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instances contracting officers have felt that it was necessary, under the circumstances set forth in paragraph (b), to omit from the contract any provision with respect to discounts. Their action in doing so is hereby ratified.

(d) Fiscal aspects of discounts. Although as provided in paragraph (a) of this section, offers of discounts for cash or prompt payment are to be disregarded in deciding between two possible contractors,


many cases contracts awarded or invoices pursuant to such contracts will provide for such discounts. In such cases advantage should be taken of such discounts and procedures should be established to aid in reaching this result; provided interference does not result in the payment of accounts or transactions which do not provide for discounts. The preferred form of procedure for the taking of discounts is one in which originals and copies of purchase instruments involving discounts and used internally by the procurement office are suitably stamped “DiscountExpedite" by the initiating office and the discount terms shown on such instruments are underscored or circled in red to invite the attention of all concerned to the possible priority status of the instrument and allied documents. For fiscal aspects of cash discounts, see AR 35-6200. (Proc. Reg. 11, revised to June 29, 1944, 9 F.R. 8589, as amended by C 38, July 21, 1944, 9 F.R. 9468]

$ 811.1181 Contingent fees. In connection with purchases and subcontracting by cost-plus-a-fixed-fee contractors, the vendor or subcontractor involved should not be permitted to pay thirdparty intermediaries a commission, percentage, brokerage, or contingent fee based upon the amount of the order or subcontract where the services performed by such intermediaries are merely the obtaining of the order of, if additional services are in fact performed by such intermediaries, the fees are disproportionate. To accomplish the foregoing it is essential that the attention of contracting officers be directed to the necessity of taking effective administrative measures so as to bring such practices to light with a view to their elimination. In some cases the prime contractor may be directed to require the disclosure by the vendor or subcontractor, as a condition to award, of any contingent or broker's fee or commission which may be in

cluded in the price quoted by such vendor or subcontractor.

In many cases third-party intermediaries and others in similar categories are capable of and do perform valuable services in connection with the purchasing and subcontracting, for which they are entitled to a return. In such cases it is not the purpose to limit the opportunities to obtain increased production by prohibiting altogether the use of such intermediaries by vendors and subcontractors. The purpose to be accomplished, however, is to prevent the abuses inherent in the inclusion in the purchase price or subcontract price of a commission, percentage, brokerage, or contingent fee in an amount not related to the services performed and the payment of such fees where the only service performed is the obtaining of the order for the vendor or subcontractor.

$ 811.1182 Track-scaling of loaded railroad cars. Provisions should not be inserted in construction or supply contracts in which payment for the materials or supplies is based on "railroad weights." The result of inserting such a provision is frequently to require railroads to incur unnecessary delay and expense in arriving at such weights, sometimes necessitating back-hauling for track-scaling. The railroads through territorial weighing bureaus enter into agreements with many of their shippers under which the railroads accept the invoice-weight of the shipper subject to periodical checks and test weights. This avoids the necessity for track-scaling the car. All reference to "railroad weights" will be omitted from requests for quotations or estimates and from the resulting contracts or orders for all materials and supplies including coal. Particular care should be taken to insure that the words “railroad weights" do not appear in the Schedule of Supplies (Schedule A) of future contracts or in any "Instructions to Bidders" or Purchase Conditions. In lieu of the words “railroad weights", there will be inserted the words "weights acceptable to railroad for freight charge purposes." Outstanding construction and supply contracts containing the words "railroad weights" should be amended to change those words to the wording indicated above. Reference is made to Circular No. 284, War Department, 1942 for the terms of the War Department Traffic Weight Agreement entered into by the

War Department with representatives of certain carriers.

$ 811.1182a Ordering of less than full carloads to be avoided. In view of the shortage of transportation facilities, it is apparent that it is wasteful to have a railroad car move with less than a full load. Therefore, unless other factors make such action unwise, supplies should be ordered in anounts equal to one or more full carloads; and the practice of ordering amounts that will result in the loading of a portion of a railroad car should be avoided.

$ 811.1182b Notice of shipment by contractors. (a) It is important that proper notices of shipment be dispatched by contractors to consignee establishments (especially in the case of shipments destined for ports of embarkation) and, in certain cases, also to other persons, or installations. The “Notice of Shipments" article ($ 803.328) to be inserted in supply contracts requires a notice of shipment to be sent to whomever the contracting officer may designate, and in the form, by the means, and on the occasions required by him.

