§ 1601.108-3 Statute of limitations. Renegotiation proceedings must be commenced within twelve months from the close of the fiscal year or within twelve months of the date of the filing of the statement referred to in § 1601.108–1, whichever is the later. If such proceedings are not completed or if an agreement or order determining the amount of excessive profits is not made within one year from the commencement of the renegotiation proceedings, the liability of the contractor or subcontractor under the 1943 act will be discharged. ever, this one year period may be extended by mutual agreement (subsection (c) (3), discussed in §§ 1603.362 and 1603.363). [RR 108.3]

How

§ 1601.108-4 Agreement or order determining excessive profits. Upon the mailing of the notice and the commencement of the renegotiation, the Board will endeavor to make a final or other agreement with the contractor or subcontractor with respect to the elimination of excessive profits. If such an agreement is not made, the act authorizes the Board to issue an order determining the amount of the excessive profits (subsection (c) (1), discussed in § 1606.620 and following). [RR 108.4]

§ 1601-108.5 Statement to the contractor or subcontractor. Whenever a determination is made as to the amount of excessive profits, whether by order or by agreement, the Board or its authorized agency, at the request of the contractor or subcontractor, will furnish a statement setting out the determination of excessive profits made in his case, the facts used as a basis therefor, and the reasons for such determination (subsection (c) (1), discussed in § 1605.520 and following). [RR 108.5]

§ 1601.109-1 Delegation. The War Contracts Board may delegate in whole or in part any of its powers, functions or duties to the Secretary of a Department and such Secretary may, in turn, redelegate such powers, functions or duties to such officers or agencies of the United States as he may designate. He may authorize successive redelegations (subsection (d) (4), discussed in § 1601.131-3). [RR 109.1]

§ 1601.109-2

Review by the War Contracts Board. The determination by any person or agency exercising the delegated powers of the War Contracts Board may be reviewed by the Board either upon its own motion, or, in its discretion, at the request of the contractor or subcontractor. The Board's determination may be less than, equal to, or greater than the determination reviewed. Unless the War Contracts Board upon its own motion initiates a review of the prior determination within sixty days from the date of such determination, or at the request of the contractor or subcontractor made within sixty days from the date of such determination initiates a review of such determination within sixty days from the date of such request, such determination becomes the determination of the War Contracts Board (subsection (d) (5), discussed in § 1606.624 and 1606.625). [RR 109.2]

§ 1601.110 Redetermination of excessive profits by The Tax Court of the United States. The Renegotiation Act provides that any contractor or subcontractor aggrieved by a unilateral determination of excessive profits by the War Contracts Board (under the Renegotiation Act of 1943), or by the Secretary of a Department (under the Renegotiation Act of 1942), may petition The Tax Court of the United States for a redeter

mination of such excessive profits. Proceedings before the Tax Court are de novo. The Court may find an amount of excessive profits less than, equal to, or greater than the amount found by the Board. The petition for a redetermination must be made to the Tax Court within ninety days after the entry of the order or the date of the enactment of the Revenue Act of 1943 (February 25, 1944), whichever is the later (subsection (e), discussed in § 1606.630 and following). [RR 110]

§ 1601.111

Applicability. [RR 111]

§ 1601.111-1 Applicability of the 1943 act in general. In general, the provisions of the 1943 act apply to all fiscal years ending after June 30, 1943. Prior fiscal years are covered by the Renegotiation Act of 1942 (section 701 (d) of the Revenue Act of 1943 set forth in full in § 1608.801-13 and §§ 1601.122-10 and 1601.122-11). [RR 111.1]

§ 1601.111-2 Applicability in special cases. There are several exceptions to the general rule set forth in § 1601.111-1.

(a) Provisions of the 1943 act made retroactive:

(1) Subsections (a) (4) (C) and (a) (4) (D) relating to the adjustment of excessive profits for any year on account of the recomputation of the amortization deduction (discussed in § 1603.383-2);

(2) Subsection (i) (3) which provides for a fair cost allowance in the exempted. state for certain raw materials and agricultural commodities in the case of integrated producers and which excludes from renegotiation the profits realized because of the increment in value of excess inventories of raw materials and agricultural products acquired in the exempted state (discussed in §§ 1603.3443 and 1603.344-4);

(3) Subsection (i) (1) (C) which exempts from renegotiation contracts or subcontracts for certain agricultural commodities (discussed in § 1603.344-2);

(4) Subsection (i) (1) (D) which exempts contracts or subcontracts with tax exempt charitable, religious or educational organizations (discussed in § 1603.345);

(5) Subsection (i) (1) (F) which exempts subcontracts under prime contracts or other subcontracts exempted by subsection (i) (1) (discussed in § 1603.347);

(6) Subsection (1) which provides a short title (see § 1601.122–9).

