for determining fair compensation for termination claims which are not settled by agreement shall be designed to compensate the war contractor fairly for the termination of the war contract, taking into

account

(1) the direct and indirect manufacturing, selling and distribution, administrative and other costs and expenses incurred by the war contractor which are reasonably necessary for the performance of the war contract and properly allocable to the terminated portion thereof under recognized commercial accounting practices; and

(2) reasonable costs and expenses of settling termination claims of subcontractors related to the terminated portion of the war contract;

and

(3) reasonable accounting, legal, clerical, and other costs and expenses incident to termination and settlement of the terminated war contract; and

(4) reasonable costs and expenses of removing, preserving, storing and disposing of termination inventories; and

(5) such allowance for profit on the preparations made and work done for the terminated portion of the war contract as is reasonable under the circumstances; and

(6) interest on the termination claim in accordance with subsection (f) of this section; and

(7) the contract price and all amounts otherwise paid or payable under the contract.

The following shall not be included as elements of cost:

(i) Losses on other contracts, or from sales or exchanges of capital assets, fees and other expenses in connection with reorganization or recapitalization, antitrust or Federal income-tax litigation, or prosecution of Federal income-tax claims or other claims against the Government (except as provided in paragraph (3) above); losses on investments; provisions for contingencies; and premiums on life insurance where the contractor is the beneficiary.

(ii) The expense of conversion of the contractor's facilities to uses other than the performance of the contract.

(iii) Expenses due to the negligence or willful failure of the contractor to discontinue with reasonable promptness the incurring of expenses after the effective date of the termination notice.

(iv) Costs incurred in respect to facilities, materials, or services purchased or work done in excess of the reasonable quantitative requirements of the entire contract.

The failure specifically to mention in this subsection any item of cost is not intended to imply that it should be allowed or disallowed. The Director may interpret the provisions of this subsection (d) and may provide for the inclusion or exclusion of other costs in accordance with recognized commercial accounting practice.

Where the small size of claims or the nature of production or performance or other factors make it impracticable to apply the principles stated in this subsection (d) to any class of settlements which are subject to this subsection (d), the contracting agencies may establish alternative methods and standards for determining fair compensation for that class of termination claims. The aggregate amount of compensation allowed in accordance with this subsection (excluding amounts allowed under paragraphs (3) and (4) above) shall not

exceed the total contract price reduced by the amount of payments otherwise made or to be made under the contract.

(e) Settlement by agreement.-In order to carry out the objectives of this chapter, termination claims shall be settled by agreement to the maximum extent feasible and the methods and standards established under subsection (b) of this section shall be designed to facilitate such settlements. To the extent that he deems it practicable to do so without impeding expeditious settlements, the Director shall require the contracting agencies to take into account the factors enumerated in subsection (d) above in establishing methods and standards for determining fair compensation in the settlement of termination claims by agreement.

(f) Interest. Each contracting agency shall allow and pay interest on the amount due and unpaid from time to time on any termination claim under a prime contract at the rate of 22 per centum per annum for the period beginning thirty days after the date fixed for termination and ending with the date of final payment, except that (1) if the prime contractor unreasonably delays the settlement of his claim, interest shall not accrue for the period of such delay, (2) if interest for the period after termination on any advance payment or loan, made or guaranteed by the Government, has been waived for the benefit of the contractor, the amount of the interest so waived allocable to the terminated contract or the terminated part of the contract shall be deducted from the interest otherwise payable hereunder, and (3) if after delivery of findings by a contracting agency, the contractor appeals or sues as provided in section 113 of this title, interest shall not accrue after the thirtieth day following the delivery of the findings on any amount allowed by such findings, unless such amount is increased upon such appeal or suit. In approving, ratifying, authorizing, or making termination settlements with subcontractors, each contracting agency shall allow interest on the termination claim of the subcontractor on the same basis and subject to the same conditions as are applicable to a prime contractor.

(g) Amendment of contracts.-Where any war contract does not provide for or provides against such fair compensation for its termination, the contracting agency, either before or after its termination, shall amend such war contract by agreement with the war contractor, or shall authorize, approve, or ratify an amendment of such war contract by the parties thereto, to provide for such fair compensation. (July 1, 1944, ch. 358, § 6, 58 Stat. 652.)

Retroactive effect of this section, see section 124 (a) of this title.

