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cess of the OPA maxima, complying with the requirements set forth in paragraph (e);

(iv) If recourse to the foregoing methods proves unsuccessful and the contracting officer believes an impairment of production of essential war material is threatened, report should be made at once to the chief of the technical service concerned and the services of the OPA Branch enlisted to remove the impediment.

(v) As a last resort, the statutes provide for the requisition of needed articles already in existence, and for mandatory orders to compel the supply of essential military items. For the conditions and procedures governing the use of these methods, see Part 814.

(h) Acceptance of contractor's certification in connection with purchases. The action of certifying and disbursing officers in connection with such price limitations is governed by Fiscal Directive SPBFA-11A, June 19, 1942, providing as follows:

1. The certification now required on Standard Form No. 1034-revised, as used in connection with payments made to vendors or contractors for purchases or services rendered other than personal will be continued in use and is a proper and sufficient warranty of compliance by the vendor or contractor with the price ceilings established in accordance with the provisions of the Emergency Price Control Act of 1942, Public Law 421, approved January 30, 1942.

2. In the absence of actual knowledge of violation of price limitations, certifying of ficers may rely upon the certificate of the vendor or contractor as to the correctness of the prices charged and will not be required to verify such prices against maxima established by the Office of Price Administration. Disbursing Officers may rely upon their records and the certificate of the vendor or contractor and will not be required to verify such maxima prices.

3. Disbursing officers will make payment in accordance with the above outlined procedure. The form of certification (Standard Form 1034) is as follows:

I certify that the above bill is correct and just; that payment therefor has not been received; that all statutory requirements as to American production and labor standards, and all conditions of purchase applicable to the transactions have been complied with; and that State or local sales taxes are not included in the amounts billed.

The words "the above bill is correct and just" and "all conditions of purchase applicable to the transactions have been complied with” constitute a proper and sufficient

warranty by the vendors and contractors that the prices billed are within any applicable price ceilings established by the OPA. Accordingly, no additional certificate or statement by the vendors and contractors with respect to maximum prices should be required. Also, no special certificate accompanying quotations, or warranty in the contract with respect to compliance with price regulations will be required.

(i) Exemption from liability of contracting and finance officers in connection with purchases. Supplementary Order No. 7, entitled "Removal of Liability of War Procurement Agencies and Governments whose Defense is Vital to the defense of the United States,” effective July 11, 1942, provides that prohibitions contained in maximum price regulations against buying or receiving a commodity or service at a price higher than the per-, mitted maximum shall not apply to (1) any War Procurement Agency of the United States or any contracting or paying finance officer thereof or (2) the Government of any country whose defense is deemed by the President to be vital to the defense of the United States under the terms of the Act of March 11, 1941. It provides further that any such War Procurement Agencies or contracting or paying finance officers of any such government or agency, shall be relieved of any criminal or civil liability imposed by a maximum price regulation or by the Emergency Price Control Act of 1942. The OPA statement of considerations involved in the issuance of Supplementary Order No. 7 states such purchases are typically not purchases "in the course of trade or business" within the meaning of the act.

(j) Non-exemption of contractors holding War Department contracts. The OPA has advised, however, that this exemption is applicable only to Government contracting officers in connection with Government purchases and does not extend to purchases made by contractors even when operating under costplus-a-fixed-fee contracts, and even though purchases made by them are reimbursable by the Government. Costplus-a-fixed-fee contractors, as well as all other prime contractors, are buyers "in the course of trade or business" within the meaning of section 4 (a) of the Emergency Price Control Act of 1942, as amended, and are, therefore, subject to the prohibitions of that section. [Proc. Reg. 11, C 40, Aug. 31, 1944, 9 F.R. 10957)

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$ 811.1134 Sales-(a) General. For a general discussion of OPA matters primarily relating to War Department sales other than by Army stores, see § 821.111 et seq.

(See $ 811.1132–811.1132 (j) for a discussion of purchases.) Interested personnel should in addition be familiar with $$ 811.1130 to 811.1131 (f).

(b) Exemption of sales by Army stores (OPA Supplementary Order No. 27). OPA Supplementary Order No. 27, effective November 14, 1942, as amended, exempted sales and deliveries of any commodity or service by the War Department through its sales stores, including commissaries, Army canteens, and post exchanges, from all OPA price regulation. The OPA retained the right, however, make price regulations applicable to such sales.

