THE ANNUAL COST OF CORROSION FOR ARMY GROUND VEHICLES

Transcription

1 THE ANNUAL COST OF CORROSION FOR ARMY GROUND VEHICLES UPDATE REPORT MEC81T1 Eric F. Herzberg David A. Forman Norman T. O'Meara, PhD James C. Tran MAY 2009

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

3 The Annual Cost of Corrosion for Army Ground Vehicles: Update MEC81T1/MAY 2009 Executive Summary We know from earlier studies that the annual cost of corrosion for Department of Defense infrastructure and equipment is between $9 billion and $20 billion. 1 Although the spread between these estimates is large, both figures confirm that corrosion costs are substantial. Congress, concerned with the high cost of corrosion and its negative effect on military equipment, facilities, and infrastructure, enacted legislation in December 2002 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 Under the leadership and sponsorship of the USD(AT&L), LMI measured the cost of corrosion for Army ground vehicles using data from FY2006 and FY2007. Using a method approved by the Corrosion Prevention and Control Integrated Product Team (CPC IPT), we estimate the FY2007 corrosion cost for Army ground vehicles to be $2.4 billion. 4 This study is a repeat of a similar study LMI performed in 2005, which employed the same methodology and used FY2004 as a measurement baseline (see Table ES-1). Table ES-1. Army Ground Vehicle and Corrosion Cost Cost element Data year Corrosion cost Total Army ground vehicle corrosion cost FY2004 $2,019 million Total Army ground vehicle corrosion cost FY2006 $2,344 million Total Army ground vehicle corrosion cost FY2007 $2,443 million 1 The $9 billion estimate is from Kinzie and Jett, DoD Cost of Corrosion, 23 July 2003, p. 3. The $20 billion estimate is from Gerhardus H. Koch et al., Corrosion Cost and Prevention Strategies in the United States, CC Technologies and NACE International in cooperation with the Department of Transportation, Federal Highway Administration, 30 September 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, 28 January 2008, Section The cost estimation method was documented in a report by the CPC IPT, Proposed Method and Structure for Determining the Cost of Corrosion for the Department of Defense, August iii

4 This recent study is part of a multiyear plan to provide detailed and current data to the military services concerning their corrosion costs. Previous study results and future studies are outlined in Table ES-2. Table ES-2. Cost-of-Corrosion Studies Study year 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 $0.7 billion FY Navy and Marine Corps aviation $3.0 billion FY2005 and FY2006 Coast Guard aviation and vessels $0.3 billion FY2005 and FY Air Force $5.4 billion FY2006 and FY2007 Army ground vehicles $2.4 billion FY2006 and FY2007 Navy ships Pending FY2006 and FY Repeat Navy and Marine Corps aviation Repeat The method we use to measure cost focuses on tangible direct material and labor costs, as well as indirect costs, like research and development (R&D) and training. The corrosion cost estimation is a combined top-down and bottom-up approach. The top-down portion uses summary-level cost and budget documentation to establish maintenance spending ceilings for depot maintenance and field-level maintenance for both organic and commercial maintenance activity. This establishes a maximum cost of corrosion in each area of maintenance. The bottom-up portion uses detailed work order records to aggregate actual occurrences of corrosion maintenance and activity. This establishes a minimum level of corrosion costs in each maintenance area. Where necessary, we use statistical methods to bridge any significant gaps between the top-down and bottom-up figures to derive a final estimation for the cost of corrosion in each area of maintenance. iv

5 Executive Summary Our cost estimation method also segregates costs by their source and nature, using the following three schemas: Depot corrosion costs incurred while performing depot maintenance Field corrosion costs incurred while performing organizational or intermediate maintenance Outside normal reporting corrosion related costs not identified in traditional maintenance reporting systems 5 Corrective costs incurred while addressing an existing corrosion problem 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 ARMY GROUND VEHICLE CORROSION COSTS We estimate Army costs according to the three schemas for each of 653 different types of Army ground vehicles, which translates to more than 458,000 individual pieces of equipment (see Figure ES-1). Figure ES-1. Cost of Corrosion for Army Ground Vehicles (FY2007) Vehicle Type 520 Cost Percentage of total Vehicle Type 260 Cost Percentage of total Vehicle Type 001 Cost Percentage of total Schema Cost ($ millions) Percentage of total Depot maintenance corrosion costs Depot maintenance corrosion costs $ % Field-level maintenance corrosion costs Field-level maintenance corrosion costs $ % Outside normal reporting corrosion costs Outside normal reporting corrosion costs $ % Corrective corrosion costs Corrective corrosion costs $ % Preventive corrosion costs Preventive corrosion costs $ % Structure corrosion costs Structure corrosion costs $ % Parts corrosion costs Parts corrosion costs $1, % 5 These costs are not distributed within the other two schema. v

6 The highest corrosion-related costs are incurred during depot maintenance, which is more than 40 percent of the total corrosion cost for Army ground vehicles. Even more informative is the percentage of corrosion-related depot maintenance costs compared to the total depot maintenance costs for ground vehicles nearly 27 percent and the percentage of corrosion-related field-level maintenance costs to total field-level maintenance costs for ground vehicles less than 10 percent. From a percentage-of-maintenance standpoint, corrosion costs incurred as part of ground vehicle depot maintenance are nearly triple those of field-level maintenance. The high costs identified as being outside normal reporting are driven by the large population of vehicle operators and the corrosion maintenance they perform as operators or maintainers. CORROSION COST FOCUS AREAS The corrosion costs that can be attributed to removable parts only slightly exceed corrosion costs associated with the body frame or structure of Army ground vehicles. The proportion is drastically different when comparing those costs to overall maintenance costs. Costs to repair corrosion-related structure or body frame damage are 32 percent of all body frame related maintenance costs, which is nearly double the corrosion-related percentage of maintenance costs attributable to removable parts. This is important to note because there are more opportunities to find common preventive and corrective solutions to corrosion that affects the body frame or structure of ground vehicles than there are common solutions for the hundreds of thousands of different removable vehicle parts. We stratify the corrosion costs of Army ground vehicles by total annual cost and cost per vehicle. Seven Army ground vehicles are among the top 20 for both total corrosion cost and corrosion cost per vehicle, making them candidates for further focus. Those vehicles are listed in Table ES-3. Table ES-3. Army Ground Vehicles with the Highest Combined Average Annual Corrosion Cost per Vehicle and Total Corrosion Cost Description Average corrosion cost per vehicle Rank in top 20: corrosion cost per vehicle Total corrosion cost (in millions) Rank in top 20: total corrosion cost Tank combat 120MM M1A2 $83,770 6 $100 2 Recovery vehicle M88A2 $325,370 2 $48 8 Recovery vehicle M88A1 $41,710 8 $89 4 Tank combat 120MM M1A1 $18, $85 5 Howitzer medium M109A6 $36, $36 10 Truck lift EFG2/6002 $128,545 4 $23 16 Infantry fighting vehicle M2 $21, $24 15 vi

7 Contents Chapter 1 Objectives, Method, and Background STUDY OBJECTIVES STUDY METHOD BACKGROUND Maintenance Structure and Costs Army Ground Vehicle DM Corrosion Organization Vehicle List Chapter 2 Army Ground Vehicle Corrosion Costs DETERMINATION OF CORROSION COSTS Army Ground Vehicles DM Cost of Corrosion (Nodes A and B ) FLM Cost of Corrosion (Nodes C and D ) ONR Cost of Corrosion (Nodes E, F, and G ) FINAL ARMY GROUND VEHICLE CORROSION COST TREE (NODES A THROUGH G ) Chapter 3 Summary and Analysis of Army Ground Vehicle Corrosion Costs ARMY CORROSION COST COMPARISON BY STUDY YEAR ARMY CORROSION COSTS BY NODE ARMY CORROSION COSTS BY VEHICLE TYPE ARMY CORROSION COSTS BY WBS ARMY CORROSION COST CORRECTIVE VERSUS PREVENTIVE COSTS ARMY CORROSION COSTS PARTS VERSUS STRUCTURE Appendix A List of Army Ground Vehicles Appendix B Army Corrosion Cost Data Sources by Node Appendix C Army Depot Work Center to Process Step Mapping Appendix D Key Corrosion Words vii

8 Appendix E Work Breakdown Structure Coding Appendix F Army Military Occupation Specialties FLM Labor Cost Appendix G Army Survey Results Appendix H Abbreviations Figures Figure 1-1. Army Materiel Command Structure and Depot Maintenance Responsibility Figure 1-2. Army Corrosion Prevention and Control Organization Figure 2-1. Army Sustainment Corrosion Cost Tree (FY2007) Figure 2-2. Army Ground Vehicle DM Corrosion Costs ($ in millions, FY2007) Figure 2-3. Army Organic DM Ground Vehicle Labor Cost Tree Section ($ in millions) Figure 2-4. Example of a Corrosion Keyword Search from Army Organic Depot JO/PCN Detail Performance Report Figure 2-5. Organic Depot Army Ground Vehicle Materials Cost Tree Section ($ in millions) Figure 2-6. Commercial Depot Army Ground Vehicle Cost Tree Section ($ in millions) Figure 2-7. Use of Corrosion Ratios to Determine Commercial Depot Corrosion Cost by Vehicle for the M1A2 Combat Tank Figure 2-8. Army Ground Vehicle Field-Level Maintenance Corrosion Cost ($ in millions) Figure 2-9. Army Ground Vehicle Organic FLM Labor Corrosion Cost ($ in millions) Figure Army Organic Field-Level Maintenance Materials Corrosion Cost ($ in millions) Figure Army Ground Vehicles Commercial FLM for FY2007 ($ in millions) Figure Army Ground Vehicles ONR Corrosion Cost ($ in millions) Figure Final Army Ground Vehicle Corrosion Cost Tree Figure 3-1. Breakouts of Army Ground Vehicles Corrosion Costs by Node Figure 3-2. LIN T61494: HMMWV viii