Separability provisions and short title, see note under section 101 of this title. Settlement of claims for war contract losses incurred between September 16, 1940 and August 14, 1945. Act Aug. 7, 1946, c. 864, §§ 1-6, 60 Stat. 902, provided: "Where work, supplies, or services have been furnished between September 16, 1940, and August 14, 1945, under a contract or subcontract, for any department or agency of the Government which prior to the latter date was authorized to enter into contracts and amendments or modifications of contracts under section 201 of the First War Powers Act, 1941 [section 611 of Appendix to Title 50], such departments and agencies are hereby authorized, in accordance with regulations to be prescribed by the President within sixty days after the date of approval of this Act [August 7, 1946], to consider, adjust, and settle equitable claims of contractors, including subcontractors and materialmen performing work or furnishing supplies or services to the contractor or another subcontractor, for losses (not including diminution of anticipated profits) incurred between September 16, 1940, and August 14, 1945, without fault or negligence on their

part in the performance of such contracts or subcontracts. Settlement of such claims shall be made or approved in each case by the head of the department or agency concerned or by a central authority therein designated by such head. "Sec. 2.. (a) In arriving at a fair and equitable settlement of claims under this Act [Act August 7, 1946, ch. 864, 60 Stat. 902], the respective departments and agencies shall not allow any amount in excess of the amount of the net loss (less the amount of any relief granted subsequent to the establishment of such loss) on all contracts and subcontracts held by the claimant under which work, supplies, or services were furnished for the Government between September 16, 1940, and August 14, 1945, and shall consider with respect to such contracts and subcontracts (1) action taken under the Renegotiation Act [section 1191 of Appendix to Title 50], the Contract Settlement Act of 1944 [sections 101-125 of this title], or similar legislation; (2) relief granted under section 201 of the First War Powers Act, 1941 [section 611 of Appendix to Title 50], or otherwise; and (3) relief proposed to be granted by any other department or agency under this Act. Wherever a department or agency considering a claim under this Act finds that losses under any such contract or subcontract affected the computation of the amount of excessive profits determined in a renegotiation agreement or order, and to the extent that the department or agency finds such amount was thereby reduced, claims for such losses shall not be allowed under this Act.

"(b) Every claimant under this Act shall furnish to the department or agency concerned any evidence within the possession of such claimant bearing upon the matters referred to in subsection (a) of this section.

"Sec. 3. Claims for losses shall not be considered unless filed with the department or agency concerned within six months after the date of approval of this Act [August 7, 1946], and shall be limited to losses with respect to which a written request for relief was filed with such department or agency on or be fore August 14, 1945, but a previous settlement under the First War Powers Act, 1941 [sections 601-622 of Appendix to Title 50], or the Contract Settlement Act of 1944 [sections 101-125 of this title shall not operate to preclude further relief otherwise allowable under this Act.

"Sec. 4. Appropriations or funds available for work, supplies, or services of the character involved in the respective claims at the time of settlement thereof shall be available for payment of the settlements: Provided, That where no such appropriations are available, appropriations for payment of such settlements are hereby authorized.

"Sec. 5. Each department and agency shall report to the Congress quarterly the name of each claimant to whom relief has been granted under this Act, together with the amount of such relief and a brief statement of the facts and the administrative decision.

"Sec. 6. Whenever any claimant under this Act is dissatisfied with the action of a department or agency of the Government in either granting or denying his claim, such claimant shall have the right within six months to file a petition with any Federal district court of competent jurisdiction, asking a determination by the court of the equities involved in such claim; and upon the filing of such a petition, the court, sitting as a court of equity, shall have jurisdiction to determine the amount if any, to which such claimant and petitioner may be equitably entitled (not exceeding the amount which might have been allowed by the department or agency concerned under the terms of this Act) and to enter an order directing such department or agency to settle the claim in accordance with the finding of the court; and thereafter either party may appeal from the decision of the court as in other equity cases."

f

Sec.

TITLE 42-THE PUBLIC HEALTH AND WELFARE

School Lunch Programs (New)

1751. Congressional declaration of policy.

1752. Appropriations.

1753. Apportionments to States; definition.

1754. Nonfood assistance; amount; apportionment.

1755. Direct expenditures for agriculture commodities and other funds.

1756. Payments to States; matching payments by States.

1757. State disbursement to schools; purpose; food costs; limitation.

1758. Nutritional and other program requirements; donation of agricultural commodities.

1759. Disbursement to nonprofit private schools; conditions.

1760. State accounts and records; inspection and audit; period of retention; definition.

SCHOOL LUNCH PROGRAMS (NEW)

§ 1751. Congressional declaration of policy. It is declared to be the policy of Congress, as a measure of national security, to safeguard the health and well-being of the Nation's children and to encourage the domestic consumption of nutritious agricultural commodities and other food, by assisting the States, through grants-in-aid and other means, in providing an adequate supply of foods and other facilities for the establishment, maintenance, operation, and expansion of nonprofit school-lunch programs. (June 4, 1946, ch. 281, § 2, 60 Stat. 230.)

