Newport News Shipbuilding and Dry Dock Company's Claims Against the Department of the Navy
PSAD-78-137: Published: Oct 6, 1978. Publicly Released: Dec 1, 1978.
- Full Report:
A firm filed five claims with the Department of the Navy involving interest expense and lost interest income totaling about $77 million. The financing claims would be governed by cost-sharing provisions of contracts, and the contractor estimated that about $29.9 million of the requested financing costs would be reimbursed if the claims were approved. GAO found the interest calculated by the company to be higher than reasonable based on more realistic rates of interest than those used by the company and more appropriate methodologies for determining bases for calculation of interest. The differences between amounts calculated by the company and GAO resulted from the company's use of estimated interest rates when actual data were available, its exclusion of actual government escalation payments on one contract which increased the base upon which financing costs were computed, failure to reasonably allocate total shipyard monthly borrowings to individual claims, and inclusion of amounts for compensating balances exceeding actual amounts required for bank borrowings.