: Measure the most recent annual sustainment cost of corrosion for Navy and Marine Corps aviation assets. Measure the most recent corrosion-related effects on availability for Navy and Marine Corps aviation assets. Identify corrosion-related cost reduction opportunities for Navy and Marine Corps aviation assets. Identify corrosion-related availability improvement opportunities for Navy and Marine Corps aviation assets. Analyze trends and draw conclusions using both the initial and most recently concluded Navy and Marine Corps aviation cost-of-corrosion studies. The study methods we applied to Navy and Marine Corps aviation assets were the same ones outlined in the original reports. For the sake of brevity, we only outline a brief description of these methods here. Readers who want more information on the cost of corrosion study methodology may refer to Chapter 1 of the original report, The Annual Cost of Corrosion for Navy and Marine Corps Aviation Equipment. 8 For more information on the method for assessing the corrosionrelated effect on availability, refer to Chapter 2 of The Impact of Corrosion on the Availability of DoD Weapon Systems and Infrastructure. 9 To ensure consistency, we used the definition of corrosion that was developed by Congress: 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 study. 8 LMI, The Annual Cost of Corrosion for Navy and Marine Corps Aviation Equipment, Report MEC70T3, David A. Forman et al., June DoD CPC IPT, The Impact of Corrosion on the Availability of DoD Weapon Systems and Infrastructure, Report DL907T1, Eric F. Herzberg, October Op. cit., Public Law , p

16 Our estimation method for both cost and availability impact segregates maintenance activities by their source and nature, using the following three schemas: Depot corrosion costs incurred while performing depot maintenance, or DM Field corrosion costs incurred while performing organizational or intermediate maintenance, referred to as field-level maintenance, or FLM Corrective costs incurred while addressing an existing corrosion problem 11 Preventive costs incurred while addressing a potential future corrosion issue Structure direct corrosion costs incurred by the body frame of a system or end item Parts direct corrosion costs incurred by a removable part of a system or end item. For the cost study, there is one additional category: outside normal reporting (ONR) costs, which are corrosion-related costs not identified in traditional maintenance reporting systems. 12 Summary of Cost Methodology The method we used to measure costs focuses on tangible direct material and labor costs as well as some indirect costs, like research and development. The corrosion cost estimation method is a combined top-down and bottom-up approach. The top-down portion uses summary-level cost and budget documentation to establish spending ceilings for DM and FLM for both organic and commercial maintenance activities. This establishes a maximum cost of corrosion in each maintenance area. The bottom-up portion uses detailed work order records to aggregate actual occurrences of corrosion maintenance and activity. This establishes the minimum 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 area of maintenance. From a management standpoint, it is useful to determine the ratio between corrective costs and preventive costs. Over time, it is usually more expensive to fix a problem than it is to prevent a problem. But it is also possible to overspend on preventive measures. As illustrated in Figure 1-1, classifying the cost elements into categories helps decision makers find the proper balance between preventive and corrective expenses to minimize the overall cost of corrosion. 11 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. Source: International Organization for Standardization 9000:2000 definition of corrective and preventive actions. 12 These costs are not distributed within any of the other schemas. 1-4

17 Objectives, Method, and Background Figure 1-1. Preventive and Corrective Corrosion Cost Curves Cost of corrosion Total cost of corrosion curve Minimum overall cost of corrosion Preventive cost curve Corrective cost curve High Ratio of preventive to corrective cost Low The value of classifying costs into preventive and corrective categories is to determine the ratio between the natures of these costs and to determine if there is an optimum ratio between the two categories that will result in the lowest total cost. Summary of Availability Methodology The availability study method we used employs a similar top-down and bottomup approach, with one difference: the top-down portion uses total days of reported non-availability by aircraft type instead of spending amounts. The bottom-up portion uses the same detailed work order records used in the cost method to aggregate actual occurrences of corrosion maintenance and activity that resulted or contributed to aircraft non-availability. This establishes a minimum level of corrosion-related non-availability in each activity area. Where necessary, we use statistical methods to bridge any significant gaps between the top-down and bottomup non-availability figures to derive a final estimate for the impact of corrosion on weapon systems availability in each area of maintenance. Relationship Between Cost and Availability There is an apparent relationship between the effect corrosion has on costs and the effect it has on availability (see Figure 1-2). 1-5