(b) The main sources of instructions concerning notices of shipment are paragraph 7 of AR 55–105, as amended, paragraph 33 of TM 38–415 and section V, Circular No. 379, War Department, 1944 (the latter two references relate to shipments to ports of embarkation). Other general and special instructions on the subject of notices of shipment are also issued from time to time by certain of the technical services. The chiefs of the technical services will bring to the attention of all contracting officers the requirements of the pertinent publications and instructions referred to above, and will implement them with such supplementary instructions as they deem advisable.

(c) Contracting officers should be fully informed concerning the notices of shipment to be required so that they may issue proper instrictions to contractors which will avoid the sending of unnecessary notices by contractors and lastminute requests by contractors for instructions. For instance, since the contractor will not ordinarily be required to dispatch a notice in the case of shipments of less than one carload (or equivalent), proper instructions should be given sufficiently in advance so that contractors making such small ship

ments will not be required to make unnecessary and burdensome calls upon contracting officers for directions. It is suggested that form instructions to contractors, concerning the notices of shipment required to be given, be prepared and furnished by contracting officers to contractors sufficiently in advance of shipments. Where form instructions are not feasible, contractors should be instructed to notify the contracting officers at least 24 hours in advance of the scheduled delivery to a carrier, so that appropriate instructions may be given. Instructions to contractors should require that in the case of classified shipments all classified information be omitted from the notice and such general terminology substituted therefor as is permissible under security regulations, and may also require, in the case of classified shipments, that the contracting officer shall approve the exact form of notice before it is sent by the contractor. Since the types and details of notices to be sent may be subject to frequent change, it is not deemed desirable to specify in the contract article itself the details of when and by what method notices are to be sent and what information they should contain. [Proc. Reg. 11, Rev. 43, Nov. 23, 1944, 9 F.R. 14170]

$ 811.1183 Procurement of spare parts. Certain restrictions and procedures have been prescribed with respect to the procurement of spare parts, particularly initial concurrent spare parts. Such restrictions and procedures are set forth in Circular No. 227, War Department, 1944, as amended by section IV, Circular 318, War Department, 1944. [Proc. Reg. 11, C 40, Aug. 31, 1944, 9 F.R. 10960]

$ 811.1184 Contracts with foreign nationals. (a) By virtue of Executive Order No. 8389, April 10, 1940, as amended, and Treasury Department regulations issued pursuant thereto, the award of contracts in which certain foreign countries or nationals thereof have any interest is prohibited.

(b) The above prohibition does not apply to contracts with individuals, partnerships, associations, corporations, or other organizations which have been granted a general or special license by the Secretary of the Treasury.

(c) Whenever a contracting officer has reason to believe that any prospective contractor is subject to the above prohibition he should inquire of the chief of the technical service concerned or the nearest Federal Reserve Bank as to the eligibility of the prospective contractor.

$ 811.1185 Contracts with blocked nationals. (a) The Secretary of State from time to time publishes lists of persons and organizations deemed to be acting directly or indirectly for the benefit of the enemy. Copies of these lists will be made available to the chiefs of the technical services.

(b) No contract will be knowingly awarded to any person or organization so listed.

CROSS REFERENCE: For tabulation of Proclaimed Lists of Blocked Nationals flled with the Division of the Federal Register, see Chapter III of Title 22.

§ 811.1186 Limitation on purchase of arms, ammunition and implements of war. (a) No purchase of arms, ammunition, or implements of war shall be made on behalf of the United States by any officer, executive department, or independent establishment of the Goyernment from any person who shall have failed to register under the provisions of subsection 12 (g) of Public Resolution of November 4, 1939 (Pub. Res. No. 54–76th Cong.).

(b) Articles which are considered arms, ammunition and implements of war will be proclaimed from time to time by the President. Chiefs of the technical services concerned will publish such information to the contracting officers concerned and secure compliance with the above limitation.

§ 811.1187 Restrictions on purchases of selected items. The purchase of various items or classes of materiel and supplies has been restricted or prohibited due to shortages of such items or classes of equipment or of materials used in the construction thereof and for other reasons. Certain of these items or classes are mentioned below together with a reference to the War Department circulars setting forth the restrictions or prohibition. These circulars must be examined for a more detailed statement of the items and classes of materiel and supplies affected and of the nature of the restriction or prohibition.

1. Office furniture and equipment. See section II, Circular No. 168, War Department, 1943 and section III, Circular No. 216, War Department, 1943.

2. Interofice communication systems, sound recording equipment and public address systems. See section I, Circular No. 2, War Department, 1944.

3. Farm machinery and equipment. See section VI, Circular No. 204, War Department, 1944, as amended by section III, Circular No. 217, War Department, 1944.