(b) Provisions of the 1943 act made effective from the date of the enactment of the Revenue Act of 1943, February 25, 1944:

(1) Subsection (d) which creates the War Contracts Price Adjustment Board and sets out its organization, powers, and duties (discussed in § 1601.131); and

(2) Subsection (e) (2) which provides for the redetermination of excessive profits by the Tax Court in the case of unilateral determinations by the Secretaries under the provisions of the Renegotiation Act of 1942. [RR 111.2]

§ 1601.111-3 Termination of renegotiation. The 1943 act provides that amounts received or accrued after December 31, 1944, will not be subject to renegotiation unless the President finds and proclaims before December 1, 1944, that competitive conditions have not been restored; in which case renegotiation would extend to amounts received or accrued up to any date specified in such proclamation which is not later than June 30, 1945. The 1943 act also provides that in case the President finds and proclaims on or before June 30, 1945, that competitive conditions have been restored as of any date within 6 months prior to such proclamation, renegotiation will not apply to amounts received or accrued after such termination of the statute. A special provision is made in the case of long term contracts which are begun before and completed after the termination date (subsection (h), discussed in § 1603.371). [RR 111.3]

§ 1601.112 Applicable and related statutes. [RR 112]

§ 1601.112-1 Renegotiation Act of 1943. The full text of the Renegotiation Act of 1943 is set forth in § 1608.801. [RR 112.1]

§ 1601.112-2 Section 3806 of the Internal Revenue Code. Section 3806 of the Internal Revenue Code, referred to in subsection (a) (4) (D) and subsection (c) (2) of the Renegotiation Act of 1943, is set out in § 1608.802. Under that section the amount of Federal income and excess profits taxes assessed with respect to any excessive profits for a prior taxable year is credited against the amount of such profits in computing the amount to be refunded by the contractor or otherwise recovered. The effect of section

3806 of the Internal Revenue Code and of the Current Tax Payment Act of 1943 is discussed in § 1604.440 and following. [RR 112.2]

§ 1601.112-3 Title XIII of Second War Powers Act. Under subsection (c) (5) (B), the War Contracts Board is given the powers of inspection and audit of an agency designated by the President to exercise powers under Title XIII of the Second War Powers Act, 1942. For convenience, Title XIII is set forth in § 1608.803 of this chapter. The authority to make such inspections and audits is discussed in § 1606.601 and following. [RR 112.3]

§ 1601.112-4 Repricing of war contracts. Title VIII of the Revenue Act of 1943 provides that in cases in which the Secretary of a Department considers the price of any article or service required by his Department to be unreasonable or unfair he may fix by agreement, if possible, a fair and reasonable price therefor. If no agreement can be reached, the Secretary is authorized to fix, by order, a fair and reasonable price for deliveries after the date of such order and to prescribe the period during which such price shall be effective and such other terms and conditions as he deems appropriate. Contractors or subcontractors aggrieved by such an order may sue the United States for fair and just compensation. Repricing under Title VIII applies to both prime and subcontractors and applies without exemption or restriction until the end of the war. The statutory provisions relating to repricing are set forth in § 1608.804. [RR 112.4]

Subpart B-Preliminary Material

§ 1601.120 Scope of subpart. This subpart refers to the application and arrangement of the Renegotiation Regulations and the definitions used therein. [RR 120]

§1601.121 Applicability of renegotiation regulations. [RR 121]

§ 1601.121-1 Years to which applicable. The Renegotiation Regulations cover all renegotiation proceedings by the War Contracts Board or under its authority pursuant to the Renegotiation Act of 1943. They are effective only with respect to the fiscal years ending after June 30, 1943. [RR 121.1]

§ 1601.121-2 Rescission of prior instructions. (a) These regulations super

§ 1601.122-2 Chief of a service. The term "Chief of a service" means the Commanding General, Army Air Forces, and the Chief of a Technical Service of the Army Service Forces. [RR 122.2]

