FINANCIAL MANAGEMENT POLICY MANUAL

074603 FINANCIAL POLICY
1. GENERAL.
The Department of the Navy operates NWCF activities in accordance with
the financial policies and procedures contained in the DOD 7000.14-R,
Financial Management Regulation, and those established by the DWCF
Policy Board.
2. MOBILIZATION/SURGE COSTS AND WAR RESERVE MATERIAL.
Mobilization capability costs include the cost to maintain a surge capacity
to procure and maintain approved war reserve material levels, and/or to
maintain other assets, functions or capabilities required to meet an
operational contingency, as documented in Defense Planning Guidance or
operational plans.
a. Unutilized Plant Capacity (UPC) represents costs associated with
maintaining facilities to meet necessary surge capacity due to
mobilization or war. The cost to maintain this capacity is budgeted in
the O&M accounts. UPC costs are not to be included in the DWCF
rate structure.
b. War reserve material purchases are funded through a direct
appropriation to the NWCF or after notification to Congress.
Appropriated amounts for such secondary items are to be reflected as a
separate goal within the Supply Management Business Area Annual
Operating Budget.
3. MILITARY PERSONNEL COSTS.
The cost of military personnel assigned to NWCF activities will be
included in the total cost of operations of NWCF activities at civilian
equivalent rates and reflected in the stabilized rates charged to customers.
This policy is based on the concept of total costing, which is designed to
ensure that the total cost of producing products and services is being
identified to both NWCF activities and customers. The amount expensed
for military personnel by NWCF activities and the amount reimbursed to
the appropriate military personnel appropriation will be the same as the
amount budgeted. The budget amount will equal the average strength,
calculated based on the average fill rate for the three prior years,
multiplied by the civilian equivalency rate for each grade. No adjustments
will be made to the NWCF cost of operations to reflect the actual cost of
military personnel employed by NWCF activities.
4. DEPRECIATION/AMORTIZATION COSTS FOR CAPITAL ASSETS.
All capital assets owned by activities in the NWCF will be capitalized and
depreciated or amortized by the individual business area. Additional
guidance regarding the treatment of capital assets is provided in DOD
Financial Management Policy
2-109