(c) Other OPA regulations pertaining to sales. If officers making sales on behalf of the War Department have any problems with relation to ceiling prices in connection with such sales which are not covered by the provisions of these procurement regulations including $ 821.111 (b) et seq., solution of such problems should be reached through contact with appropriate OPA officials or by reference of the problems to the Chief, OPA Branch, Purchases Division, as provided in $ 811.1130 (b). [Proc. Reg. 11, C 40, Aug. 31, 1944, 9. F.R. 10959, and C 41, Oct. 5, 1944, 9 F.R. 12254]

$ 811.1135 Rationing regulations(a) General. The OPA issues regulations covering the rationing of scarce consumer goods. These regulations do not restrict Army purchases of the goods concerned, but to control illegal sales ("black markets") sellers of rationed goods, whether sales are made to the Army or otherwise, are required by OPA, upon replacement of their stocks, to produce so-called “ration evidences" obtained from their customers, ACcordingly, Army procurement officers, in purchasing rationed goods, furnish the seller with ration evidences for the goods purchased, or otherwise cooperate with OPA policies.

(b) Applicable OPA directives. Sugar (Ration Order 3), processed foods (Ration Order 13), meats, fish, fats, and cheese (Ration Order 16), gasoline (Ration Order 5c), fuel oil in part of the United States (Ration Order 11), and shoes (Ration Order 17), have been subjected to rationing. Procedures under the rationing system are established by

Subpart E-Controlled Materials Plan

CROSS REFERENCE: For tabulation of Controlled Materials Plan regulations of_the War Production Board, see Appendix-Tabulation of Documents in Chapter IX of Title 32.

$ 811.1140 Revision of existing supply contracts to conform to production schedules authorized under Controlled Materials Plan-(a) Effect of reduced allotments of materials. Under the Controlled Materials Plan (CMP) some Army suppliers from time to time will receive allotments of controlled materials which are less than the materials necessary to meet the production schedules in effect under existing contracts. Normally, the production schedule authorized on Form CMP-10 will reflect these reduced quantities. In cases where the end item schedule has not been reduced in line with the reduced allotments, a letter is sent to the contractor explaining the factors (for example, changed specifications, reduced requirements of spare parts, and prior allocations) which will enable him to meet the required production schedule with the materials allotted to him.

(b) Coordination with CMP officers. Schedules of production authorized on Form CMP-10 are controlling and must be put into effect by appropriate contract adjustments. CMP officers have been instructed to inform contracting officers of revised schedules, and whenever practicable to consult with them concerning the distribution of any reduced allotment among the various con

tractors concerned. Close coordination between contracting officers and CMP officers is required in order that changes in or amendments of outstanding contracts may be promptly effected where made necessary by revisions in schedules.

(c) Protection of contractor. Under the usual “Delays-Damages" article (see $ 803.352) in most War Department contracts, the delay of a contractor is treated as excusable if it is without fault or negligence on the part of the contractor and is due to "unforeseeable causes beyond his control, including any preference, priority, or allocation order issued by the Government." A possible statutory exemption from liability for delay is also to be found in a clause of Title II of the Second War Powers Act, 1942, reading as follows:

(7) No person shall be held liable for damages or penalties for any default under any contract or order which shall result directly or indirectly from compliance with this subsection (a) or any rule, regulation, or order issued thereunder, notwithstanding that any such rule, regulation, or order shall thereafter be declared by Judicial or other competent authority to be invalid.

Nevertheless, a contractor is entitled to the protection of an amendment to his contract to reflect accurately the changes in the production schedule which are made necessary or appropriate by the reduction in allotments. Such changes will be effected promptly by appropriate supplemental agreement (or change order where a change order can effect the necessary adjustment).

(d) Adjustment of schedules in contracts. Appropriate adjustment of a contract to conform to reduced schedules made necessary under the Controlled Materials Plan or otherwise may in many cases be made under contract provisions already in effect, if the contract contains such provisions (see, for example, 88 803.329, 803.329a and 803.351 (c)). Where a contract contains no provision permitting such an adjustment, the chief of the supply service concerned is authorized to amend the contract by supplemental agreement, inserting one or more of the contract articles contained in $$ 803.329, 803.329a and 803.351 (c) so as to provide in the contract itself authority for the making of any later adjustments made necessary by changes in the CMP allotments (see $ 811.1233).

(e) Upward adjustment of price. Where a reduction in allotments SO

changes or interrupts the contractor's operations as substantially to increase the unit costs of any of the items procured, an equitable adjustment in the contract price in addition to a modification of the production schedule is also authorized to be made, either under an appropriate contract provision providing such an adjustment or by supplemental agreement (see $ 812.1233).