4. Spare parts. See $ 811.1183. [Proc. Reg. 11, C 40, Aug. 31, 1944 9 F.R. 10960]

$ 811.1187a Restrictions on local purchases. (a) Detailed provisions respecting restrictions upon and procedures required to be followed in connection with local purchases (including local purchases from appropriated as well as unappropriated funds) are set forth in section VII, Circular 310, War Department, 1944,

(b) Reference is also made to Section IV, Circular No. 209, War Department, 1943, as amended by Section 1, Circular No. 361, War Department, 1944, dealing with local purchase of items of ordnance supply, such as spare parts, tools, accessories, shop equipment and supplies.

(c) It is essential that local purchases be kept to a minimum in order not to impinge on matériel and supplies intended for civilian economy. Local purchases are generally less economical, often result in an accumulation of nonstandard supplies which have limited use and tend to create excesses of standard items in depot stocks.

(d) Responsibility for controlling local purchases is a continuing command function in all echelons and at all installations. It shall be exercised vigorously and systematically. (Proc. Reg. 11, C 40, Aug. 31, 1944, 9 F.R. 10960, and C 41, Oct. 5, 9 F.R. 12255]

$ 811.1188 Advertising-(a) Basic statutes. (1) No advertisement, notice, or proposal for any Executive Department of the Government, or for any Bureau thereof, or for any office therewith connected, shall be published in any newspaper whatever, except in pursuance of a written authority for such publication from the head of such Department; and no bill for any such advertising, or publication, shall be paid, unless there be presented, with such bill, a copy of such written authority. (R. S. 3828; 44 U.S.C. 324; M, L., 1929, sec. 1829)

(2) Hereafter all advertisements, notices, proposals for contracts, and all

forms of advertising required by law for the several Jepartments of the Government may be paid for at a price not to exceed the commercial rates charged to private individuals, with the usual discounts; such rates to be ascertained from sworn statements to be furnished by the proprietors or publishers of the newspapers proposing so to advertise: Provided, That all advertising in newspapers since the tenth day of April, eighteen hundred and seventy-seven, shall be audited and paid at like rates; but the heads of the several departments may secure lower terms at special rates whenever the public interest requires it. Act June 20, 1878 (20 Stat. 216; 44 U. S. C. 322; M. L., 1929, sec. 1827).

(3) First War Powers Act: The Judge Advocate General, in an opinion dated August 4, 1943 (SPJGC 1943/10580) has expressed the view “that compliance with the provisions of section 3828 of the Revised Statutes would limit and restrict the freedom of action granted by the First War Powers Act, 1941, to facilitate the prosecution of the war, and that the operation of such statute to the extent that it limits the broad authority granted by the First War Powers Act, 1941, is suspended thereby.”

(b) Delegation of authority. (1) The responsibility for authorizing advertising has been assigned by the Secretary of War to the Under Secretary of War (see $ 801.107 (c)). Pursuant to Circular 181, War Department, June 10, 1942, this responsibility was further delegated "subject to the direction of the Under Secretary of War, to the Commanding General, Army Air Forces, so far as [it relates) to supplies or equipment peculiar to the Army Air Forces; and subject to the same direction, so far as [it relates) to all other supplies and equipment, to the Commanding General, Seryices of Supply, or to such person or persons as they may designate.” The authority so delegated is hereby further delegated to the chiefs of the technical services.

(2) The responsibility for authorizing advertising through the medium of newspapers or otherwise, which is delegated to the chiefs of the technical services by subparagraph (1), is not to be confused with the responsibility for authorizing the placing of contracts by formal adver

tising rather than by negotiation. This latter responsibility is vested in the Director, Purchases Division, Headquarters, Army Service Forces (see $ 802.240 (b)).

(c) Ratification. Prior to the promulgation on September 3, 1943, of paragraph (b), the chiefs of the technical services had not expressly been delegated authority to authorize advertising. The Judge Advocate General, however, in the opinion referred to in paragraph (a) expressed the view that the delegations set forth in $ 801.107 (f) gave the Director, Purchases Division, Headquarters, Army Service Forces authority to approve advertising; and that the action of the chiefs of the technical service in authorizing advertising may “be ratified by the Director of the Purchases Division, if it is determined that such action facilitated the prosecution of the war". Accordingly, if any advertising was done subsequent to June 29, 1942, and prior to September 3, 1943, without approval of the Director, Purchases Division, Headquarters, Army Service Forces (or some higher authority) a request may be made to said Director that such advertising be ratified; the request should be accompanied by a full statement of the facts and a determination by the chief of the technical service that such advertising facilitated the prosecution of the war. Advertising done on or subsequent to September 3, 1943, may be authorized or ratified by the Chiefs of the technical services, without the necessity of submission to the Director, Purchases Division, Headquarters, Army Service Forces. [Proc. Reg. 11, revised to June 29, 1944, 9 F.R. 8589, as amended by C 39, Aug. 4, 1944, 9 F.R. 9594)

