Administrative orders.

Directives.

Distribution orders.

ADMINISTRATIVE ORDERS

No. 1. Motor oil and fuel oil for military and other essential uses. As am. Feb. 1, 1943, Amdt. 4, Feb. 15, 1944, 9 F.R. 1819. Amdt. 5, Apr. 19, 9 F.R. 4304.

No. 11. Delivery, acquisition and use of petroleum. As am. Jan. 1, 1944, 9 F.R. 107. As am. July 1, 9 F.R. 7445; Amdt. 1, Nov. 17, 9 F.R. 13807. Supp. Order 1, Aug. 11, 9 F.R. 9789. Supp. Order 4, as am. June 1, 9 F.R. 6031. Supp. Order 5, as am. Apr. 19, 9 F.R. 4303. Supp. Order 7, Aug. 26, 9 F.R. 10648. Supp. Order 8, Amdt. 1, Aug. 25, 9 F.R. 10427. Supp. Order 10, Jan. 21, 9 F.R. 851. Supp. Order 11, May 2, 9 F.R. 4651. Supp. Order 12, July 1, 9 F.R. 7448. Supp. Order 13, Aug. 18, 9 F.R. 10094. Supp. Order 14, Aug. 25, 9 F.R. 10427. Supp. Order 15, Oct. 23, 9 F.R. 12748. No. 12. Marketing material conservation. As am. Apr. 8, 1944, 9 F.R. 3858. Amdt. 1, Aug. 11, 9 F.R. 9790.

No. 15. Material conservation; pipe lines, terminals and refining. As am. Feb. 3, 1944, 9 F.R. 1458. As am. July 27, 9 F.R. 9170; Amdt. 1, Nov. 17, 9 F.R. 13807.

No. 23. Residual fuel oil. Aug. 25, 1944, 9 F.R. 10428.

DIRECTIVES

No. 59. Petroleum supply program. As am. Dec. 1, 1943, Amdt. 1, Jan. 17, 1944, 9 F.R. 1457. Amdt. 2, May 1, 9 F.R. 4897. Amdt. 3, Sept. 23, 9 F.R. 12280.

No. 64. Schedule of production for District Two. Revocation, Sept. 14, 1944, 9 F.R. 11399.

No. 65. Elimination of unnecessary movements within District Two. As am. March 15, 1944, 9 F.R. 3095, 3355.

No. 66. Manufacture of asphalt. Revocation, Oct. 19, 1944, 9 F.R. 12648.

No. 69. Transportation; use of inland waterway equipment in Great Lakes-New York Area. As am. May 29, 1944, 9 F.R. 6112. No. 70. Foreign Operations Committee. Amdt. 1, May 20, 1944, 9 F.R. 5830.

No. 71. Diesel fuel in West Coast Area and in Hawaii and Alaska. Revocation, Sept. 30, 1944, 9 F.R. 12040.

No. 72. Delivery and use of road oil prohibited. Amdt. 1, Nov. 1, 1944, 9 F.R. 13068. No. 77. High-octane aviation gasoline. July 24, 1944, 9 F.R. 8933.

No. 78. Supply program in District Three. Oct. 14, 1944, 9 F.R. 12843.

Recommendations.

No. 79. Limitation upon use of butane and propane-butane mixture in oil and gas drilling operations. Oct. 23, 1944, 9 FR.

12747.

DISTRIBUTION ORDERS

No. 13. Marketing fuel oil. As am. July 25, 1944, 9 F.R. 9018. Amdt. 1, Oct. 21, 9 F.R. 12748.

No. 14. Marketing motor fuel. As am. Feb. 26, 1944, 9 F.R. 2302. Amdt. 1, May 18,

9 F.R. 5346.

No. 18. Marketing naphtha. Apr. 8, 1944, 9 F.R. 3859. No. 20. Marketing petroleum. 1944, 9 F.R. 5346.

No. 21.

Amdt. 1,

May 18,

Premium motor fuel. June 21, 1944, 9 F.R. 6952. Amdt. 1, July 21, 9 FR. 8934. Amdt. 2, Sept. 25, 9 F.R. 11805. Amdt. 3, Dec. 27, 9 F.R. 15108.

No. 22. Manufacture and delivery of fuel oil. June 28, 1944, 9 F.R. 7203. Amdt. 1, July 14, 9 F.R. 7944. As am. Sept. 2, 9 F.R. 10880.

MATERIALS REDISTRIBUTION PROGRAM No. 2. Determination of surplus critical materials. Amdt. 1, June 3, 1944, 9 F.R. 6111. Amdt. 2, Nov. 17, 9 F.R. 13807.

RECOMMENDATIONS

No. 5. Petroleum products in District 1. Revocation, July 25, 1944, 9 F.R. 9068.

No. 8. Use of blending agents; base stock of aviation gasoline of 85.0 octane number or less. Revocation, July 24, 1944, 9 F.R. 8933.