(f) Downward adjustment of price. In cases where production schedules are to be stepped up as a result of a speedier flow of materials under a CMP allotment, the contract will be appropriately amended to accomplish this result. Where an increase in allotment so accelerates the contractor's operations as to produce a substantial saving in unit costs, contracting officers will, where possible, negotiate a reduction in unit price in connection therewith (see $ 812.1251 (b)).

$ 811.1141 Allotment of materials for new contracts. Under the Controlled Materials Plan, it is essential that each new contract let be accompanied by a suficient allotment of material to enable the contractor to enter into production as called for under the contract. Consequently, before a contract is let or a letter contract or letter of intent executed, contracting oficers should coordinate with CMP officers to make sure that controlled materials are expected to be available in the quantity required, and that each contractor is asked to submit an estimate of the controlled materials required along with his proposal or bid. Upon the execution of a contract, arrangements should be made with CMP officers to issue allotments as required to meet the production schedules of the contract. Subpart F-Contracts Involving Rubber

or Synthetic Rubber § 811.1150 Agreement with Rubber Reserve Company. (a) Rubber Reserve Company, a subsidiary of Reconstruction Finance Corporation, owns and controls the supply of all natural rubber and substantially all synthetic rubber in this country. Effective June 1, 1943 Rubber Reserve Company found it necessary to increase its price for natural rubber from 222 cents per pound to 40 cents per pound, but reduced its prices for synthetic rubber to 36 cents per pound for GRS (Buna S); 33 cents per pound for

2213 181/2

151/2

GRI (Butyl); and 45 cents per pound for GRM (Neoprene Type GN).

(b) In order to avoid the necessity of adjusting the outstanding contracts of the War Department and subcontracts therunder based on a price for natural rubber of 2242 cents per pound and in order to facilitate transition from natural to synthetic rubber and to simplify future procurement of rubber products, the War Department has made an agreement with Rubber Reserve Company to pay directly to it part of the cost of such natural and synthetic rubber used for War Department purposes and thereby to maintain lower, stable, prices to rubber manufacturers for such natural and synthetic rubber.

(c) Under this agreement Rubber Reserve Company will supply natural and synthetic rubber to War Department contractors and subcontractors upon payment by them to Rubber Reserve Company at the following rates per pound.

Price per

pound Type

(cents) Natural GRS Synthetic (Buna 8). GRI Synthetic (Butyl)GRM Synthetic (Neoprene Type GN)-- 271/2 These rates apply to natural, GRS and GRI Synthetic used after June 1, 1943 and to GRM synthetic used after August 1, 1943.

(d) The War Department will pay Rubber Reserve Company the difference between these amounts and the prices fixed by Rubber Reserve Company specified in subparagraph (1) above, or such lower prices as the Rubber Reserve Company may fix from time to time. This contract will remain in force until June 30, 1945, unless extended by the War Department or terminated on ninety days' notice before that date. [Proc. Reg. 11, revised to June 29, 1944, 9 F.R. 8589, as amended by C 38, July 21, 1944, 9 F.R. 9467]

$ 811.1151 Administration of agreement. (a) To simplify administration of this agreement with Rubber Reserve Company the Ordnance Department is handling the contract on behalf of the entire War Department and will administer it for all of the technical services.

(b) Rubber Reserve Company will obtain from rubber manufacturers reports of the amount of natural and synthetic rubber used on account of War Depart

ment contracts and subcontracts and will bill the War Department monthly through the Ordnance Department on the basis of these reports showing the. amount due with respect to the contracts and subcontracts of each technical seryice.

(c) The chief of each technical service has been directed to make available to the Ordnance Department by special allotment or otherwise suficient funds to cover the estimated amounts payable to Rubber Reserve Company under this agreement with respect to its contracts and subcontracts up to June 30, 1945. The Chief of Ordnance is authorized to issue such directives or instructions to the chiefs of the other technical services as he deems' necessary for the administration of the agreement and the furnishing of such allotments. (Proc. Reg. 11, revised to June 29, 1944, 9 F.R. 8589, as amended by C 38, July 21, 1944, 9 F.R. 9468]

$ 811.1152 Effect of agreement on contracts involving natural rubber. (a) Since natural rubber will continue to be supplied to rubber manufacturers by Rubber Reserve Company at 2242 cents per pound as heretofore, existing contracts made on this basis will not need to be adjusted.