$ 811.1189 Certificate required in procurement with respect to motor-propelled passenger-carrying vehicles. All procuring instruments covering the purchase of supplies, equipment, spare parts, accessories or services, for use in the operation, maintenance, or repair of motorpropelled passenger-carrying vehicles will bear the following certificate:

None of the supplies or services covered by this instrument are to be used in violation of the legal restrictions quoted in Circular No. 340, War Department, 1944. (Proc. Reg. 11, C 41, Oct. 5, 1944, 9 F.R. 122551


PRICE ADJUSTMENT CROSS REFERENCE: For Renegotiation Regulations issued by the War Contracts Price Adjustment Board, see Chapter XIV of Title 32, infra. For interim financing regulations of the Office of Contract Settlement, see Chapter XX of Title 32, infra. Sec. 812.1200 Scope of part.

Subpart A-Statutory Renegotiation 812.1201 Definitions; scope of subpart.

RENEGOTIATION STATUTE AND EXEMPTIONS 812.1202 Statutory provisions. 812.1203 Effect of 1943 act. 812.1204 Mandatory exemptions from statu

tory renegotiation. 812.1205 Discretionary power to exempt cer

tain contracts and subcontracts.

CONTRACT ARTICLES FOR RENEGOTIATION 812.1207 Articles authorized. 812.1208 Use of articles. 812.1209 Optional provisions in subcon

tracts. 812.1210 Use of other articles.


PROCEDURE 812.1213 Administration of statutory re

negotiation. 812.1214 Effect of statutory renegotiation

on price adjustments by con

tracting officers. Subpart B-Contract Articles for Price Adjust

ment on the Basis of Production Experience 812.1220 Scope of subpart. 812.1221 Effect of articles. 812.1222 Relation to other price adjustment

articles. 812.1223 Price redetermination by formula. 812.1224 Negotiated revision of entire con

tract price, upward or downward. 812.1225 Article for converting fixed-fee

contracts to fixed price basis. 812.1226 Incentive provisions for fixed-fee

contracts Subpart C—Contract Provisions for Price Ad

justment Upon Contingencies and Short-Term

Pricing 812.1230 Scope of subpart. 812.1231 Adjustments under changes article

in fixed price supply contracts. 812.1232 Escalation. 812.1233 Interruption of production sched

ules by Government action. 812.1234 Operation of articles. 812.1235 Article for short term pricing. 812.1235a Article for optional periodic ad

justment of price. 812.1236 Periodic adjustment of price with

out provision for exemption from renegotiation.

Sabpart D-Contract Articles for Periodic Read

justment of Price and Exemption From Rene

gotiation Sec. 812.1240 Articles authorized. 812.1241 Effect of articles. 812.1242 Purpose of articles. 812.1243 Use of articles. 812.1244 Insertion of statutory renegotiation

article. 812.1245 Deleted. 812.1246 Price adjustments under the arti

cles. 812.1247 Inserting articles in existing con

Subpart B-Price Adjustments Without

Contract Provisions 812.1250 Scope of subpart. 812.1251 Amendments with consideration. 812.1252 Amendments without considera

tion. Subpart H—Audits and Inspections Under Title

XIII of the Second War Powers Act 812.1260 Basic statute. 812.1261 Executire order. 812.1262 Delegations of authority under

Title XIII of the Second War

Powers Act, 1942. 812.1263 Preliminary steps before audit or

subpena. Subpart 1-Mandatory Pricing and Repricing of

Articles and Services 812.1270 Statutory basis for mandatory pric

ing and repricing. 812.1271 Delegations of authority. 812.1272 Definitions. 812.1273 Scope of statute. 812.1274 General application of the statute. 812.1275 Voluntary negotiation with respect

to prices deemed to be unfair or

unreasonable. 812.1276 Mandatorily requiring negotiation. 812.1277 Agreements resulting from volun

tary or mandatory negotiation. 812.1278 Issuance of order fixing fair and

reasonable price. 812.1279 Notification of technical services of

service of order. 812.1280 Preservation of data upon whicb

orders are based. 812.1281 Method of service. 812.1282 Form of requirement to negotiate

fair and reasonable prices. 812.1283 Form of order fixing fair and rea

sonable price.

Appendix 812.1289 Reference to renegotiation reg

ulations. 812.1290 Rulings of War Contracts Price

Adjustment Board relating to exclusions or mandatory exemptions from statutory renegotia

tion. 812.1291 Rulings of War Contracts Price

Adjustment Board relating to discretionary exemptions from statutory renegotiation.

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