9 Contents Figure 3-3. LIN R18701: Radar Set Semi-Trailer Mounted Figure 3-4. LIN T13305: M1A2 Abrams Tank Tables Table 1-1. Cost-of-Corrosion Studies to Date and Future Efforts Table 2-1. Typical DM Process Steps and Corrosion Cost Percentage for Army Ground Vehicles Table 2-2. Army Ground Vehicle Depot Organic and Commercial Corrosion Cost ($ in millions) Table 2-3. Percentage of DM Workload for Army Ground Vehicles Table 2-4. Distribution of Organic DM Labor Costs by Process Step ($ in millions) Table 2-5. Distribution of Organic DM Labor Corrosion Costs by Process Step ($ in millions) Table 2-6. Army Ground Vehicle WBS Code Convention Structure versus Parts Table 2-7. Corrosion Ratios by LIN Table 2-8. Staffing Levels and Cost by Military Component for Army Field-Level Maintainers Table 2-9. Army FLM Spares and Repair Parts Consumables Budget for FY2006 and FY Table Comparison of Field Sub-Activity Group Operations Spending in FY2006 and FY Table Final Army FLM Spares and Repair Parts Consumables Budget for FY Table Materials Budget for Army Ground Vehicles for FLM for FY Table Commercial FLM Ratios Table Number of Army Ground Vehicles by Type and Military Component Table Number of Army Ground Vehicles by Type and Military Component Operated by Non-Maintenance Personnel Table Summary of Time Spent on Corrosion Maintenance by Non-Maintenance Personnel Who Operate Ground Vehicles Table Corrosion Cost of Non-Maintenance Personnel Who Operate Ground Vehicles Table Army Ground Vehicles FY2007 Corrosion RDT&E Projects ix

10 Table Summary of Army Ground Vehicle DM Corrosion Training Costs Table 3-1. Army Ground Vehicle DM and FLM Corrosion Costs Table 3-2. Army Ground Vehicles Corrosion Cost by Node and Sub-Node Table 3-3. Army Ground Vehicles Corrosion Cost as a Percentage of Maintenance Table 3-4. Top 20 Contributors to Army Ground Vehicle Corrosion Costs for FY Table 3-5. Top 20 LINs by Average Corrosion Cost per Vehicle for FY Table 3-6. Vehicles with Highest Average per Vehicle and Total Corrosion Cost Contribution to Army Ground Vehicle Corrosion Cost (FY2007) Table 3-7. Top 20 Army Ground Vehicle Corrosion Cost Ranking by WBS for FY Table 3-8. Corrosion Cost by WBS as a Percentage of Maintenance Cost for FY Table 3-9. Corrosion Cost as a Percentage of Maintenance Cost for the Third Digit of WBS FY Table Army Ground Vehicle Corrective and Preventive Corrosion Cost Table Army Ground Vehicle Corrective and Preventive Corrosion Cost for Each Corrosion Study Year Table Army Ground Vehicle Preventive-to-Corrective Corrosion Cost Ratio for FY Table Army Ground Vehicles Corrosion Cost by Parts versus Structure x

11 Chapter 1 Objectives, Method, and Background According to two separate studies, the cost of corrosion to the Department of Defense (DoD) infrastructure and equipment is estimated to be between $9 billion and $20 billion each year. 1 Although the spread between these estimates is large, both studies show that corrosion costs are significant. Congress, concerned with the high cost of corrosion and its negative effect on military equipment, facilities, and infrastructure, enacted legislation in December 2002 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 a standard method to measure the cost of corrosion for DoD s military equipment and infrastructure. 5 Because the data-gathering effort is large and complex, the CPC IPT plans to measure the total DoD cost of corrosion in segments. In April of 2006, the CPC IPT published the results of its first study using the standard corrosion cost estimation method. We present the results of the initial studies and the timeline for future corrosion studies in Table The $9 billion estimate is from Kinzie and Jett, DoD Cost of Corrosion, 23 July 2003, p. 3. The $20 billion estimate is from Gerhardus H. Koch et al., Corrosion Cost and Prevention Strategies in the United States, CC Technologies and NACE International, in cooperation with the Department of Transportation, Federal Highway Administration, 30 September 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, 28 January 2008, Section GAO , Opportunities to Reduce Corrosion Costs and Increase Readiness, July 2003, p DoD Corrosion Prevention and Control Integrated Product Team, Proposed Method and Structure for Determining the Cost of Corrosion for the Department of Defense, August

12 Table 1-1. Cost-of-Corrosion Studies to Date and Future Efforts Study year 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 0.7 billion FY Navy and Marine Corps aviation $3.0 billion FY2005 and FY2006 Coast Guard aviation and vessels $0.3 billion FY2005 and FY Air Force $5.4 billion FY2006 and FY2007 Army ground vehicles $2.4 billion FY2006 and FY2007 Navy ships Pending FY2006 and FY Repeat Navy and Marine Corps aviation Repeat LMI was tasked by the CPC IPT with measuring the cost of corrosion for Army ground vehicles, Navy ships, and the Air Force in This is the fourth segment of the CPC IPT plan. Future phases of the plan call for a repetition of earlier segment studies to help the services identify trends over time. As shown in the study results from Table 1-1, the current cost of corrosion for DoD is $16.9 billion. We derive this total by aggregating the initial cost of each study segment 6 and disregarding the totals from the recently concluded repeat efforts for Army ground vehicles and Navy ships. We present the study results from study year in three separate reports to ensure ease of use for each service. This report presents the results of the Army ground vehicle portion of the cost-of-corrosion study. STUDY OBJECTIVES The specific objectives of this study are threefold: Measure the most recent annual sustainment cost of corrosion for Army ground vehicles. Identify corrosion cost reduction opportunities for Army ground vehicles. Analyze trends and draw conclusions using both the initial and most recently concluded Army ground vehicle cost-of-corrosion studies. 6 We also disregard the Coast Guard aviation and vessels total of $0.3 billion because they are part of the Department of Homeland Security. 1-2

13 Objectives, Method, and Background STUDY METHOD BACKGROUND The study method we apply is the same one that was outlined in the original report. For the sake of brevity, we will not repeat a detailed description of the method here. Readers who want more information may refer to Chapter 1 of the original report, The Annual Cost of Corrosion for Army Ground Vehicles and Navy Ships. 7 To ensure consistency, we use 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. 8 We have applied this definition of corrosion to each study. The U.S. Army Materiel Command (AMC) is the Army organization with the overall responsibility for procuring weapon systems and components, and maintaining readiness of all Army equipment. The maintenance policy regarding combat and tactical vehicles and associated systems is the primary responsibility of the U.S. Army Tank-Automotive and Armaments Command (TACOM) Life Cycle Management Command (LCMC) with research, development, and engineering support provided by the Tank-Automotive Research, Development, and Engineering Center of the Research, Development, and Engineering Command (RDECOM). These two organizations, highlighted in yellow in Figure 1-1, are subordinate commands of AMC. 7 LMI, The Annual Cost of Corrosion for Army Ground Vehicles and Navy Ships, Report SKT50T1, Eric F. Herzberg et al., April Op. cit., Public Law , p

14 Figure 1-1. Army Materiel Command Structure and Depot Maintenance Responsibility U.S. Army Materiel Command (AMC) U.S. Army Field Support Command (AFSC) U.S. Army CECOM Life Cycle Management Command Tobyhanna Communications U.S. Army AMCOM Life Cycle Management Command Corpus Christi Aviation Letterkenny Tactical missiles Primary maintenance and engineering responsibility for Army ground vehicles U.S. Army Research, Development & Engineering Command (RDECOM) U.S. Army TACOM Life Cycle Management Command Red River Bradley vehicles Anniston Wheeled/Tracked vehicles Note: AMCOM = Aviation and Missile Command; CECOM = Communications and Electronics Command. Maintenance Structure and Costs Army maintenance tasks and costs can be categorized generally 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 U.S. Army Field Support Command (AFSC), a subordinate command of AMC (see Figure 1-1). 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. For the purpose of the cost-of-corrosion studies, we created a third category of maintenance costs that we refer to as outside normal reporting (ONR). These are maintenance costs that typically are not reported in maintenance production or 1-4

15 Objectives, Method, and Background financial systems. Examples include the maintenance labor hours of nonmaintenance specialty personnel, research and development, new facilities, and purchase card expenses. Army Ground Vehicle DM As depicted in Figure 1-1, two TACOM-managed Army depots perform DM on wheeled and tracked weapon systems: Anniston Army Depot (ANAD), Anniston, AL, is the primary Army installation with DM responsibility for wheeled and tracked vehicles. 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: Letterkenny Army Depot (LEAD), Chambersburg, PA, is managed by the U.S. Army Aviation and Missile Command Lifecycle Management Command. It is also responsible for DM of tactical missiles and associated ground support equipment. Tobyhanna Army Depot (TYAD), Tobyhanna, PA, is managed by the U.S. Army Communications Electronics Command Lifecycle Management Command. TYAD is responsible for communications, satellite systems, communication shelters, and much of the associated ground support equipment on which the shelters are mounted. The Marine Corps is assigned limited DM responsibility for certain Army tactical, combat, and engineering equipment that is similar to an existing Marine Corps equipment capability. The two Marine Corps depots with DM responsibility for Army ground systems are Corrosion Organization Marine Corps Logistics Base Albany, Albany, GA, and Marine Corps Logistics Base Barstow, Barstow, CA. 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 as the Army Corrosion Executive. 1-5

16 Figure 1-2 reflects this designation 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. Figure 1-2. Army Corrosion Prevention and Control Organization Army Corrosion Executive DASA(AP&L) Senior Review Board Army Corrosion Program Policy (HQAMC) Infrastructure Storage Army Corrosion Manager (TACOM) Corrosion Working Group Armaments Research, Development & Engineering Center Co-Chair Tank Automotive Research, Development & Engineering Center Co-Chair Automotive Missile Armaments Electronics Aviation Chemical Note: DASA(AP&L) = Deputy Assistant Secretary of the Army, Acquisition Policy and Logistics. TACOM, the manager of the largest inventory of corrosion-sensitive equipment, was designated as the Army Corrosion Manager. TACOM has two research and development (R&D) centers: the Armaments Research, Development, and Engineering Center (ARDEC) manages the R&D portions of the corrosion program; the Tank Automotive Research, Development, and Engineering Center (TARDEC) manages the production and sustainment portions of the corrosion program respectively. The Army CCPE and HQAMC are supported by the Corrosion Working Group, which includes representatives from all of AMC s subordinate commands and the Army Research Lab. HQAMC also established a Senior Review Board that includes representatives from within AMC and the Department of the Army. 1-6