Short title. Congress in enacting this chapter provided by section 1 of act June 4, 1946, cited to text, that it should be popularly known as the "National School Lunch Act".

§ 1752. Appropriations. For each fiscal year, beginning with the fiscal year ending June 30, 1947, there is authorized to be appropriated, out of money in the Treasury not otherwise appropriated, such sums as may be necessary to enable the Secretary of Agriculture (hereinafter referred to as "the Secretary") to carry out the provisions of this chapter. (June 4, 1946, ch. 281, § 3, 60 Stat. 230.)

§ 1753. Apportionments to States; definition.-The sums appropriated for any fiscal year pursuant to the authorization contained in section 1752 of this title, excluding the sum specified in section 5, shall be available to the Secretary for supplying, during such fiscal year, agricultural commodities and other foods for the school-lunch program in accordance with the provisions of this chapter. The Secretary shall apportion among the States during each fiscal year not less than 75 per centum of the aforesaid funds made available for such year for supplying agricultural commodities and other foods under the provisions of this chapter, except that the total of such apportionments of funds for use in Alaska, Territory of Hawaii, Puerto Rico, and the Virgin Islands shall not exceed 3 per centum of the funds appropriated for agricultural commodities and other

foods for the school-lunch program. Apportionment among the States shall be made on the basis of two factors: (1) The number of school children in the State and (2) the need for assistance in the State as indicated by the relation of the per capita income in the United States to the per capita income in the State. The amount of the initial apportionment to any State shall be determined by the following method: First, determine an index for the State by multiplying factors (1) and (2); second, divide this index by the sum of the indices for all the States; and, finally, apply the figure thus obtained to the total funds to be apportioned. For the purpose of this section, the number of school children in the State shall be the number of children therein between the ages of five and seventeen, inclusive; such figures and per capita income figures shall be the latest figures certified by the Department of Commerce. For the purposes of this chapter, "school" means any public or nonprofit private school of high-school grade or under and, with respect to Puerto Rico, shall also include nonprofit child-care centers certified as such by the Governor of Puerto Rico. If any State cannot utilize all funds so apportioned to it, or if additional funds are available under this chapter for apportionment among the States, the Secretary shall make further apportionments to the remaining States in the same manner. (June 4, 1946, ch. 281, § 4, 60 Stat. 230.)

§ 1754. Nonfood assistance; amount; apportionment.-Of the sums appropriated for any fiscal year pursuant to the authorization contained in section 1752 of this title, $10,000,000 shall be available to the Secretary for the purpose of providing, during such fiscal year, non food assistance for the school-lunch program pursuant to the provisions of this title. The Secretary shall apportion among the States during each fiscal year the aforesaid sum of $10,000,000, and such apportionment among the States shall be on the basis of the factors, and in accordance with the standards, set forth in section 1753 of this title with respect to the apportionment for agricultural commodities and other foods. The total of such funds apportioned for nonfood assistance for use in Alaska, Territory of Hawaii, Puerto Rico, and the Virgin Islands shall not exceed 3 per centum of the funds appropriated for nonfood assistance in accordance with the provisions of this chapter. (June 4, 1946, ch. 281, § 5, 60 Stat. 231.)

$1775. Direct expenditures for agricultural commodities and other foods. The funds appropriated for any fiscal year for carrying out the provisions of this chapter, less not to exceed 312 per centum thereof made available to the Secretary for his administrative expenses and less the amount apportioned by him pursuant to sections 1753, 1754, and 1759 of this title, shall be available to the Secretary during such year for direct expenditure by him for agricultural commodities and other foods to be distributed among the States and schools participating in the school-lunch program under this chapter in accordance with the needs as determined by the local school authorities. The provisions of law contained in the proviso of section 713e of Title 15, facilitating operations with respect to the purchase and disposition of surplus agricultural commodities under section 6120 of Title 7, shall, to the extent not inconsistent with the provisions of this chapter, also be applicable to expenditures of funds by the Secretary under this chapter. (June 4, 1946, ch. 281, § 6, 60 Stat. 231.)