(b) Likewise, future contracts involying the use of natural rubber can continue to be made on the same basis of 221/2-cent rubber, as heretofore,

§ 811.1153 Existing contracts involving synthetic rubber. (a) The prices for synthetic rubber specified in the agreement between Rubber Reserve Company and the War Department are substantially lower than the prices previously in effect for the same types of synthetic rubber.

(b) Accordingly, the prices under existing contracts involving the use of synthetic rubber and made on the basis of the prices in effect before the agreement, should be promptly adjusted to reflect the reduced prices for such synthetic rubbers.

(c) By its Circular No. 21 dated May 31, 1943, the Rubber Reserve Company has directed all rubber manufacturers to report to it all existing contracts made on the basis of prices for natural or synthetic rubber higher than those fixed by the agreement with the War Department and has directed such rubber manufacturers promptly to adjust their prices under such contracts to reflect the reduced prices for synthetic.

$ 811.1154 Conversion from use of natural rubber to use of synthetic. (a) At the present time the cost of processing synthetic rubber is greater than the cost of processing natural rubber for many types of articles. The lower price per pound for synthetic rubber as compared to natural rubber will offset to the extent of the price differential the additional costs of processing such synthetic rubber.

(b) In the cast of certain types of commodities such as tires, the shift from natural to synthetic rubber involves an additional factor affecting costs of production. When such commodities are made from natural rubber it is often possible to use a substantial amount of reclaimed rubber which is much less expensive than either natural or synthetic. When the same commodities are made from synthetic rubber, however, it is at present not feasible to use reclaimed rubber to the same extent or at all. Consequently, synthetic must be substituted not only for the natural rubber but also for the reclaimed rubber in such cases.

(c) When it becomes necessary to amend the specifications under existing contracts under the "changes” article to substitute synthetic rubber for natural rubber, the contract price must be equitably adjusted in accordance with that article. In fixing this adjustment it is necessary to take into account, (1) any additional costs of processing synthetic in place of natural rubber; (2) the lower price per pound of synthetic as compared with natural rubber; (3) the extent to which reclaimed rubber is superseded by synthetic; (4) any other factors relevant in the particular case. Accordingly, the adjustment under any particular contract will depend primarily on the circumstances with respect to processing and the ratio of natural and reclaimed rubber in the particular type of commodity.

(d) Likewise, when new contracts are made for the manufacture from synthetic rubber of commodities previously made from natural rubber, the proper price will depend on the consideration of the same factors discussed in paragraph (c).

$ 811.1155 Price adjustment provisions. In order to assure rubber manufacturers that they may fix their prices on the basis of the cost for natural and

synthetic rubber specified in the agreement between the War Department and Rubber Reserve Company a special price adjustment article contained in $ 803.351 (a) has been authorized for use in contracts involving natural or synthetic rubber (see $ 812.1232 (b)). It provides for equitable adjustment in the contract price to the extent that any change in the price payable for natural or synthetic rubber affects the cost of performing the contract.

Subpart H-Miscellaneous Matters

$ 811.1180 Discounts in purchasing(a) General rule. Frequently contractors include in their bids offers of discounts for cash or prompt payment. In view of the volume of purchasing being presently done, it is frequently not practicable to effect prompt payment and thus take advantage of these provisions. It is therefore apparent that if these offers were taken into account in deciding whether to award a contract to one contractor rather than another, the decision to award the contract to one might be made on the basis of an offer of a cash discount the benefit of which the Government would never receive. The rule has therefore been established that offers of a discount for cash or prompt payment will be disregarded in deciding between two possible contractors.

(b) Example. Let us assume that bids are solicited, informally, or otherwise, and two contractors submit bids. Contractor A quotes a price of $1.00 per unit with an offer of a 10% discount for prompt payment. Contractor B quotes a price of $1.10 per unit. Disregarding A's offer of a 10% discount, the contracting officer nevertheless decides that the contract will be awarded to contractor A because his unit price of $1.00 is lower than that quoted by contractor B. The question now arises whether the rule set forth in paragraph (á) of this section requires that A's offer of discount for prompt payment should be disregarded. The answer obviously is that it should not be disregarded. The discount provision should be included in the contract. It was disregarded in making the decision to award the contract to A, but once the contract was awarded to A, the Government should take advantage of all of the terms offered by contractor A.

(c) Ratification of past action. Because of the misunderstanding of previous regulations, it appears that in some

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