17 Objectives, Method, and Background Vehicle List The scope of this study includes all wheeled, tracked, and towed Army vehicles. There are 653 different types of vehicles at the line item number (LIN) level of detail, totaling more than 458,000 individual pieces of equipment. We compiled inventories for Army wheeled, tracked, and towed ground vehicles at the LIN and national stock number (NSN) 9 levels of detail using data extracted from the Army s Requisition Validation (REQVAL) System. 10 The REQVAL System is part of the Logistics Integrated Database (LIDB) maintained by the AMC Logistics Support Activity (LOGSA). REQVAL ties Continuing Balance System Expanded (CBS-X) assets to the Army s official requirements and authorizations provided through the Army Authorization Documentation System (TAADS). REQVAL aligns these authorizations with corresponding assets and compares them against the Structure and Manpower Allocation System (SAMAS), the Army s official force structure. 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. 9 The NSN is a unique 13-digit number that identifies the item in procurement systems. 10 As of March 13,

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19 Chapter 2 Army Ground Vehicle Corrosion Costs In this chapter, we determine the corrosion cost for Army ground vehicles. For ease of discussion, we focus on FY2007 costs, as they are the most recent. In Chapter 3, we present our analysis of the cost data and any comparisons to the previous Army ground vehicle cost-of-corrosion study results. The estimated total annual cost of corrosion for Army ground vehicles (based on FY2007 data) is $2.44 billion. DETERMINATION OF CORROSION COSTS We developed the cost tree in Figure 2-1 as a visual tool to help illustrate the cost of corrosion for Army ground vehicles. It serves as a guide for the remainder of this section. Figure 2-1. Army Sustainment Corrosion Cost Tree (FY2007) $83.9 billion DoD maintenance $51.8 billion Non-Army maintenance $9.3 billion Total Army DM $22.8 billion Total Army FLM $0.6 billion Army ground vehicle ONR Laborrelated cost of corrosion Materialsrelated cost of corrosion Laborrelated cost of corrosion Materialsrelated cost of corrosion Labor of non-maintenance vehicle operators a Priority 2 and 3 costs Purchase cards A B C D E F G a Priority 2 and 3 costs include training, research and development, and new corrosion mitigation and treatment facilities. At the top of the cost tree is $83.9 billion, the entire cost of maintenance throughout DoD for FY Eliminating non-army costs and segregating the cost tree into three major groups depot and field-level maintenance and costs outside normal reporting results in the second level of the tree. At this point, the cost figures for DM and FLM represent all Army costs. ONR costs reflect only Army ground vehicle costs. 1 LMI, The Estimated Total Cost of DoD Materiel Maintenance for FY2007 briefing prepared for the Office of the Secretary of Defense, April 11,

20 We split each group into the major pertinent cost categories of interest, and label the categories as cost nodes. Cost nodes A through G depict the main segments of corrosion-related Army ground vehicle costs. Using separate cost trees for DM, FLM, and ONR, we determine the overall corrosion costs by combining the costs at each node. The documentation of data sources for each of the cost figures in each node is provided in Appendix B. We explore this analysis in more detail starting with DM costs. Army Ground Vehicles DM Cost of Corrosion (Nodes A and B ) Corrosion costs are considerable both at organic and commercial DM facilities. We identified a total ground vehicle depot corrosion cost of $980 million. This is 26.8 percent of the Army ground vehicle depot total of $3.65 billion. Depot corrosion costs are found both in maintenance process and maintenance repair : The maintenance process includes any action performed on a system or end item that is the same for each piece of equipment, regardless of its material condition. Maintenance repair involves targeted actions that are different for each piece of equipment and are based on the material condition of the equipment. This is an important distinction. At the depot level of maintenance for Army ground vehicles, the overwhelming majority of corrosion costs are incurred as part of the maintenance process. The maintenance process actions for each vehicle and the applicable corrosion cost percentage 2 are listed in Table The corrosion cost percentage is the ratio of corrosion costs to total maintenance costs. 2-2

21 Army Ground Vehicle Corrosion Costs Table 2-1. Typical DM Process Steps and Corrosion Cost Percentage for Army Ground Vehicles Step Maintenance action Is this a corrosion cost? Corrosion percentage 1 Inspect equipment Partially 25% 2 Wash or steam clean equipment Yes 100% 3 Sand blast or chemically clean equipment Yes 100% 4 Repair or replace parts and structure Potentially a 0% 100% 5 Treat or metal-finish equipment Yes 100% 6 Prepare equipment for painting Yes 100% 7 Paint Yes 100% 8 Final wash, clean, and inspection Partially 0% 100% 9 Administration and planning Partially 0% 100% a We only cost the known corrosion-related repair or replacement work records at 100 percent. Although the order of these actions may vary slightly for different depots, only step 4, repair or replace parts and structure, varies significantly from one piece of equipment to another within the same depot all depending on the type of maintenance being performed. The other eight steps are typically applied to each vehicle, regardless of its condition. This has important implications for corrosion-related costs: The depot corrosion costs for each vehicle within the same vehicle type are almost the same. The only differentiation is the cost of parts replacement or repair that can be linked to a corrosion-related cause. Because none of the DM information systems report corrosion as a reason for maintenance, it is very difficult to isolate corrosion as a cause for parts replacement or repair. Because corrosion costs are incurred as part of the processing of each vehicle, the total cost of corrosion at the depot level is a function of how many vehicles have been processed. Major subcomponents and depot-level reparables, such as engines and transmissions, show relatively low corrosion-related costs because the majority of the maintenance process (described in Table 2-1) applies only to end items. As explained in the methodology section from the earlier Army ground vehicles study, 3 we use a combined top-down and bottom-up approach to determine the costs of corrosion. The detailed depot corrosion cost tree in Figure 2-2 illustrates how we determine ground vehicle depot corrosion costs. 3 LMI, The Annual Cost of Corrosion for Army Ground Vehicles and Navy Ships, Report SKT50T1, Eric F. Herzberg et al., April

22 Figure 2-2. Army Ground Vehicle DM Corrosion Costs ($ in millions, FY2007) $9,255 DM $5,140 Organic depot $4,115 Commercial depot $1,854 Labor $229 Overhead $3,056 Materials $1,485 Labor $183 Overhead $2,447 Materials $703 $1,151 Ground vehicles Non-ground labor vehicles labor $1,327 $1,729 Ground vehicles Non-ground materials vehicles materials $562 Ground vehicles labor $923 Non-ground vehicles labor $1,062 Ground vehicles $1,385 Non-ground materials vehicles materials $605 Noncorrosion $98 Corrosion A1 $898 $429 Noncorrosion Corrosion B1 $399 Noncorrosion $163 Corrosion A2 $771 $291 Noncorrosion Corrosion B2 We start with a top-down cost of $9.255 billion for Army DM costs. We use an annual DM congressional reporting requirement to determine this cost. 4 The same document details the split between organic depot costs ($5.140 billion) and costs incurred at commercial depots ($4.115 billion). We reflect this in the second level of the tree in Figure 2-2. Through continued top-down analysis, we determine the cost at each level in the tree until we reach the cost-of-corrosion nodes. We then use detailed bottom-up data to determine the corrosion cost at each node. These costs are outlined in Table 2-2. Table 2-2. Army Ground Vehicle Depot Organic and Commercial Corrosion Cost ($ in millions) Maintenance provider Total ground vehicle labor costs Total ground vehicle material costs Total ground vehicle overhead cost Total ground vehicle depot cost Corrosion labor cost Corrosion material cost Total corrosion maintenance cost Organic depot $703 $1,327 $95 $2,125 $98 $429 $527 Commercial depot $562 $1,062 $76 $1,700 $163 $291 $454 Total $1,265 $2,389 $171 $3,825 $261 $720 $981 4 Deputy Under Secretary of Defense (Logistics and Materiel Readiness), Distribution of DoD DM Workloads: Fiscal Years , April 2007, p

23 Army Ground Vehicle Corrosion Costs The total ground vehicle overhead costs for organic depots ($95 million) and commercial depots ($76 million) are the ground vehicle portions of the total organic depot overhead cost ($229 million) and commercial depot overhead cost ($183 million) from the depot corrosion cost tree in Figure 2-2. As we show in Table 2-2, the depot corrosion cost for materials ($720 million) exceeds the depot corrosion cost of labor ($261 million) by a considerable margin. We discuss this and other observations in more detail in the next chapter. We now examine how we determine the corrosion cost at each node, starting with organic DM. ORGANIC DM CORROSION COSTS (NODES A1 AND B1 ) We continue our top-down analysis at the top of the organic depot side of the cost tree in Figure 2-2. We split the $5.140 billion of organic depot costs into labor, overhead, and materials using DM cost figures from the 1307 report, which is an annual report compiled for the Office of the Secretary of Defense (OSD). The contractual cost reported in the 1307 report contains labor, materials, and overhead. We use the actual reported totals of labor, materials, and overhead costs to apportion the contractual cost into their respective labor, materials, and overhead schema. We then separate the costs according to what is incurred at depots that maintain Army ground vehicles and what is incurred at depots that do not maintain Army ground vehicles. We next analyze the depot workload according to the type of equipment. By comparing the bottom-up DM records to the vehicle list mentioned earlier, we determine which maintenance tasks are performed on Army equipment that is within the scope of this study and which tasks are out of the current scope. Examples of out-of-scope tasks include maintenance performed on small arms, some communications equipment, missiles, and foreign military sales items. By comparing the cost of the tasks that are within the scope of this study to the costs of those that are out of scope, we calculate the percentage of total workload for each depot that was expended on Army ground vehicles within the scope of this study. This workload breakdown is summarized in Table

24 Table 2-3. Percentage of DM Workload for Army Ground Vehicles Depot Service Percentage of workload expended on Army ground vehicles Anniston Army 70.8% Corpus Christi Army 0.0% Letterkenny Army 23.6% Red River Army 83.9% Tobyhanna Army 4.8% Albany Marine Corps 7.8% Barstow Marine Corps 4.5% As expected, Anniston and Red River have the highest percentage of their workload dedicated to Army ground vehicles, 70.8 percent and 83.9 percent respectively. Using the percentages, we split the organic depot costs for labor and materials into ground vehicle and non-ground vehicle costs. The top-down Army ground vehicle depot labor cost is $703 million; the top-down materials cost is $1.327 billion. To this point, we have determined the labor and materials cost figures by using a top-down costing method. To take the final step and determine the corrosion costs at each node, we use detailed bottom-up data. ORGANIC DM LABOR COST OF CORROSION (NODE A1 ) Our task is to extract the organic depot labor cost of corrosion from the total labor cost ($703 million from Figure 2-2). For ease of discussion, we repeat the organic DM labor portion of the cost tree in Figure 2-3 below. Figure 2-3. Army Organic DM Ground Vehicle Labor Cost Tree Section ($ in millions) $1,854 Labor $703 $1,151 Ground vehicles Non-ground labor vehicles labor $605 Noncorrosion $98 Corrosion A1 2-6

