The Defense Companies Initiative (“DCI”), published by Transparency International Defense & Security, sets standards and ratings for anti-corruption programs and transparency among defense sector companies. Huntington Ingalls Industries (“HII”) understands the role that transparency plays to the broader goal of eradicating corruption. We support the work and goals of organizations such as Transparency International that push us and our competitors to be transparent about our commitment to anti-corruption compliance. In furtherance of this goal, we are publishing this Explanation and Fact Sheet to provide information regarding HII’s Compliance Program in each of the areas for which Transparency International has highlighted the need for increased transparency.

Introduction
At HII, we are committed to operating in full compliance with the law. We expect all of our directors, officers, employees and business partners to operate ethically and honestly. We simply will not tolerate anything less.

Our commitment to anti-corruption compliance is stated clearly and prominently in our Code of Ethics and Business Conduct. But this commitment goes well beyond public statements. We have developed a best-in-class Compliance Program designed to ensure compliance with all areas of the law, including anti-corruption laws.

Our Compliance Program is developed and monitored at the Corporate level and is implemented by our three operating divisions (“Divisions”):

Newport News Shipbuilding, Ingalls Shipbuilding, and Technical Solutions.

As America’s largest military shipbuilding company, we understand the need for careful planning, accountability, and goal setting—it is how hard stuff is done right. We take the same approach toward compliance. Each year we develop Compliance Work Plans at the Corporate and Division levels. Each Work Plan identifies “Core Elements” of compliance focus. For each Core Element, we conduct an annual risk assessment. Based on that assessment, we prepare a Work Plan that identifies the risks, highlights the applicable policies and procedures relating to the Core Element, identifies mitigating measures, develops goals for the year, establishes metrics, and assigns responsibility. Our risk assessments and Core Element Work Plans are all managed through a proprietary compliance interface designed and administered by HII.

The vast majority (over 90%) of HII’s revenue derives from contracts with the U.S. Navy and Coast Guard. Our international operations are currently limited. Nevertheless, we take both domestic and foreign corruption risks seriously. Several Core Elements relate to anti-corruption compliance, including: (i) Anti-Corruption, (ii) Business Gratuities, (iii) Due Diligence, (iv) Federal Political Activities, (v) Personal Conflicts of Interest, (vi) Purchasing, (vii) Responsible Suppliers, Subcontractors and Vendors, (viii) Retaliation, (ix) Revolving Door, and (x) State and Local Political Activities.

Of course, a Compliance Program is only as good as the people running it—and following it. We rely on a team of highly skilled and committed compliance experts to run the Compliance Program and help employees, officers, and directors deal with any anti-corruption issues they may face. We also place great responsibility on the shoulders of our employees. We believe that employees should not just follow, but should be actively engaged in, the Compliance Program. Various employees, managers, and departments are given specific compliance responsibilities associated with Core Element Work Plans.

The following Explanation and Fact Sheet covers each of the areas and questions raised by Transparency International. Where relevant and possible, we have included links directly to documents or other resources.