No. 10. Reports on procurement of petroleum on East Coast. Revocation, July 25, 1944, 9 F.R. 9068.

No. 16. Aviation gasoline. July 24, 1944, 9 F.R. 8933.

Revocation,

No. 19. District 5, Pacific Coast area. Amdt. July 3, 1944, 9 F.R. 7525.

No. 28. Aviation grade petroleum. Revocation, June 8, 1944, 9 F.R. 6263.

No. 37. Contractual commitments for distribution of fuel oil. Revocation, Oct. 19, 1944, 9 F.R. 12647.

No. 39. Conservation of fuel oil. Revocation, Oct. 19, 1944, 9 F.R. 12647.

No. 47. Abandonment of oil or gas wells. Revocation, June 23, 1944, 9 F.R. 7020.

No. 56. Petroleum coke. Revocation, Oct. 7, 1944, 9 F.R. 12360.

Subpart A-Summary of Renegotiation Act of 1943 and Related Statutes

§ 1601.101 Scope of subpart. The summary of the Renegotiation Act of 1943 in this subpart is designed to provide only a general outline of its structure and basic provisions. The detailed discussion of these provisions and of their interpretation and application is contained under the appropriate subparts of subsequent parts of this chapter. [RR 1011

§ 1601.102 War Contracts Price Adjustment Board. Subsection (d) of the 1943 act creates the War Contracts Price Adjustment Board, which, for convenience, is referred to in these regulations as the War Contracts Board. Authority

with respect to renegotiation is vested in this Board subject, however, to being delegated, in the Board's discretion, to the Secretaries of the Departments, with right of redelegation. The Board is composed of six members, one each from the War Department, the Navy Department, the Treasury, the Maritime Commission or the War Shipping Administration, the Reconstruction Finance Corporation, and the War Production Board. The War Contracts Board, its powers, duties and functions, and its authority to delegate its duties and functions are described more fully in § 1601.130 and following. [RR 102]

§ 1601.103 Coverage. (a) In general, the 1943 act applies to amounts received or accrued in fiscal years ending after June 30, 1943 under all contracts with the Departments and subcontracts, with the exceptions stated under § 1601.104 (subsection (c) (6) discussed in

§ 1603.348).

(b) Subcontracts include purchase orders or agreements to perform all or any part of the work, or to make or furnish any article, required for the performance of any other contract or subcontract but do not include any purchase order or agreement to furnish office supplies. A contract or arrangement to procure a contract with a Department or a subcontract thereunder is also a subcontract. Subcontracts are not limited to those made by a prime contractor but include those made by a subcontractor or sub-subcontractor down through the various tiers (subsection (a) (5), discussed in 1603.333).

§ 1601.104-1 Mandatory. The 1943 act does not apply to:

(a) Contracts between the Departments and other Governmental agencies (subsection (i) (1) (A), discussed in § 1603.343);

(b) Contracts or subcontracts for certain raw materials (subsection (i) (1) (B), discussed in § 1603.344);

(c) Contracts or subcontracts for agricultural commodities in a certain form or state (subsection (i) (1) (C), discussed in § 1603.344-2);

(d) Contracts or subcontracts with tax exempt charitable, religious or educational institutions (subsection (i)⋅ (1) (D), discussed in § 1603.345);

(e) Construction contracts with a Department let under competitive bidding (subsection (i) (r) (E), discussed in § 1603.346); or

(f) Subcontracts under prime contracts or other subcontracts of the types listed above which are exempted by subsection (i) (1) (subsection (i) (1) (F), discussed in § 1603.347). [RR 104.1]

§ 1601.104-2 Permissive. The War Contracts Board may, in its discretion, exempt from any or all of the provisions of the 1943 act:

(a) Any contract or subcontract:

(r) To be performed outside of the continental United States or in Alaska (subsection (i) (4) (A), discussed in § 1603.351);

(2) Under which the profits can be determined with reasonable certainty when the contract price is established (subsection (i) (4) (B), discussed in § 1603.352);

(3) During a specified period or periods, to the extent that the contract provisions are adequate to prevent excessive profits (subsection (i) (4) (C), discussed in § 1603.353);

(4) For a standard commercial article if competitive conditions are such as will reasonably protect the Government (subsection (i) (4) (D), discussed in § 1603.354)

(5) If competitive conditions affecting the making of such contract or subcontract are likely to result in effective

competition with respect to the contract price (subsection (i) (4) (E), discussed in § 1603.355); or

(b) Any subcontract or group of subcontracts, if it is not administratively feasible to segregate the renegotiable from the non-renegotiable business (subsection (i) (4) (F), discussed in § 1603.356).