25 Army Ground Vehicle Corrosion Costs We analyzed the JO/PCN (Job Order, Production Control Number) Detail Performance Report, which was provided by the Army depots. This report lists each maintenance operation performed on each vehicle, the work center performing the operation, and the associated labor hours for the operation. As with the initial Army ground vehicles cost-of-corrosion study, we first examine each of the work centers that perform DM and assign them to one of the nine process steps we outline in Table 2-1. We show this work center to process step mapping in Appendix C. Because each in-scope bottom-up record contains a work center, each record is assigned to one of the nine process steps. We also characterize each process step as either preventive or corrective maintenance. 5 We show the distribution of all organic DM costs by process step and the corresponding preventive or corrective nature of those costs in Table 2-4. Table 2-4. Distribution of Organic DM Labor Costs by Process Step ($ in millions) Step Maintenance action Total labor cost Percentage of labor cost Is this a corrosion cost? Corrective or preventive cost? 1 Inspect equipment $37 5.3% Partially Preventive 2 Wash or steam clean equipment $15 2.1% Yes Preventive 3 Sand blast or chemically clean equipment $14 2.0% Yes Corrective 4 Repair or replace parts and structure $ % Potentially Corrective 5 Treat or metal-finish equipment $9 1.3% Yes Preventive 6 Prepare equipment for painting $7 1.0% Yes Preventive 7 Paint $19 2.7% Yes Preventive 8 Final wash, clean, and inspection $16 2.3% Partially Preventive 9 Administration and planning $ % No Preventive Total $703 Once each bottom-up record is assigned to one of the nine process steps, our corrosion analysis is partially complete. We regard the costs associated with the records in process steps 2, 3, 5, 6, and 7 as 100 percent corrosion-related because of the nature of the tasks. Records in process steps 1, 4, and 8 require further analysis to determine whether they are corrosion-related. Notice that more than half of the total maintenance costs are in process step 4. We use a list of corrosion keywords (such as rust, paint, and clean ) to identify activities that are related to corrosion. We provide a complete list of these key corrosion words in Appendix D. 5 Corrective costs are incurred when removing an existing nonconformity or defect. Corrective actions address actual problems. Preventive costs involve steps taken to remove the causes of potential nonconformities or defects. Preventive actions address future problems. As defined by the International Organization for Standardization 9000:2000 definition of corrective and preventive actions. 2-7

26 The sample JO/PCN report in Figure 2-4 presents an example of how we isolate the corrosion activities from the non-corrosion activities for data records in process steps 1, 4, and 8. Figure 2-4. Example of a Corrosion Keyword Search from Army Organic Depot JO/PCN Detail Performance Report 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 corrosion maintenance activity. The highlighted information tells us the vehicle worked on is an M1A2 Abrams tank, the corrosion 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 production control number (PCN) 6 is M04B1H. We isolate the corrosion activities from the non-corrosion activities for the records identified in process steps 1, 4, and 8 in this manner. We aggregate the labor hours associated with those corrosion records and multiply by a standard average hourly labor rate ($47.55) to determine a corrosion-related labor cost. 7 6 The PCN is similar to a job order number; it is a number that serves as a reference to the work package description and associated costs. 7 According to Office of Management and Budget (OMB) Circular A-76 (March 2003), a civilian full-time equivalent (FTE) is 1,776 hours. We used the per capita yearly rate derived from the Department of Defense Fiscal Year 2005 President s Budget divided by 1,776 hours to calculate the equivalent hourly rate. 2-8

27 Army Ground Vehicle Corrosion Costs The organic DM labor corrosion cost calculated in this manner is $89 million; however, we also calculate the total organic DM labor cost and find it to be $635 million. This is slightly lower than our top-down organic DM labor cost figure of $703 million (see Figure 2-3 above). We multiply $89 million (the initial corrosion labor cost estimate) by a factor of $703 million to $635 million to determine our final organic DM corrosion-related labor cost of $98 million. This is the corrosion cost for node A1. We show the distribution of the final organic DM corrosion-related labor cost of $98 million by process step in Table 2-5. Table 2-5. Distribution of Organic DM Labor Corrosion Costs by Process Step ($ in millions) Step Maintenance action Total labor cost Percentage of labor cost Total corrosionrelated labor cost Percentage of corrosion-related labor cost 1 Inspect equipment $37 5.3% $6 6.1% 2 Wash or steam clean equipment $15 2.1% $ % 3 Sand blast or chemically clean equipment $14 2.0% $ % 4 Repair or replace parts and structure $ % $ % 5 Treat or metal-finish equipment $9 1.3% $9 9.2% 6 Prepare equipment for painting $7 1.0% $7 7.1% 7 Paint $19 2.7% $ % 8 Final wash, clean, and inspection $16 2.3% $1 1.0% 9 Administration and planning $ % $4 4.1% Total $703 $98 We also assign a work breakdown structure (WBS) 8 code to the corrosion labor hours based on the description of the maintenance activity. The three-character WBS code identifies which vehicle subsystem is being worked on (such as body frame, engine, or components). A list of the WBS codes is provided in Appendix E. From the WBS codes, we assign the corrosion labor costs to either parts or structure. 9 We assign corrosion labor costs associated with a WBS code ending in the number 1 to the vehicle structure; all other corrosion-related labor costs are assigned to vehicle parts. Table 2-6 shows this convention. 8 We use the work breakdown structure convention established in DoD Financial Management Regulation, Volume 6, Chapter 14, Addendum 4, January 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. 2-9

28 Table 2-6. Army Ground Vehicle WBS Code Convention Structure versus Parts Third character of WBS code Cost assigned as structure Cost assigned as part 1 X 2 X 3 X 4 X 5 X 6 X 7 X We are now ready to examine the organic depot materials costs. ORGANIC DEPOT ARMY GROUND VEHICLE MATERIALS COST OF CORROSION (NODE B1 ) Our task is to extract the organic depot materials cost of corrosion from the total ground vehicle materials cost ($1,327 million from Figure 2-2). For ease of discussion, we repeat the organic DM materials portion of the cost tree in Figure 2-5. Figure 2-5. Organic Depot Army Ground Vehicle Materials Cost Tree Section ($ in millions) $3,056 Materials $1,327 $1,729 Ground vehicles Non-ground materials vehicles materials $898 Noncorrosion $429 Corrosion B1 We analyze information provided by the Army depots in the Parts Analysis Report by PCN. This report lists each material purchase for work performed in association with a PCN. These are the same PCNs used to describe the work package and to accumulate the labor hours. We examine the materials purchase information for each item and assign a WBS based on the vehicle type described by the PCN and the nomenclature of the individual part. We use the convention presented in Table 2-6 to assign material 2-10

29 Army Ground Vehicle Corrosion Costs purchases as either structure or parts by the WBS code. We then turn our attention to the corrosion-related materials cost. We first aggregate the individual materials costs for each PCN to compare this bottom-up total with our top-down amount. We account for $460 million in ground vehicle related materials costs from the detailed bottom-up labor data, approximately 33 percent of our top-down total of $1,327 million. This is somewhat surprising, as we expect (based upon previous studies) to account for percent of the top-down materials cost. Our next task is to determine the corrosion-related materials cost. This is fairly straightforward because of the previous analysis of labor records. Labor records that involve corrosion-related work have been flagged based on the process we described earlier. The corresponding materials used to accomplish corrosionrelated tasks are also flagged through association and by the shared PCN. By aggregating materials cost for each flagged record, we identify $149 million in corrosion-related organic DM materials costs for Army ground vehicles. We multiply the $149 million (the initial corrosion-related materials cost estimate) by a factor of $1,327 million to $460 million to determine our final organic DM corrosionrelated materials cost of $429 million. This is the corrosion cost for node B1. We now turn our attention to commercial DM costs. COMMERCIAL DEPOT CORROSION COSTS (NODES A2 AND B2 ) We follow a slightly different method to determine the commercial depot corrosion costs because we do not have detailed bottom-up data. Figure 2-6 represents the commercial depot branch of the overall depot cost tree shown in Figure 2-2. Figure 2-6. Commercial Depot Army Ground Vehicle Cost Tree Section ($ in millions) $4,115 Commercial depot $1,485 Labor $183 Overhead $2,447 Materials $562 Ground vehicles labor $923 Non-ground vehicles labor $1,062 Ground vehicles $1,385 Non-ground materials vehicles materials $399 Noncorrosion $163 Corrosion A2 $771 $291 Noncorrosion Corrosion B2 2-11

30 We start our top-down analysis at the top of the cost tree in Figure 2-6 with a cost of $4,115 million for commercial DM. The source of this total is the annual congressional DM cost reporting requirement. Recall that we used this annual DM congressional reporting requirement to determine the total DM cost, and then used financial information from the 1307 report to determine the costs at the second level of the tree for organic DM. Because there is no information similar to the 1307 report for commercial depot work, we use a combination of the annual DM congressional reporting requirement and the Army organic DM ratios for labor, overhead, and materials to determine the corresponding commercial depot labor ($1,485 million), overhead ($183 million), and materials ($2,447 million) costs. These are the costs in the second row of Figure 2-6. We continue our top-down approach using the Army organic depot ratios for ground vehicle labor compared to total labor and ground vehicle materials compared to total materials to determine the corresponding commercial depot totals. The commercial depot ground vehicle labor cost is $562 million and the commercial depot ground vehicle materials cost is $1,062 million. We then use information reported in the Depot Maintenance Cost System (DMCS) 10 to complete the analysis. DMCS contains aggregated maintenance task information by vehicle. Essentially, it is a summary of the bottom-up maintenance records. We first assign each DMCS record to a LIN, and then remove the records for LINs that do not fall within the scope of this study. Because the remaining inscope records contain summary information, we cannot conduct a separate corrosion analysis on each record. Instead, we use the organic corrosion-related DM ratios for those LINs that have maintenance performed by commercial depots to determine the corrosion cost. We also use the organic DM corrective/preventive and parts/structure ratios by LIN to determine the costs for each commercial LIN. We illustrate this technique in Table 2-7. Table 2-7. Corrosion Ratios by LIN LIN Description Corrosion labor Corrosion materials Preventive cost Corrective cost Parts Structure T96883 Trailer 5 ton M1061A1 7.2% 39.0% 44.3% 55.7% 69.8% 30.2% K57667 Self-propelled howitzer 155mm 1.8% 35.5% 48.5% 51.5% 78.2% 21.8% D12087 Personnel carrier M113A2 2.3% 49.8% 82.1% 17.9% 63.0% 37.0% T13305 Tank combat 120MM M1A2 4.4% 25.5% 28.4% 71.6% 94.1% 5.9% T91490 Truck utility W/E M1025P1 28.5% 0.0% 26.9% 73.1% 84.6% 15.4% T92242 Truck utility 1/4-ton 0.9% 26.4% 40.3% 59.7% 86.0% 14.0% 10 Also referred to as the 1397 report or AP-MP(A)