18 Figure 1-2. The Relationship Between Spending on Corrosion-Related Maintenance and Availability From Figure 1-2, we see two relationships. The first is the relationship between spending on preventive corrosion and corrective corrosion. Typically, this is an inverse relationship. The higher the amount of spending on preventive measures, the lower the corrective corrosion spending will be. The amount of preventive spending drives the resultant corrective actions. The exception to this general rule is there can be overspending on preventive measures without a corresponding reduction in corrective spending. The other relationship is the amount of corrosion cost and the subsequent effect on availability. An extreme amount of spending on preventive measures that do not result in a reduction of corrective maintenance actions will have an overall negative impact on availability. This is similar to changing the oil on your car every month. It is most likely an excessive amount of preventive maintenance that has only marginal effect on improving the reliability of your car s engine. Of course, spending too little on preventive measures will eventually result in greater corrective corrosion spending. This, too, can have a negative effect on availability. Of course, 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 number of unplanned maintenance hours) to minimize the availability impact of corrective corrosion actions. 1-6

19 Objectives, Method, and Background It is also useful to examine the availability-related effects of not spending on corrosion. In Figure 1-3, we see the impact on availability of not spending any maintenance funds for corrosion. The initial impact is minimal; however, over time, as corrosion starts to degrade all aircraft, we see an accelerating negative effect on availability. Figure 1-3. The Relationship Between Zero Spending on Corrosion-Related Maintenance and Availability Availability impact of corrosion L100 L0 T0 Time T100 BACKGROUND Notes: L0 = initial level of corrosion impact on availability; L100 = level of corrosion impact on availability at time interval 100; T0 = start time; T100 = time interval 100. The Naval Systems Command (SYSCOM), under the direction of the Assistant Secretary of the Navy, Research, Development, and Acquisition (ASN[RD&A]) and the Chief of Naval Operations (CNO), provides support to naval operating forces. There are two primary aviation maintenance organizations within SYSCOM: Naval Air Systems Command (NAVAIR) and Naval Supply Systems Command (NAVSUP). Together, these organizations provide total lifecycle support to Navy and Marine Corps aviation forces worldwide. This aviation-related maintenance support includes facilities for the repair of aircraft and components and storage areas for repair parts. NAVAIR is the technical authority for maintenance and upgrades for aviationrelated Navy and Marine Corps equipment. Within NAVAIR, the Logistics and Industrial Operations Directorate (AIR 6.0) provides technical oversight of aviation maintenance operations, provides technical authority for three naval air depots, and maintains central databases of FLM and DM aviation maintenance activities. 1-7

20 NAVSUP provides supplies and material support to the fleet. Within NAVSUP, the Naval Inventory Control Point (NAVICP) manages more than 350,000 different line items of repair parts, components, and assemblies for weapon systems, including aviation platforms and equipment. We show the SYSCOM organizational structure in Figure 1-4. The NAVAIR and NAVSUP activities are highlighted in yellow. The fleet relies heavily on these organizations to support aviation maintenance operations. Figure 1-4. Navy Systems Command Structure ASN (RD&A) CNO Deputy Assistant Secretaries of the Navy Program Executive Officers SYSCOM Naval Sea SYSCOM (NAVSEA) Primary maintenance, engineering, and supply responsibilities for Navy and Marine Corps aviation platforms and equipment NAVAIR NAVSUP Space and Naval Warfare SYSCOM (SPAWAR) Marine Corps SYSCOM (MARCOR) Naval Facilities Engineering Command (NAVFAC) Office of Naval Research (ONR) Aviation Maintenance Structure The Naval Aviation Maintenance Program (NAMP), 13 established many years ago and revised significantly by the CNO in February 2005, provides the instructions and procedures to meet aviation readiness and safety standards for Navy and Marine Corps aviation equipment. 13 CNO, OPNAV Instruction J, The Naval Aviation Maintenance Program, 1 February

