Charging practices across Newport News Shipbuilding are governed by established cost accounting standards and must align with our disclosed accounting practices outlined in the NNS disclosure statement. These practices are not just guidelines – they are foundational to our compliance with government contracting requirements.

The chief financial officer’s organization, specifically the Government Financial Relations (GFR) Department (O74), is responsible for all charging determinations per SSO 10-201 (Charging Classification of Accounts). No charging practice may be changed without first consulting GFR. This includes decisions such as:

• Whether a cost is charged as direct or indirect.
• Whether a cost is allowable (able to be billed to the government) or unallowable (not able to be billed to the government).
• Determining which overhead cost pool (i.e., which department) is responsible for the cost.

It’s essential to note that charging decisions are not driven by funding availability. For example:

• Direct jobs may not be used to fund traditional overhead activities.
• We cannot change how something is charged purely due to budget limitations.
• If direct funding is exhausted, it is not appropriate to reclassify costs as indirect.

Charging is based solely on the nature of the cost, not on the preferred or available funding stream.

Additionally, manufacturing industrial base contracts must follow the same rules and standards as all other U.S. government contracts. There are no exceptions based on contract type.

Finally, if any directly funded project is expected to result in a capital asset – including capital improvements or infrastructure – it must be reviewed by GFR before work begins.

By following these practices, NNS ensures compliance with federal regulations, maintains consistency across programs and upholds the integrity of our accounting system. For questions or review, please contact the GFR team.