31 Army Ground Vehicle Corrosion Costs Table 2-7. Corrosion Ratios by LIN LIN Description Corrosion labor Corrosion materials Preventive cost Corrective cost Parts Structure T13168 Tank combat 120MM M1A1 2.8% 33.2% 40.3% 59.7% 100.0% 0.0% Engine 5.7% 12.9% 18.3% 81.7% 90.1% 9.9% Transmission 7.2% 6.3% 15.1% 84.9% 88.9% 11.1% Unidentified 6.1% 14.4% 20.9% 79.1% 89.5% 10.5% Using the ratios in Table 2-7 and the cost information contained in the DMCS records, we determine the commercial labor and materials corrosion costs for each vehicle. We illustrate this method in Figure 2-7 using one of the vehicles from Table 2-7, the M1A2 122mm combat tank, LIN T Figure 2-7. Use of Corrosion Ratios to Determine Commercial Depot Corrosion Cost by Vehicle for the M1A2 Combat Tank DMCS Cost Labor Materials Corrosion Corrosion Corrosion Corrosion Amount Cost Cost Labor % Labor Cost Materials % Materials Cost $1,409,913 $294,687 $1,115, % $12, % $284,382 Ratios from LIN T mm combat tank from Table 2-6 Preventive Corrective Preventive Corrective Parts Structure Parts Structure Cost % Cost % Corrosion Cost Corrosion Cost Cost % Cost % Corrosion Cost Corrosion Cost 28.4% 71.6% $84,552 $212, % 5.9% $279,692 $17,656 The corrosion labor (4.4 percent) and corrosion materials (25.5 percent) figures are applied to the labor cost ($294,687) and materials cost ($1,115,225) respectively to determine the corrosion-related labor and corrosion-related materials costs. The preventive/corrective and parts/structure percentages are then applied to the total corrosion cost (the sum of the corrosion labor cost and the corrosion materials cost) to determine these respective costs. As a final step, we multiply all costs by a ratio of $1,624 million (the top-down Army ground vehicle commercial DM cost) to $978 million (the original bottomup Army ground commercial DM cost from DMCS) to account for the difference in our top-down to bottom-up commercial DM costs. We aggregate all commercial depot ground vehicle corrosion costs and determine the cost for node A2, corrosion-related ground vehicle labor, is $163 million, and the cost of B2, corrosion-related ground vehicle materials, is $291 million. We now turn our attention to the FLM cost of corrosion. 2-13

32 FLM Cost of Corrosion (Nodes C and D ) Although FLM costs are more than twice as large as DM costs, the FLM corrosion costs are smaller than DM corrosion costs as a percentage of total maintenance. FLM corrosion costs are $874 million of the total FLM expenditure of $8.9 billion and, therefore, are 9.8 percent of all FLM costs. The detailed FLM cost tree in Figure 2-8 guides our discussion for the remainder of this section. Figure 2-8. Army Ground Vehicle Field-Level Maintenance Corrosion Cost ($ in millions) $22,787 FLM $12,824 Organic labor $4,905 Organic materials $4,704 Commercial maintenance $354 Overhead $5,981 $6,843 Ground vehicles Non-ground labor vehicles labor $2,633 Ground vehicles materials $2,272 Non-ground vehicles materials $286 Ground vehicles $4,418 Non-ground vehicles $172 Ground vehicles $182 Non-ground vehicles $5,364 Noncorrosion $617 Corrosion C1 $2,399 Noncorrosion $234 Corrosion D1 $195 Labor $6 Overhead $85 Materials $178 Noncorrosion $17 Corrosion C2 $80 $5 Noncorrosion Corrosion D2 We start our top-down analysis with the realization that we must calculate the costs at the second level of the tree to determine the total Army FLM costs. Unlike DM, there is no legal requirement to aggregate FLM costs and report them at the service level. Once we determine the costs at the second level of the tree in Figure 2-8 for FLM labor, materials, commercial maintenance, and overhead, we calculate the cost at each subsequent level until we reach the cost-of-corrosion nodes. We then used detailed bottom-up data to determine the corrosion cost at each node We start our calculation with the labor costs in the second level of the cost tree in Figure 2-8, using data from the Defense Manpower Data Center (DMDC) to identify Army personnel with maintenance skill specialties. These personnel come from different service components: active duty, the Army Reserve, the National Guard, and the civilian workforce. 2-14

33 Army Ground Vehicle Corrosion Costs Based on staffing levels and per capita pay rates, 11 we determine the top-down Army FLM labor cost to be $ billion. Table 2-8 details these staffing levels, rates, and costs. Table 2-8. Staffing Levels and Cost by Military Component for Army Field-Level Maintainers Component Staffing level Per capita cost Total cost (in millions) Active duty 99,326 $79,972 $7,943 Reserve 27,652 $24,177 $669 National Guard 65,725 $24,177 $1,589 Civilian 31,063 $84,451 $2,623 Total 223,766 $12,824 Continuing our top-down approach, we move to materials in the second level of the cost tree. We identify Army field-level organic maintenance materials costs by using the Army s OP-31, Spares and Repair Parts, 12 exhibits for active duty and Army Reserve, and the OP-25 budget exhibit, Ground Vehicle Operations, for the Army National Guard. A summary of this budget information for FY2006 and FY2007 is contained in Table 2-9. Table 2-9. Army FLM Spares and Repair Parts Consumables Budget for FY2006 and FY2007 Military component Commodity category Total FY2006 (in millions) Total FY2007 (in millions) Active Airframes $753 $109 Active Aircraft engines $32 $5 Active Combat vehicles $854 $87 Active Missiles $40 $5 Active Communications equipment $370 $52 Active Other miscellaneous $1,422 $200 Reserve All categories $82 $78 Guard All categories $188 $213 Total $3,741 $747 It is clear from this comparison that the Army active duty budget is significantly different when comparing FY2006 to FY2007. In each commodity category, the 11 Per capita rates are derived from the Department of Defense Fiscal Year 2007 President s Budget. 12 Operations and Maintenance, Army Data Book, Volume II, submitted in Justification of Estimates, February 2008, p. 87. This document was submitted as part of the Department of the Army Fiscal Year 2009/2010 Budget Estimates. 2-15

34 FY2007 amount is approximately one-seventh of the FY2006 figure. This leads us to believe the FY2007 active duty budget submission is a baseline total only, and that it is severely understated. The Army Reserve and National Guard figures appear to be consistent and reasonable. To correct for the understatement and determine a more accurate top-down total, we examine the reported operations spending of Army field units in FY2006 and FY2007. These field units are the most likely to have significant expenditures on spare parts for FLM. We show this comparison in Table Table Comparison of Field Sub-Activity Group Operations Spending in FY2006 and FY2007 Sub-activity group Commodity category Total FY2006 (in billions) Total FY2007 (in billions) 111 Maneuver units $1,037 $ Modular support brigades $318 $ Echelons above brigade $329 $ Theatre-level assets $886 $ Land forces operations support $945 $ Aviation assets 135 Additional activities (includes supplemental spending $32,552 $45,319 Total $36,067 $47,944 We use the ratio of FY2007 spending to FY2006 spending (47,944 36,067 = 1.329) and apply the ratio to the FY2006 OP-31 Army active duty totals. We use the original Army Reserve and National Guard totals from the FY2007 budget. This yields the final FY2007 FLM materials estimate shown in Table Table Final Army FLM Spares and Repair Parts Consumables Budget for FY2007 Military component Commodity category Original FY2006 total (in millions Final FY2007 total (in millions) Active Airframes $753 $1,001 Active Aircraft engines $32 $43 Active Combat vehicles $854 $1,135 Active Missiles $40 $53 Active Communications equipment $370 $492 Active Other miscellaneous $1,422 $1,890 Reserve All categories $82 $78 Guard All categories $188 $213 Total $3,741 $4,

35 Army Ground Vehicle Corrosion Costs We next move to commercial Army FLM (i.e., contract maintenance) in the third level of the cost tree. We identify Army commercial FLM costs using the Army and Army Reserve s OP-31 exhibits from the same budget documents we used for organic FLM materials costs. Commercial maintenance costs are captured inside budget line 922, Equipment Maintenance by Contract. We isolate all costs associated with line 922 for each budget activity. We sum these line 922 contract maintenance costs to yield $4.704 billion in Army commercial FLM costs. Finally, we move to overhead in the second level of the cost tree and calculate the overhead costs for FLM. A previous study of FLM costs determined overhead to be approximately 2 percent of total field-level costs. This does not include indirect labor or materials, but it does include utilities, fuel, and other miscellaneous costs. 13 We therefore calculate overhead cost to be $354 million. 14 Adding the FLM organic labor and materials costs, contract maintenance costs, and overhead costs equates to a total Army FLM cost of $ billion. Our next step is to isolate Army ground vehicle FLM costs from the total Army FLM costs and then determine the corrosion cost for each node. We start this analysis with organic labor. ORGANIC FLM LABOR CORROSION COST (NODE C1 ) We split organic FLM labor costs into ground vehicles and non-ground vehicles using DMDC data. We identify Army military occupation specialties that perform maintenance on ground vehicles. We then determine the staffing level and military component for those ground vehicle specialties. From this analysis, we know 107,876 Army personnel perform field-level ground vehicle maintenance for an annual cost of $5.981 billion. A complete list of these specialties, the staffing level, and the labor costs is provided in Appendix F. Our next task is to extract the corrosion-related labor cost (node C1 from Figure 2-9) from that total using a bottom-up approach. We use information from the primary Army FLM database, the Integrated Logistics Analysis Program (ILAP), to accomplish this task. 13 LMI, Field-Level Maintenance Cost Visibility, Report LG301T7, Eric F. Herzberg et al., March 2005, p The $354 million is 2 percent of the labor costs ($ billion) plus materials costs ($4.909 billion). 2-17