§ 1601.122-3 Contract. The term "contract" is generally used to include a subcontract, except where the distinction between them is clear from the context. [RR 122.3]

§ 1601.122-4 Contractor. The term "contractor" is generally used to include both a contractor and a subcontractor, except where distinction between them is clear from the context. [RR 122.4]

§ 1601.122-5 Department. The term "Department" means "Department" as defined in subsection (a) of the Renegotiation Act of 1943 as follows:

(1) The term "Department" means the War Department, the Navy Department, the Treasury Department, the Maritime Commission, the War Shipping Administration, Defense Plant Corporation, Metals Reserve Company, Defense Supplies Corporation, and Rubber Reserve Company, respectively.

[RR 122.5]

§ 1601.122-6 Departmental Board. The term "Departmental Board" means, respectively, the War Department Price Adjustment Board, the Navy Price Adjustment Board, the Treasury Department Price Adjustment Board, the Maritime Commission Price Adjustment Board, the War Shipping Administration Price Adjustment Board, and the RFC Price Adjustment Board established by Defense Plant Corporation, Metals Reserve Company, Defense Supplies Corporation and Rubber Reserve Company. [RR 122.6]

§ 1601.122-7 Joint Board. The term "Joint Board" means the Joint Price Adjustment Board established by the Departments under date of September 24, 1943, having jurisdiction of certain matters relating to the 1942 act. [RR 122.7]

§ 1601.122-8 Mandatory financial statement. The term "mandatory financial statement" means the statement required by the regulations of the War Contracts Board pursuant to subsection (c) (5) (A) of the 1943 act (see § 1602.220 and following). [RR 122.8]

§ 1601.122-9 Renegotiation Act. The term "Renegotiation Act" means the 1942 act and the 1943 act in view of subsection (1) of the 1943 act and its retroactive application (see § 1608.801-12). [RR 122.9]

§ 1601.122-10

Renegotiation Act of 1943, 1943 act. The terms "Renegotiation Act of 1943" and "1943 act" mean section 403 of the Sixth Supplemental National Defense Appropriation Act, 1942, as amended by section 701 of the Revenue Act of 1943 (Public 235, 78th Congress, enacted February 25, 1944), and expressed to be effective only with respect to the fiscal years ending after June 30, 1943 as provided in subsection (d) of said section 701 of the Revenue Act of 1943 (see § 1608.801). (RR 122.10]

§ 1601.122-11 Renegotiation Act of 1942, 1942 act. The terms "Renegotiation Act of 1942", and "1942 act", mean section 403 of the Sixth Supplemental National Defense Appropriation Act, 1942 (Public, 528, 77th Congress, approved April 28, 1942), as amended by section 801 of the Revenue Act of 1942 (Public, 753, 77th Congress, approved October 21, 1942), by section 1 of the Military Appropriations Act, 1944 (Public, 108, 78th Congress, approved July 1, 1943), and by Public, 149 (78th Congress, approved July

14, 1943), and as further amended by section 701 (b) of the Revenue Act of 1943 (Public, 235, 78th Congress, enacted February 25, 1944) to the extent that section 701 (d) of the Revenue Act of 1943 makes the amendments made by section 701 (b) effective as if they had been a part of section 403 of the Sixth Supplemental National Defense Appropriation Act, 1942, on the date of its enactment, April 28, 1942. [RR 122.11]

§ 1601.122-12 Renegotiable business, renegotiable sales, and non-renegotiable business. The terms "renegotiable business" and "renegotiable sales" mean the aggregate business of a contractor or subcontractor under contracts with the Departments and subcontracts which are subject to statutory renegotiation. The term "non-renegotiable business" means any business of a contractor other than "renegotiable business". [RR 122.12]

§ 1601.122-13 Secretary. The term "Secretary" means the Secretary of a Department and means "Secretary" as defined in subsection (a) of the Renegotiation Act of 1943 as follows:

(2) In the case of the Maritime Commission, the term "Secretary" means the Chairman of such Commission, in the case of the War Shipping Administration, the term "Secretary" means the Administrator of such Administration, and in the case of Defense Plant Corporation, Metals Reserve Company, Defense Supplies Corporation, and Rubber Reserve Company, the term "Secretary" means the board of directors of the appropriate corporation.