21 Objectives, Method, and Background Although we discussed the general definitions of FLM and DM earlier in this chapter, it is useful to understand how they are specifically applied to Navy and Marine Corps aviation assets. FLM involves the daily care and upkeep of an aviation platform as it is used in an operational environment. FLM includes both organizational ( O ) and intermediate ( I ) levels. O-level maintenance is performed by Navy and Marine Corps aviation maintenance specialists who support their own unit s operations on a day-to-day basis. O-level maintenance is also referred to as level 1 maintenance. I-level maintenance is performed in centrally located facilities set up to support all operating units within a geographical area, a particular base, or aboard aviation ships. I-level maintenance includes designated aircraft intermediate maintenance departments (AIMDs) that are located either onboard ships or at specified bases. It also includes Marine aviation logistics squadrons (MALS), which provide maintenance and supply support to the Marine Corps tactical squadrons. This type of work is usually conducted in back-shops for aircraft subsystems and components. I-level maintenance is also referred to as level 2 maintenance. DM supports FLM by providing engineering assistance and performing maintenance that is beyond the capabilities of O- and I-level activities. DM is the more comprehensive and complex repair work performed by civilian artisans in a government-owned and -operated Navy or Marine Corps facility (called a fleet readiness center [FRC]) or at a commercial contractor facility. The three aviation maintenance FRC s (located in Cherry Point, North Carolina; Jacksonville, Florida; and North Island, California) are subordinate organizations to NAVAIR. These are highlighted in green in Figure 1-5. The aviation maintenance structure also includes organizations that supply the maintenance activities. NAVICP is the primary supplier of repair parts and supplies. As a subordinate organization of NAVSUP, NAVICP provides repair parts and supplies to Navy and Marine Corps maintainers worldwide. NAVICP consists of two primary sites, both in Pennsylvania: Philadelphia and Mechanicsburg. NAVICP-Philadelphia focuses on Navy and Marine Corps aviation and weapon system support, including aircraft platforms, engines, avionics, and support equipment. NAVICP-Mechanicsburg focuses on ship-related supplies. The NAVICP-Philadelphia site is highlighted in blue in Figure

22 Figure 1-5. Navy SYSCOM Structure with DM and Supply Aviation Maintenance Responsibility ASN (RD&A) CNO Deputy assistant secretaries of the Navy Program executive officers SYSCOM commanders Navy aviation maintenance FRC s and supply points FRCE (Cherry Point) H-46, AV-8B, V-22, H-53, H-1, EA-6B, C-130, H-2, H-3, H-60, engines, and gearboxes NAVAIR FRCSE (Jacksonville) P-3, F/A-18, EA-6B, SH-60 FRCSW (North Island) F/A-18 and Super Hornet, E-2, C-2, S-3, SH-60, AH-1W NAVSUP ICP- Philadelphia Aviation and related parts ICP Mechanicsburg Ship, subs, and related parts Aviation Corrosion 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. In January 2009, the Navy appointed a corrosion executive. That position is currently held within the office of the Assistant Secretary of the Navy for Research, Development, and Acquisition. In FY , corrosion mitigation and prevention for naval aviation was managed by way of embedded programs and individuals within the various aviation maintenance and aviation-related supporting organizations. NAMP requires an active corrosion control program to protect weapon systems from corrosive elements. As a result, Navy and Marine Corps aviation assets undergo corrosion prevention and control measures as part of a planned maintenance program for all aircraft at all levels of maintenance. As the technical authority, NAVAIR is involved with corrosion control and prevention throughout an aircraft s life cycle. NAVAIR acts as the Navy s representative to many internal and external material-related corrosion mitigation efforts. The Materials Engineering Corrosion and Wear Branch (AIR ) is a key NAVAIR organization in aviation corrosion control. Its involvement in materialrelated corrosion control efforts includes the following: Providing acquisition and in-service corrosion engineering. Identifying and solving corrosion needs at all levels of maintenance. 1-10

23 Objectives, Method, and Background Participating on the DoD CPC IPT. Acting as the lead for the Corrosion Steering Group as part of the Joint Council on Aging Aircraft. Partnering with the Army Aviation and Missile Command on common solutions to aviation corrosion problems. Aircraft and Engine Equipment List The scope of this study includes all Navy and Marine Corps aircraft and engines. There are 98 unique types of aircraft at the type, model, series (TMS) level of detail. In FY2009, there were more than 3,775 aircraft in Navy and Marine Corps inventories, as reported in the Aircraft Inventory Readiness and Reporting System (AIRRS). 14 We included in this study an additional 14 types of aircraft engines listed at the type and model level of detail. Unfortunately, there is no engine inventory reported in AIRRS. We were able to identify these engines through the FLM and DM records. We provide a complete listing of all Navy and Marine Corps aircraft and engines in Appendix A. DATA STRUCTURE AND ANALYSIS CAPABILITIES To accommodate the anticipated variety of decision makers and data users, we designed a corrosion cost data structure that maximizes analysis flexibility. Figure 1-6 outlines the data structure and different methods of analysis. 14 AIRRS provides the aviation community with up-to-date and consistent aircraft inventory, readiness data, and flight/utilization data for each aircraft in the Navy and Marine Corps inventory. We used the midyear inventory level of aircraft with an active status as reported on 31 March 2009 to represent our average annual inventory. 1-11