36 Figure 2-9. Army Ground Vehicle Organic FLM Labor Corrosion Cost ($ in millions) $12,824 Organic labor $5,981 $6,843 Ground vehicles Non-ground labor vehicles labor $5,364 Noncorrosion $617 Corrosion C1 We obtain FY2007 closed work order information from ILAP for each of the 653 LINs. Including data on materials purchased, this equates to approximately 2.8 million data records. By aggregating the individual ILAP labor hours, we account for $1.2 billion in ground vehicle related direct labor costs from the detailed bottom-up labor data. At first glance, there seems to be a large gap between this total and the top-down cost of $5.981 billion; however, we determine the top-down cost figure of $5.981 billion by multiplying a staffing level by a per capita yearly rate. We determine the bottom-up cost of $1.2 billion by aggregating direct hands-on maintenance labor hours and multiplying by $45.03 the hourly equivalent of the per capita rate. 15 In other words, the top-down cost is the total yearly cost of the 107,876 personnel with ground vehicle related maintenance skill specialties. We calculate the bottom-up cost using only the hours recorded for hands-on maintenance by this number of personnel. Therefore, we account for the gap between the top-down and bottom-up cost figures as follows: Roughly 73 percent of a typical maintainer s time is spent performing direct hands-on maintenance. 16 The remaining time is spent on leave, recovering from illness, in training, on travel, and attending to other administrative duties. According to a report on the ability of Army FLM information systems to measure costs, there is inadequate capability to measure organizational 15 OMB Circular A-76 (March 2003) states a civilian full-time equivalent (FTE) is 1,776 hours. Therefore, we use the per capita yearly rate divided by 1,776 hours to calculate the equivalent hourly rate. 16 United States General Accounting Office, Army Industrial Facilities: Workforce Requirements and Related Issues Affecting Depots and Arsenals, GAO/NSIAD 99-31, November 1998, Table 2-3, pp. 28. This figure is the average of the depots, excluding Corpus Christi. 2-18

37 Army Ground Vehicle Corrosion Costs maintenance labor hours. The report estimates only 55 percent of total Army FLM costs are captured. 17 The Army field-level maintenance (FLM) information systems have more capability to measure the cost of material consumed than they do to measure the cost of labor, both at the organizational and intermediate maintenance levels Visibility into the largest area of maintenance cost, organizational labor, is inadequate on the whole. Taken collectively, Army FLM information systems provide adequate cost visibility to roughly 55% of the FLM costs incurred. As we analyze the ILAP records, we notice a large percentage of the records have no entry in the problem description field. This is the data field technicians use to enter a text description of the nature of the maintenance work. Without an entry in this field, we cannot perform the corrosion analysis of the data record. We eliminate a total of 300,000 records containing $1.2 billion in labor costs because of this issue. Based on these factors, we expect to account for approximately $1.2 billion in directly recorded labor costs from ILAP. This is the same amount we captured. We now start our analysis of each of the labor records to isolate those related to corrosion. The first step is to examine the type maintenance code. A notation of code 6 in this field signifies cosmetic maintenance, such as body work and paint. We flag records with this code entry as corrosion-related records. We continue our bottom-up approach using the corrosion-related keyword list to search through the fault descriptions of the work records contained in ILAP. We accumulate corrosion labor costs of $124 million using the keyword search to flag and separate corrosion records from non-corrosion records. To calculate the final corrosion costs for node C1, we multiply $127 million (the flagged labor corrosion costs) by the ratio of $5.981 billion to $1.2 billion to account for the top-down to bottom-up gap. The result is the corrosion cost of $617 million in node C1. ORGANIC FLM MATERIAL CORROSION COST (NODE D1 ) We start with our top-down estimate of $4.905 billion for total Army FLM materials cost from Table We identify Army ground vehicle organic fieldlevel maintenance materials costs using the commodity category title from the OP-31 and OP-25 budget exhibits. We identify a total of $2.633 billion of the $4.905 billion as a top-down estimate for Army ground vehicle organic FLM materials costs. A summary of this calculation is shown below in Table Op. cit., LMI Report LG301T7, March 2005, p

38 Table Materials Budget for Army Ground Vehicles for FLM for FY2007 Military component Commodity category Total (in millions) Ground vehicle total (in millions) Active Airframes $1,001 Active Aircraft engines $43 Active Combat vehicles $1,135 $1,135 Active Missiles $53 Active Communications equipment $492 $250 a Active Other miscellaneous $1,890 $961 a Reserve All categories $78 $74 Guard All categories $213 $213 Total $4,905 $2,633 a We use 51 percent of the communications equipment and Other miscellaneous categories as ground vehicle costs based on the ratio of the combat vehicle total ($1,135 million) to the sum of the airframes, aircraft engines, combat vehicles, and missiles total ($2,232 million). Our next task is to extract the corrosion-related materials cost (node D1 from Figure 2-10) from the $2.633 billion total using a bottom-up approach. Figure Army Organic Field-Level Maintenance Materials Corrosion Cost ($ in millions) $4,905 Organic materials $2,633 Ground vehicles materials $2,272 Non-ground vehicles materials $2,399 Noncorrosion $234 Corrosion D1 This analysis is fairly straightforward. We first aggregate the individual ILAP materials costs to compare this bottom-up total with our top-down amount. We account for $936 million in ground vehicle related materials costs from the detailed bottom-up labor data. Our next task is to determine the corrosion-related portion of that total. The labor corrosion records have already been analyzed as described above, and those records involving corrosion-related work have been flagged. The corresponding materials used to accomplish those corrosion-related tasks are also flagged. By aggregating materials costs associated with each flagged record, we 2-20

39 Army Ground Vehicle Corrosion Costs identify $83 million in corrosion-related organic FLM materials costs for Army ground vehicles. To calculate the final corrosion costs for node D1, we multiply $83 million (the flagged materials corrosion costs) by the ratio of $2.633 billion to $936 million to account for the top-down to bottom-up gap. The result is the corrosion cost in node D1 of $234 million. ADDITIONAL CHARACTERIZATION OF ILAP RECORDS Having calculated both the corrosion labor (node C1 ) and corrosion materials (node D1 ) costs, we characterize each task as either corrective or preventive and parts- or structure-related. We also derive the WBS using the same method as we described in the Organic DM Corrosion Costs section earlier in this chapter. We next examine commercial FLM costs. COMMERCIAL FLM LABOR AND MATERIALS CORROSION COST (NODES C2 AND D2 ) We repeat the commercial maintenance portion (see Figure 2-11) of the FLM cost tree from Figure 2-8 for ease of discussion. Figure Army Ground Vehicles Commercial FLM for FY2007 ($ in millions) $4,704 Commercial maintenance $286 Ground vehicles $4,418 Non-ground vehicles $195 Labor $6 Overhead $85 Materials $178 Noncorrosion $17 Corrosion C2 $80 Noncorrosion $5 Corrosion D2 To determine the corrosion-related commercial FLM materials and labor costs, we start with the same top-down figure of $4.704 billion from our earlier analysis. We again examine commercial maintenance costs noted on budget line 922, Equipment Maintenance by Contract. We isolate all costs associated with line 2-21

40 922 for each budget activity that is pertinent to FLM and to ground vehicles. We sum these line 922 contract maintenance costs to yield $286 million in commercial FLM costs associated with Army ground vehicles. We use information supplied by the TACOM Life Cycle Management Command to determine how the $286 million in commercial FLM was expensed by LIN. The data submission from the LCMC accounts for $84 million of the initial $286 million top-down commercial FLM figure. We multiply each of the data entries by 3.4 ($286 $84) to account for the difference in the TACOM data submission totals and the top-down figure. We use 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. This is similar to the analysis of commercial DM corrosion costs. We show an example of this analysis in Table Table Commercial FLM Ratios LIN Vehicle nomenclature Labor Materials Corrosion Preventive Corrective Parts Structure F40375 Fighting vehicle: full 17.2% 82.8% 3.3% 0.9% 99.1% 79.2% 20.8% K57667 Howitzer medium self-propelled 50.4% 49.6% 8.9% 2.2% 97.8% 89.2% 10.8% J81750 Fighting vehicle infantry M2 19.7% 80.3% 3.4% 0.9% 99.1% 78.8% 21.2% C18234 Carrier personnel M113A3 45.7% 54.3% 6.9% 8.8% 91.2% 64.3% 35.7% R50681 Medium recover vehicle 28.7% 71.3% 6.4% 5.2% 94.8% 77.2% 22.8% full tracked T13168 Tank combat 120mm M1A1 35.0% 65.0% 8.6% 4.2% 95.8% 84.8% 15.2% Each percentage is applied to the total commercial FLM cost from the TACOM data submission to determine corrosion costs and other characterizations of the data. We then aggregate the labor and materials corrosion costs for each LIN. The costs for nodes C2 and D2 are $6 million and $2 million respectively. ONR Cost of Corrosion (Nodes E, F, and G ) Corrosion costs outside normal maintenance reporting are a significant contributor to the overall cost of corrosion for Army ground vehicles. The corrosion costs for this area are $590 million, with the overwhelming majority of the costs ($557 million) associated with the labor of non-maintenance specialty vehicle operators. The cost tree in Figure 2-12 guides our discussion. 2-22