[RR 122.13]

§ 1601.122-14 Section. The term "Section" means a Price Adjustment Section of the War Department, except where a different meaning appears from the context. [RR 122.141

§ 1601.122-15 Service. The term "Service" means the Army Air Forces and the Technical Services of the Army Service Forces. [RR 122.15]

§ 1601.122-16 Statutory renegotiation. The term "statutory renegotiation" means renegotiation pursuant to the 1943 act. [RR 122.16]

§ 1601.122-17 War Contracts Board. The term "War Contracts Board" means the War Contracts Price Adjustment Board established under the 1943 act. [RR 122.17]

§ 1601.123-1 Organization. For convenience these regulations are divided into chapters, each of which deals with a specified topic. Each chapter is divided into several sections, each of which contains a series of numbered paragraphs dealing with the same subject. [RR 123.1]

§ 1601.123-2 Numbering. The numbering of individual paragraphs is not consecutive, and is designed to permit additional paragraphs to be inserted later within the appropriate chapter and section. The number of a particular paragraph shows the chapter and section where it is found and also whether it is subordinate to a preceding paragraph. The first digit of the number indicates the chapter and the second digit the section in which the paragraph is found. Thus, paragraphs in Chapter I run from 100 to 199; those from 101 to 119 are under section 1, those from 120 to 129 are under section 2, etc. Where the number of a paragraph ends with a digit preceded by a decimal point (as 123.2), this indicates that it is part of the general subject covered by the basic paragraph (as 123). [RR 123.2]

§ 1601.123-3 Citations. Since the number of any paragraph indicates its place in these regulations, a paragraph may be referred to by citing its number only, and it is not necessary to refer to the chapter or section or page in these regulations where it appears. These regulations will be called the Renegotiation Regulations, which may be abbreviated as RR in referring to paragraphs; thus this paragraph may be cited as RR 123.3. [RR 123.3]

§ 1601.124 Amendments and additions. (a) When amendments or additions to these regulations are adopted by the War Contracts Board, they will become effective at once unless otherwise specified, but will not affect the validity of any determination theretofore made in accordance with prior regulations.

(b) All changes in these regulations and all additions to them will be issued in the form of additional or revised pages for this document. These regulations in loose-leaf form will be placed in the hands of interested personnel in the Departments. New and revised pages will be sent from time to time to the Departments for distribution to holders of the Renegotiation Regulations within the Departments. [RR 124]

$1601.125 Changes in interpretations. The regulations and interpretations of the statute in this document reflect the present judgment of the War Contracts Board and are subject to such revision as from time to time may appear desirable. [RR 125]

§ 1601.126 Federal Register. These regulations are being published in the FEDERAL REGISTER. Changes and additions will be so published from time to time as directed by the War Contracts Board. [RR 126]

§ 1601.127 Official Official copies. copies of the statutes referred to herein may be obtained from the Superintendent of Documents, U. S. Government Printing Office, Washington 25, D. C. Official copies of Executive orders cited herein are set out in the FEDERAL REGISTER, which may also be procured from the Superintendent of Documents. [RR 127]

§ 1601.128 Copies of renegotiation regulations. The Renegotiation Regulations, along with current supplements embodying additions and amendments thereto as published in the FEDERAL REGISTER, are available in loose leaf form for a subscription price of $2.00 from the Superintendent of Documents, U. S. Government Printing Office, Washington 25, D. C. [RR 128]

Subpart C-Organization and Functions of the Price Adjustment Boards and Sections

§ 1601.130 Statutory authority. The authority and discretion to administer the Renegotiation Act of 1943 is conferred upon the War Contracts Board with power of delegation (see subsection (d) of the 1943 act in § 1608.801-4). [RR 130]

§ 1601.131 War Contracts Price Adjustment Board. [RR 131]

§ 1601.131-1 Functions. The War Contracts Price Adjustment Board has authority to administer the Renegotiation Act of 1943, including authority over agreements, unilateral determinations of excessive profits and exemptions. The Board has 6 members, of whom 4 constitute a quorum, and the Board may act by a majority of a quorum. [RR 131.1]

§ 1601.131-2 Seal. The seal of the Board shall be judicially noticed. [RR 131.2]