24 Figure 1-6. Data Structure and Methods of Analysis Equipment Type xxx (Age z years) Cost Percentage of total Equipment Type 100 (Age 5 years) Cost Percentage of total Equipment Type 001 (Age 12 years) Cost Percentage of total Labor Materials WBS Depot-level maintenance corrosion costs Field-level maintenance corrosion costs Outside normal reporting corrosion costs Corrective corrosion costs Preventive corrosion costs Structure direct corrosion costs Parts direct corrosion costs Using this data structure, we were able to analyze all available data against the following: Equipment type Age of equipment type Corrective versus preventive costs Depot-level, field-level, or outside normal reporting Structure versus parts costs Materials costs Labor costs Work breakdown structure (WBS) Work breakdown structure coding determines the aircraft sub-system on which work is being performed. We discuss the Navy and Marine Corps aviation WBS in more detail in Chapter

25 Objectives, Method, and Background Any of these data structures can be combined with another to create a new analysis category. For example, a data analyst can isolate corrective corrosion cost for field-level maintenance materials if desired. REPORT ORGANIZATION Having explained our analysis approach, outlined the Navy and Marine Corps maintenance and corrosion organizations, discussed the maintenance structure, and outlined the aviation assets included within the scope of the study, we are now ready to explain how we determined the corrosion impact on availability and costs. Chapter 2 explicitly details the corrosion-related costs for Navy and Marine Corps aviation equipment (based on FY2009 costs) and presents our analysis of the results. Chapter 3 presents the same type of information for the effect corrosion has on availability. Chapter 4 discusses our final conclusions about the relationship between the corrosion-related costs and the effect corrosion has on availability. The appendixes provide supporting data and analysis. 1-13

26 1-14

27 Chapter 2 Navy and Marine Corps Aviation Corrosion Costs and Analysis The estimated total annual cost of corrosion for Navy and Marine Corps aviation assets (based on FY2009 data) is $2.6 billion. In this chapter, we explain how we arrived at this estimate. For ease of discussion, we focused on FY2009 costs, as they are the most recent. We developed the cost tree in Figure 2-1 as a visual tool to help illustrate the cost of corrosion for Navy and Marine Corps aviation. It serves as a guide for the remainder of this section. Figure 2-1. Navy and Marine Corps Aviation Equipment Corrosion Cost Tree (FY2009) $83.7 billion DoD Maintenance $49.7 billion Non-Navy/MC maintenance $11.9 billion Total Navy/MC DM $22.1 billion Total Navy/MC FLM Total Navy/MC costs Outside normal reporting Laborrelated cost of corrosion Materialsrelated cost of corrosion Laborrelated cost of corrosion Materialsrelated cost of corrosion Labor of non-maintenance operators Priority 2 and 3 costs Purchase cards Navy/MC flying assets only A B C D E F G At the top of the cost tree is $83.7 billion, which is the entire cost of DoD maintenance for FY Eliminating non-navy and non Marine Corps costs and segregating the cost tree into DM, FLM, and ONR costs resulted in the second level of the tree. The cost figures for DM and FLM represent all Navy and Marine Corps costs. Cost nodes A through G depict the main segments of corrosion cost. Using separate cost trees for DM, FLM, and ONR, we can determine the overall corrosion costs by combining the costs at each node. We provide the documentation of data sources for each of the cost figures in each node in Appendix B. 1 Analysis based on method described in LMI report, The Estimated Total Cost of DoD Materiel Maintenance, Report LG603T3, Earl R. Wingrove, III, et al., July