41 Army Ground Vehicle Corrosion Costs Figure Army Ground Vehicles ONR Corrosion Cost ($ in millions) Labor of non-maintenance vehicle operators Priority 2 and 3 costs Purchase cards E F G $557 million $1 million $32 million We calculate each of the corrosion costs in nodes E through G in a unique way because they are not recorded as part of a standard maintenance reporting system. LABOR OF NON-MAINTENANCE GROUND VEHICLE OPERATORS (NODE E ) This node contains the cost of ground vehicle operators with non-maintenance specialties that perform corrosion-related tasks, such as painting, cleaning, and inspection of a vehicle. To obtain a cost estimate, we first determine the staffing level of non-maintenance personnel for the ground vehicles within the scope of this study. To do so, we assume each vehicle (both wheeled and tracked) has one operator who is responsible for the operator maintenance of the towed equipment. Table 2-14 presents the number of Army ground vehicles by military component. Table Number of Army Ground Vehicles by Type and Military Component Type of vehicle Active duty National Guard Reserve Pre-positioned stock Total Tracked 26,327 12,756 1, ,947 Wheeled 148,394 86,242 36,827 2, ,152 Total wheeled 174,721 98,998 37,946 3, ,099 and tracked Towed 73,650 45,926 22,280 1, ,656 Total 248, ,924 60,226 5, ,755 We determine there are 315,099 wheeled and tracked Army vehicles. We assume pre-positioned stock is maintained by an individual with a maintenance specialty, and, therefore, subtract them (3,434) from the total. In FY2007, 192,703 Army personnel (out of 1,060,372 total personnel) held a maintenance specialty. We apply this ratio to the 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 double count them. 2-23

42 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 Table Number of Army Ground Vehicles by Type and Military Component Operated by Non-Maintenance Personnel Type of vehicle Active duty National Guard Army Reserves Total Tracked 21,543 10, ,896 Wheeled 121,426 70,569 30, ,130 Total wheeled 142,969 81,007 31, ,026 and tracked Towed 72,178 46,401 22, ,138 Total 215, ,408 53, ,164 We then use information from a survey we administered on the Army Knowledge Online (AKO) website to determine the amount of time non-maintenance vehicle operators spend on both general maintenance tasks and corrosion-related maintenance tasks. A summary of the survey results is provided in Table Table Summary of Time Spent on Corrosion Maintenance by Non-Maintenance Personnel Who Operate Ground Vehicles Level of maintenance No. of responses Percentage with non-maintenance specialty Average maintenance hours per workday Average corrosion maintenance hours per workday Ratio of corrective to preventive maintenance Active duty % :50 National Guard % :50 Reserve % :50 Total 1, :50 Eight hundred fifty-three survey respondents were non-maintenance vehicle operators. This group performs an average of 1.5 hours of vehicle maintenance per day, 0.5 hours of which is corrosion-related. A summary of the complete survey results is provided in Appendix G. 2-24

43 Army Ground Vehicle Corrosion Costs We use the survey results to calculate the final cost of node E, as shown in Table Table Corrosion Cost of Non-Maintenance Personnel Who Operate Ground Vehicles Military component No. of vehicles Workdays with operators Hourly rate a per year b Corrosion hours per day Cost Active duty 142,969 $ $450 million National Guard 81,007 $ $77 million Reserve 31,050 $ $30 million Total 255,026 $557 million a Rate is the FY2004 Army E-4 Annual DoD Composite rate of $50,399 per year divided by 1,776 hours. b We determine the National Guard and Reserve workdays through their respective pay rates derived from the Department of Defense Fiscal Year 2007 President s Budget. Based on the survey responses, the total number of wheeled and tracked vehicles, and an average pay rate for an E-4, we determine the total cost estimate for node E is $557 million. We allocate these costs to each vehicle by LIN. PRIORITY 2 AND 3 COSTS (NODE F ) There are three corrosion-related costs for this node: Research, development, testing, and evaluation (RDT&E) Facilities Training. Army Corrosion RDT&E Cost 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 begin with a study of the Army s budget requests. We examine the Army s RDT&E requests contained in the FY2007 President s Budget. We queried the budget documents for program elements that contained possible corrosion terms, such as paint, corrosion, or coat, but did not find any such projects. We then reviewed the list of CPC IPT projects and found two that are related to Army ground vehicle corrosion. We list these in Table

44 Table Army Ground Vehicles FY2007 Corrosion RDT&E Projects Index number Project title Service funding level W07AR04 Service life prediction tool $175,000 W07AR06 Antimicrobial mildew growth/bio-corrosion $488,000 Total $663,000 We conclude the corrosion cost of Army ground vehicle RDT&E in FY2007 was at least $663,000. Army Corrosion Facilities Cost Corrosion-related facilities costs are expenditures that have the primary purpose of preventing or correcting corrosion. Examples of facilities-related costs include paint booths, curing ovens to heat treat protective coatings, or dehumidification tents or buildings. We examine the Army s military construction requests contained in the FY2007 President s Budget. We searched the text descriptions of the military construction projects for corrosion key words but found no projects that contain a match. Therefore, we conclude the total Army corrosion facilities cost in FY2007 was zero. Army Corrosion Training Cost Corrosion training costs are the labor-hours, materials, travel, and other related costs expended by instructors and students teaching or learning corrosion-related subject matter. We review the bottom-up depot labor records and find annotations for training courses and their descriptions. Using only those records we did not use in the bottom-up DM corrosion analysis so as to avoid double counting costs we flag training records with corrosion-related training material. We aggregate those labor hours and multiply by the standard labor rate we used for the DM cost analysis. We summarize these findings in Table Table Summary of Army Ground Vehicle DM Corrosion Training Costs Depot Corrosion training cost Anniston $308,457 Letterkenny $152,443 Red River $145,745 Tobyhanna $0 Total $606,

45 Army Ground Vehicle Corrosion Costs A similar search of FLM bottom-up records as well as training course literature and training databases did not yield any Army ground vehicle corrosion courses for FLM. Therefore, we conclude the total Army ground vehicle corrosion training cost is at least $606,645. The total corrosion cost for priority 2 and 3 costs (node F ) is $1,269,644. PURCHASE CARDS (NODE G ) Purchase card corrosion costs are expenditures for corrosion-related materials or services that are made with the use of a charge card. We obtained a list of the FY2007 charge card purchases for the Army. This data includes the purchasing organization, the merchant category code (MCC), transaction dates, merchant description, and transaction amounts. The MCC describes the material or service much like the government s Federal Supply Catalog (FSC) codes. We first identify FSCs that contain corrosion-related consumables like paints, preservatives, cleaning supplies, coatings, etc. We then identify the potential corrosionrelated purchase card items by segregating the MCCs that are similar to the corrosion-related. We perform a keyword search to flag merchant descriptions that contain corrosion words, such as paint, wash, coatings, and clean from among the millions of potential corrosion-related purchase card records. Finally, we examine each flagged transaction to determine whether it was a corrosion-related Army ground vehicle materials or service purchase. We do this by eliminating flagged merchant descriptions that are obviously not corrosion-related (Bill s Dry Cleaning, for example) or purchasing organizations that are obviously not associated with ground vehicles (Training and Doctrine Command, for example). Based on the valid corrosion-related Army ground vehicle transactions that remained, the cost of corrosion based on purchase card expenditures in FY2007 is $32 million. 2-27

46 FINAL ARMY GROUND VEHICLE CORROSION COST TREE (NODES A THROUGH G ) In Figure 2-13, we present the Army ground vehicle corrosion cost tree with corrosion costs at each node. Figure Final Army Ground Vehicle Corrosion Cost Tree $83.9 billion DoD Maintenance $51.8 billion Non-Army maintenance $9.3 billion Total Army DM $22.8 billion Total Army FLM $0.6 billion Army ground vehicle ONR Army ground vehicles only Laborrelated cost of corrosion Materialsrelated cost of corrosion Laborrelated cost of corrosion Materialsrelated cost of corrosion Labor of non-maintenance vehicle operators Priority 2 and 3 costs Purchase cards A B C D E F G $261 million $720 million $634 million $239 million $557 million $1 million $32 million $2.4 billion estimated annual Army ground vehicle corrosion cost 2-28

47 Chapter 3 Summary and Analysis of Army Ground Vehicle Corrosion Costs The total annual corrosion cost estimate for Army ground vehicles is $2.44 billion. During the execution of this study, we created a data structure that allows many different views of this cost far too many to depict within the body of this report. In this chapter, we extract several of the more interesting summaries and discuss their significance. We also present trend analysis based on the 3 years of study data from this and the earlier study of Army ground vehicle corrosion costs. ARMY CORROSION COST COMPARISON BY STUDY YEAR We present a summary of Army ground vehicle corrosion costs by study year in Table 3-1 below. We exclude ONR corrosion costs for this analysis. Table 3-1. Army Ground Vehicle DM and FLM Corrosion Costs Data baseline DM and FLM corrosion cost DM and FLM cost Percentage increase from FY2004 corrosion cost Percentage increase from FY2004 DM and FLM cost Corrosion cost as a percentage of DM and FLM cost FY2004 $1,319 million $8,936 million 0.0% 0.0% 14.8% FY2006 $1,776 million $12,489 million 34.6% 39.8% 14.2% FY2007 $1,854 million $12,948 million 40.6% 44.9% 14.3% Total $4,949 million $34,373 million 14.4% Army ground vehicle corrosion costs incurred during the performance of DM and FLM increased from $1.319 billion in FY2004 to $1.854 billion in FY2007 an increase of 40.6 percent. However, this increase is entirely explained by the increase in DM and FLM expenditures during the same period. Expenditures on DM and FLM increased from $8.936 billion in FY2004 to $ billion in FY2007 an increase of 44.9 percent. Corrosion incurred during the performance of DM and FLM actually dropped on a percentage basis from 14.8 percent in FY2004 to 14.3 percent in FY

48 ARMY CORROSION COSTS BY NODE The Army ground vehicle corrosion costs are presented by node in Figure 3-1. Figure 3-1. Breakouts of Army Ground Vehicles Corrosion Costs by Node $83.9 billion DoD maintenance $51.8 billion Non-Army maintenance $9.3 billion Total Army DM $22.8 billion Total Army FLM $0.6 billion Army ground vehicle ONR Army ground vehicles only Laborrelated cost of corrosion Materialsrelated cost of corrosion Laborrelated cost of corrosion Materialsrelated cost of corrosion Labor of non-maintenance vehicle operators Priority 2 and 3 costs Purchase cards A B C D E F G $261 million $720 million $634 million $239 million $557 million $1 million $32 million $2.4 billion estimated annual Army ground vehicle corrosion cost The cost of corrosion-related labor is modestly higher than all other corrosion costs. The labor costs of corrosion are the costs at nodes A, C, and E. The labor costs of these three nodes account for $1.452 billion, or nearly 60 percent, of the total Army ground vehicle corrosion cost. 3-2