The Board may make such exemptions by individual contracts or by general classes or types of contracts (subsection (i) (4), discussed in §1603.357). [RR 104.2]

§ 1601.104-3 Exemption measured by volume of business. Subsection (c) (6) provides that renegotiation shall not apply to any contractor or subcontractor unless the aggregate of the amounts received or accrued by the contractor or subcontractor (and all persons under the control of or controlling or under common control with the contractor or subcontractor) under contracts with the Departments and subcontracts, not including subcontracts for procuring contracts or subcontracts, exceed $500,000 (discussed in § 1603.348). In the case of subcontracts for the procuring of contracts or subcontracts, this figure is $25,000 (discussed in § 1603.348). [RR 104.3]

§ 1601.104-4 Profits from increment in value of excess inventories. The 1943 act excludes from renegotiation that portion of the profits derived from contracts with the Departments and subcontracts attributable to the increment in value of excess inventories of certain raw materials and agricultural commodities (subsection (i) (3), discussed in § 1603.344-4). [RR 104.4]

§ 1601.105 Renegotiation clauses in contracts. (a) The 1943 act directs each Secretary to insert in each contract made by his Department, involving more than $100,000, terms under which the contractor agrees (1) to renegotiation, (2) to the withholding or recovery of excessive profits by the United States and (3) that he will insert like terms in all subcontracts made by him involving more than $100,000, and will require the subcontractor to insert like terms in contracts entered into by him. In the case of subcontracts for procuring contracts with the Departments these terms are to be placed in all such subcontracts for more than $25,000 (subsection (b), dìscussed in § 1603.331).

(b) The 1943 act permits these terms to be incorporated in contracts and subcontracts by reference and each contract or subcontract is made subject to such terms whether or not they are incorporated either physically or by reference. [RR 105]

§ 1601.106 Determination of excessive profits. [RR 106]

§ 1601.106-1 Costs. In determining the profits from renegotiable business, the 1943 act requires the War Contracts Board to allow costs determined in accordance with the method of cost accounting regularly employed by the contractor or if such method does not properly reflect such costs, the Board is authorized to prescribe the method under which such costs shall be determined. No item of cost shall be allowed which is unreasonable or which is not properly chargeable to the contract or subcontract. Notwithstanding these provisions, all items estimated to be allowable as deductions or exclusions for income tax purposes, to the extent they are allocable to renegotiable business, are to be allowed in determining excessive profits. State income taxes, to the extent they are attributable to the portion of the contractor's profits determined to be excessive, however, are not allowable (subsection (a) (4) (B), discussed in § 1603.389). [RR 106.1]

§ 1601.106-2 Unused amortization deduction. The 1943 act provides for the repayment by the United States to a contractor or subcontractor, without interest, of the amount of the net renegotiation rebate determined in accordance with procedures and principles set forth in the 1943 act in the event of a recomputation of the amortization deduction provided for in section 124 (d) of the Internal Revenue Code (subsections (a) (4) (C) and (D), discussed in § 1603.388-2). [RR 106.2]

§ 1601.106-3 Fair cost allowance in the exempted state for raw materials and agricultural commodities in the case of integrated producers. In order to provide for equitable treatment of the integrated producer, the 1943 act provides for the allowance of a fair amount of cost in the exempted state for certain raw materials and agricultural commodities in the case of integrated producers who produce or acquire such materials or commodities below such state and process them up to and beyond such state (subsection (i)

(3), discussed in § 1603.344-3). In this connection attention is also directed to § 1601.104-4 supra, which in effect gives the contractor or subcontractor who acquires the exempted raw materials and agricultural commodities at the exempt stage the benefit of a similar special cost allowance to the extent that such products constitute excess inventory of such a contractor or subcontractor. [RR 106.3]

§ 1601.106-4 Factors in determining excessive profits. The 1943 act defines excessive profits to be the portion of the profits from the renegotiable business of the contractor or subcontractor which in the light of a list of factors set out in subsection (a) (4) (A) of the act is determined to be excessive. These factors cover such matters as efficiency, costs, capital, risk, contribution to the war effort, character of business, and such other factors as the public interest and fair and equitable dealing may require (discussed fully in § 1604.408 and following). [RR 106.4]

The

§ 1601.107 Renegotiation by fiscal years. The 1943 act applies to fiscal years ending after June 30, 1943, and requires that renegotiation be conducted on an overall fiscal year basis. Renegotiation may relate to any period other than a full fiscal year only with the consent of the contractor or subcontractor. 1943 act requires that renegotiation relate to the aggregate of the contractor's war business for the year unless the contractor requests and the War Contracts Board agrees to the renegotiation of separate contracts (subsection (c) (1), discussed in §§ 1603.301-1601.303). [RR 107]

§ 1601.108-1 Mandatory filing of statement. The 1943 act requires every contractor or subcontractor not specifically exempted from renegotiation to file with the Board on or before the first day of the fourth month following the close of the fiscal year, or after the date of the enactment of the Revenue Act of 1943, whichever is the later, a statement containing such information as the Board may by regulations prescribe (subsection (c) (5) (A), discussed in § 1602.220 and following). In addition to this statement, which is considered to be the statement for the purposes of the beginning of the statute of limitations, the War