28 DM COST OF CORROSION (NODES A AND B ) DM corrosion costs are significant, both at organic and commercial DM facilities. We identified a total aircraft and aircraft engine DM corrosion cost of $549 million. This is 16.8 percent of total Navy and Marine Corps aviation equipment DM costs (excluding overhead) of $3.268 billion. As explained briefly in Chapter 1, we used a combined top-down and bottom-up approach to determine the costs of corrosion. We examined DM costs by developing the detailed DM corrosion tree in Figure 2-2. In this cost tree, we separated organic DM from commercial DM and segregated the labor, materials, and overhead costs. Figure 2-2. Navy and Marine Corps Aviation DM Corrosion Costs (in millions) 2 $11,903 DM $6,406 Organic depot $5,497 Commercial depot $4,127 Labor $656 Overhead $1,623 Materials $3,542 Labor $563 Overhead $1,392 Materials $835 Flying assets labor $3,292 Non-flying assets labor $924 Flying assets materials $699 Non-flying assets materials $716 Flying assets labor $2,826 Non-flying assets labor $792 Flying assets materials $600 Non-flying assets materials $682 Noncorrosion $153 Corrosion A1 $747 $177 Noncorrosion Corrosion B1 $612 Noncorrosion $104 Corrosion A2 $677 $115 Noncorrosion Corrosion B2 Note: Numbers may not add because of rounding. We started with a top-down DM cost of $ billion for the Navy and Marine Corps using an annual DM congressional reporting requirement to determine this cost. 3 The same document details the split between organic DM ($6.406 billion) and costs incurred at commercial depots ($5.497 billion). This is reflected in the second level of the tree in Figure The Navy s three organic FRCs are responsible for providing DM for both Navy and Marine Corps aircraft. 3 Deputy Under Secretary of Defense (Logistics and Materiel Readiness), Distribution of DoD DM Workloads: Fiscal Years , May 2010, p. 9. 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 being used to contract for performance by non federal government personnel. 2-2

29 Navy and Marine Corps Aviation Corrosion Costs and Analysis Through 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 bottomup data to determine the corrosion costs at each sub-node. These costs are shown in Table 2-1. Table 2-1. Navy and Marine Corps Aviation Equipment DM Organic and Commercial Corrosion Cost (in millions) Aviation equipment costs Corrosion-related costs Maintenance provider Labor costs Materials costs Overhead costs Total DM costs Labor costs Materials costs Total maintenance costs Organic DM $835 $924 $200 $1,959 $153 $177 $330 Commercial DM $716 $792 $172 $1,680 $104 $115 $219 Total $1,551 $1,716 $372 $3,639 $257 $292 $549 As we show in Table 2-1, the DM corrosion cost for materials ($292 million) exceeds the DM corrosion cost for labor ($257 million) by a slight amount. Corrosion-related organic DM cost ($330 million) is significantly higher than the commercial DM corrosion cost ($219 million). We discuss these and other observations in more detail later in this chapter. Organic DM Corrosion Costs (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 organic DM corrosion cost tree in Figure 2-3. Figure 2-3. Navy and Marine Corps Aviation Equipment Organic DM Corrosion Costs (in millions) $6,406 Organic depot $4,127 Labor $656 a Overhead $1,623 Materials $835 Flying assets labor $3,292 Non-flying assets labor $924 Flying assets materials $699 Non-flying assets materials $682 Noncorrosion $153 Corrosion A1 $747 $177 Noncorrosion Corrosion B1 a Overhead does not contain any corrosion costs. 2-3

30 We split the $6.406 billion of organic DM costs into aviation and non-aviation equipment using a report on DoD depot operating expenses for FY That report used the FY2009 Statements of Financial Position (AR[M]1307) for all the DoD depots. Using the AR(M)1307 for the FRCs at Cherry Point, Jacksonville, and North Island, we identified the specific aviation equipment costs. We next split the organic DM aviation costs into labor, materials, and overhead using the AR(M)1307 report on DoD maintenance depot operating expenses. Labor costs include both organic and contractual labor. Materials costs include both direct and contractual materials. Overhead includes depreciation, contractual overhead, and other overhead costs. Next, we scaled the labor, materials, and overhead costs from the AR(M)1307 to balance with the top-down organic DM total. We needed to do this because the statements of financial position do not precisely add up to the amount reported in the annual report to Congress. The scaling factor for Navy FRCs decreased the labor, materials, and overhead costs by 1.0 percent from their original amount. Based on the depot accounting report information, the organic DM costs depicted in the third level of the organic DM cost tree (Figure 2-3) are as follows: Labor $835 million. The labor cost is the sum of each FRC s direct and contractual labor costs. The labor costs include potential corrosion costs. Materials $924 million. The materials cost is the sum of each FRC s direct and contractual materials costs. Materials costs include potential corrosion costs. To this point, we determined the labor and materials cost figures by using a topdown costing method. We needed to take the final step and determine the corrosion costs at each node using a bottom-up cost analysis. 4 LMI, DoD Maintenance DM Operating Expenses for FY2009, Report LG902T2, Clark L. Barker, May The report presents a summary of operating expenses for DoD maintenance depots. Data is presented for each maintenance activity and includes the major expense categories of personnel, material, contractual, and other. 2-4