49 Summary and Analysis of Army Ground Vehicle Corrosion Costs In Table 3-2, we examine the cost at each of these nodes in more detail. Table 3-2. Army Ground Vehicles Corrosion Cost by Node and Sub-Node Node Corrosion cost (in millions) Description of corrosion cost node FY2004 FY2006 FY2007 A1 Organic DM labor $46 $88 $98 B1 Organic DM materials $84 $417 $429 A2 Commercial DM labor $55 $68 $163 B2 Commercial DM materials $89 $400 $291 DM total $274 $973 $981 C1 Organic FLM labor $842 $461 $617 D1 Organic FLM materials $195 $312 $234 C2 Commercial FLM labor $6 $19 $17 D2 Commercial FLM materials $2 $11 $5 FLM total $1,045 $803 $873 E Labor of non-maintenance vehicle operators $670 $532 $557 F Priority 2 and 3 $21 $10 $1 G Purchase cards $7 $25 $32 H Scrap and disposal $2 N/A a N/A a ONR total $700 $567 $590 Total all corrosion costs $2,019 $2,347 $2,444 a We did not calculate costs for scrap and disposal in the FY2006 and FY2007 studies. In comparing the trend of corrosion cost for Army ground vehicles between FY2004 and FY2007, there appears to be a shift in costs from FLM to DM. The corrosion cost for DM jumped from $274 million in FY2004 to $981 million in FY2007. During the same period, the corrosion costs for FLM dropped from $1,045 million in FY2004 to $873 million in FY2007. This trend is more apparent when we examine corrosion as a percentage of total maintenance. We show this comparison in Table 3-3. Table 3-3. Army Ground Vehicles Corrosion Cost as a Percentage of Maintenance Corrosion cost (in millions) Corrosion cost as a percentage of maintenance Level of maintenance FY2004 FY2006 FY2007 FY2004 FY2006 FY2007 DM $274 $973 $ % 29.4% 26.8% FLM $1,045 $803 $ % 9.1% 9.8% Total $1,319 $1,776 $1, % 14.2% 14.3% 3-3

50 From Table 3-3, we can see corrosion as a percentage of DM maintenance has roughly doubled from 14 percent in FY2004 to an average of 28 percent in FY2006 and FY2007. During this same period, corrosion as a percentage of FLM maintenance has dropped from 15 percent in FY2004 to less than 10 percent in FY2006 and FY2007. It appears as though more responsibility for dealing with corrosion issues is being transferred to the depots. Interestingly, the DM and FLM corrosion cost as a percentage of DM and FLM cost actually decreased from 14.8 percent to 14.3 percent between FY2004 and FY2007. ARMY CORROSION COSTS BY VEHICLE TYPE We calculated the total corrosion cost by LIN as well as the average corrosion cost per vehicle for each LIN. The top 20 contributors to Army ground vehicle corrosion costs for FY2007 are shown in Table 3-4. Table 3-4. Top 20 Contributors to Army Ground Vehicle Corrosion Costs for FY2007 Rank LIN Nomenclature Total maintenance cost (in millions) Total corrosion cost (in millions) Number of vehicles Average corrosion cost per vehicle 1 T61494 Truck utility: cargo $1,130 $154 43,019 $3,571 2 T13305 Tank combat 120MM M1A2 $415 $100 1,196 $83,770 3 T07679 Truck utility: heavy $403 $99 24,997 $3,972 4 R50681 Recovery vehicle M88A1 $362 $89 2,138 $41,710 5 T13168 Tank combat 120MM M1AI $440 $85 4,490 $18,937 6 X40009 Truck cargo: 2 1/2 ton $328 $60 9,298 $6,415 7 T92242 Truck utility: ARMT CA $356 $57 7,700 $7,377 8 R50885 Recovery vehicle M88A2 $162 $ $325,370 9 X40794 Truck cargo: drop side $318 $45 12,407 $3, H57642 Howitzer medium M109A6 $175 $ $36, X59326 Truck tractor: 5 ton 6 $235 $31 7,584 $4, X40146 Truck cargo: 2 1/2 ton $129 $27 3,374 $8, X63299 Truck wrecker M936A2 $144 $27 1,945 $13, T92446 Truck utility HMMWV M1114 $334 $25 6,710 $3, J81750 Infantry fighting vehicle M2 $217 $24 1,101 $21, X50436 Truck lift EFG2/6002 $93 $ $128, T61103 Truck tractor M915A3 $144 $21 4,722 $4, T60081 Truck cargo: 4 4 LMTV $174 $20 9,536 $2, R18701 Radar set mounted $68 $19 41 $456, T63093 Truck wrecker M984A1 $109 $19 1,936 $9,578 A a Unknown $573 $115 B a Engine $605 $113 C a Transmission $153 $21 a We include these categories because they contain corrosion costs that cannot be attributed to a single LIN. 3-4

51 Summary and Analysis of Army Ground Vehicle Corrosion Costs As it was in FY2004, LIN T61494, a High Mobility Multi-Purpose Wheeled Vehicle (HMMWV) (see Figure 3-2), is the largest contributor to Army ground vehicle corrosion cost at more than $154 million; but the average corrosion cost per vehicle is more moderate, at $3,571 per vehicle. Figure 3-2. LIN T61494: HMMWV Note: LIN T61494 is the highest contributor to total Army ground vehicle corrosion cost. The average number of vehicles per LIN in this study is 702 (458,755 total vehicles spread across 653 LINs). The fleet size of 17 of the top 20 overall corrosion cost contributors from Table 3-4 exceeds the average number of vehicles per LIN for this study. This implies fleet size is a significant contributor to total Army ground vehicle corrosion costs. The vehicles in the grey highlighted rows from Table 3-4 are the top 20 corrosion cost contributors for each of the three years of the corrosion studies. These vehicles provide an opportunity for a focused application of resources to mitigate the effects of corrosion. Table 3-5 presents the top 20 LINs by average corrosion cost per vehicle. We only include vehicle types that had more than 10 vehicles in the Army inventory to avoid portraying a skewed picture of the data. 3-5

52 Table 3-5. Top 20 LINs by Average Corrosion Cost per Vehicle for FY2007 Rank LIN Nomenclature Average corrosion cost per vehicle Number of vehicles Total maintenance cost (in millions) Total corrosion cost (in millions) 1 R18701 Radar set mounted $456, $68 $19 2 R50885 Recovery vehicle M88A2 $325, $162 $48 3 P60658 Carrier personnel $167, $61 $16 4 X50436 Truck lift EFG2/6002 $128, $93 $23 5 R18815 Radar set mounted $103, $17 $4 6 T13305 Tank combat 120MM M1A2 $83,770 1,196 $415 $100 7 R66273 Refuel system HEMTT $65, $55 $18 8 R50681 Recovery vehicle M88A1 $41,710 2,138 $362 $89 9 T07814 Truck CR with ITAS M1121P1 $39, $11 $5 10 H57642 Howitzer medium M109A6 $36, $175 $36 11 J97621 Light armored vehicle M1132 $35, $40 $2 12 S72846 Semi-trailer fuel M131A5 $22, $2 $1 13 X63573 Truck wrecker $21, $1 $1 14 J81750 Infantry fighting vehicle M2 $21,546 1,101 $217 $24 15 T13168 Tank combat 120MM M1A1 $18,937 4,490 $440 $85 16 A80593 Antenna OE-349/MRC $16, $10 $2 17 R16611 RO TE CH KALMAR RT240 $16, $36 $6 18 T10549 S/EQ S/WEST SGPRSMD $15, $8 $1 19 X43845 Truck dump 5 ton W/W M817 $15, $18 $6 20 T39518 Truck cargo tactical W/W $14, $29 $7 The vehicle with the highest average corrosion cost is LIN 18701, a radar set for the Patriot missile that is mounted on a semi-trailer. This vehicle is the 19th highest total corrosion contributor as depicted in Table 3-4. Figure 3-3. LIN R18701: Radar Set Semi-Trailer Mounted Note: The Patriot missile radar set is the highest average per vehicle contributor to Army ground vehicle corrosion cost. 3-6

53 Summary and Analysis of Army Ground Vehicle Corrosion Costs The vehicles in the grey highlighted rows in Table 3-5 are among the top 20 average per-vehicle corrosion cost contributors for at least two of the three years studied. The vehicles in bold type appear in the top 20 average corrosion contributor lists for each of the three study years. These vehicles provide an opportunity for a focused application of resources to mitigate the effect of corrosion. Vehicles that merit the most attention have a high total corrosion cost as well as a high average corrosion cost per vehicle. Eight vehicles fall into both categories of top 20 contributors to Army ground vehicle corrosion cost based on FY2007 results (see Table 3-6). Table 3-6. Vehicles with Highest Average per Vehicle and Total Corrosion Cost Contribution to Army Ground Vehicle Corrosion Cost (FY2007) LIN Description Average corrosion cost per vehicle Rank in top 20: corrosion cost per vehicle Total corrosion cost (in millions) Rank in top 20: total corrosion cost T13305 Tank combat 120MM M1A2 $83,770 6 $100 2 R50885 Recovery vehicle M88A2 $325,370 2 $48 8 R50681 Recovery vehicle M88A1 $41,710 8 $89 4 T13168 Tank combat 120MM M1A1 $18, $85 5 H57642 Howitzer medium M109A6 $36, $36 10 X50436 Truck lift EFG2/6002 $128,545 4 $23 16 R18701 Radar set mounted $456,073 1 $19 19 J81750 Infantry fighting vehicle M2 $21, $24 15 LIN T13305, the M1A2 Abrams Tank (see Figure 3-4), is the highest combined contributor to Army ground vehicle corrosion cost in terms of both total corrosion cost and average corrosion cost per vehicle based on FY2007 data. The vehicles from Table 3-6 in the grey highlighted rows have appeared in the top 20 highest contributors of both total and average corrosion cost for at least two of the three years. Figure 3-4. LIN T13305: M1A2 Abrams Tank Note: The M1A2 Abrams Tank has the highest combined total and average corrosion cost per vehicle based on FY2007 data. 3-7