1480.12 Copies of records; fees or charges. (a) Upon request, the Board will furnish a copy or copies of any record made available pursuant to this part, except records published in the FEDERAL REGISTER and offered for sale by the Superintendent of Documents, Government Printing Office (see § 1480.4).

(b) There shall be a charge of 25 cents for each copy of each page of any record furnished pursuant to this part, with a minimum charge of $2. Such charge shall be deemed to include the cost of labor and machine time in making the copy so furnished. An additional charge of $2.50 will be made for furnishing an authenticated copy of any record.

(c) In view of the time and expense that may be involved in locating a requested record, or in determining that a requested record cannot be located, or in deleting exempt information or identifying details in order to prepare a requested record for inspection and copying, there

shall be a charge for such services by clerical personnel (GS-9 or lower) at a rate of $4 per person per hour and by professional personnel (GS-10 or higher) at a rate of $7 per person per hour, except that there shall be no charge if the performance of such services takes less than 15 minutes.

(d) Persons may inspect and copy records by their own means in the principal office of the Board without charge, except for any search or deletion charges payable pursuant to this

section.

(e) There shall be no charge for the making or authentication of copies of records required for use by other agencies of the Government.

(f) The Board shall be entitled to waive any fees or charges prescribed in this part in any instance in which the Board, in its discretion, determines such waiver to be appropriate in the interest of its program.

See.

1490.1

Introduction.

de

1490.1 Introduction. - Subcontracts scribed in section 103 (g) (3) of the act are substantially different from other contracts and subcontracts subject to the act, both in the nature of the services rendered thereunder and their relation to the defense effort. Because of these basic differences, the application of the act to such subcontracts gives rise to correspondingly different problems and considerations. The regulations in this part apply solely to subcontracts described in section 103 (g) (3) of the act. As used in this part, except when the context clearly indicates otherwise, the term "contractor" means any person holding one or more subcontracts described in section 103 (g) (3) of the act.

1490.2 Statutory provisions.-(a) Coverage.-Section 103 (g) (3) of the act provides in part as follows:

The term "subcontract" means

(1)

(2)

(3) Any contract or arrangement (other than a contract or arrangement between two contracting parties, one of whom is found by the Board to be a bona fide executive officer, partner, or full-time employee of the other contracting party) under which

(A) Any amount payable is contingent upon the procurement of a contract or contracts with a Department or of a subcontract or subcontracts; or

(B) Any amount payable is determined with reference to the amount of a contract or contracts with a Department or of a subcontract or subcontracts; or

(C) Any part of the services performed or to be performed consists of the soliciting, attempting to procure, or procuring a contract or contracts with a Department or a subcontract or subcontracts.

(b) Minimum amount subject to renegotiation.-Section 105 (f) (2) of the act provides as follows:

If the aggregate of the amounts received or accrued during a fiscal year (and on or after the applicable effective date specified in section 102 (a) by a subcontractor, and all persons under control of or controlling or under common control with the subcontractor, under subcontracts described in section 103 (g) (3) is not more than $25,000, the receipts or accruals from such subcontracts shall not, for such fiscal year, be renegotiated under this title. If the aggregate of such amounts received or accrued during the fiscal year under such subcontracts is more than $25,000, no determination of excessive profits to be eliminated for such year with respect to such subcontracts shall be in an amount greater than the amount by which such aggregate exceeds $25,000.

(c) Computation of aggregate receipts or accruals.-Under Section 105 (f) (3) of the act, in computing its aggregate receipts or accruals for any fiscal year ending after June 30, 1956, a broker, agent or other person holding a subcontract described in section 103 (g) (3) of the act must include all commissions or other compensation from its parent or other related principal which are referable to renegotiable prime contracts or subcontracts. See § 1458.2 (b) of this subchapter.

1490.3 Limited exemption of subcontracts for architectural, design or engineering services.-Certain subcontracts described in section 103 (g) (3) of the act have been exempted by the Board under certain circumstances. Such exemption is limited to subcontracts "for architectural, design or engineering services, no part of which services is or was related to the effecting or procuring of a contract with a Department or a subcontract, if the aggregate renegotiable business of the subcontractor holding such subcontracts and all per

sons under control of or controlling or under common control with such subcontractor during a fiscal year of 12 months is not more than $250,000, in the case of a fiscal year ending before June 30, 1953, or $500,000, in the case of a fiscal year ending on or after June 30, 1953, or $1,000,000, in the case of a fiscal year ending after June 30, 1956, or, during a fiscal year which is a fractional part of 12 months, is not more than the same fractional part of $250,000, $500,000, or $1,000,000, as the case may be" (see § 1455.3 (b) (6) of this subchapter).

1490.4 Application of the act.-Subcontracts described in section 103 (g) (3) of the act are subject to renegotiation under the act to the extent of amounts received or accrued on or after the date applicable to the prime contract to which the subcontract relates (see § 1452.2 of this subchapter).

1490.5 Filing of financial statement.The regulations pertaining to this subject are set forth in § 1470.3 of this subchapter. It will be noted therefrom that no special form is prescribed for persons holding subcontracts described in section 103 (g) (3) of the act. Every such person, if required by the first sentence of section 105 (e) (1) of the act to file a financial statement with the Board for a fiscal year, shall adapt the Standard Form of Contractor's Report to his particular needs. Any such person who elects to file a financial statement with the Board for a fiscal year pursuant to the second sentence of section 105 (e) (1) of the act may file the Statement of Non-Applicability.

1490.6 Determination of renegotiable business under section 103 (g) (3) of the act. (a) Receipts and accruals which are derived from any contract or arrangement described in section 103 (g) (3) of the act are renegotiable only to the extent that they are contingent upon the procurement of a renegotiable prime contract or subcontract, or are determined with reference to the amount of a renegotiable prime contract or subcontract, or are received or accrued for soliciting, attempting to procure, or procuring a renegotiable prime contract or subcontract.

Example. X Company, only part of whose sales are subject to renegotiation, enters into a sales commission contract with a sales representative. Pursuant to such contract he makes sales on behalf of X company to

Y company, which is not engaged in renegotiable business, and also to the Department of the Army. The commissions on the sales to the Department of the Army are renegotiable since they are received for procuring a renegotiable prime contract. The commissions on the sales to Y company are not renegotiable even though all of the commissions are received pursuant to the single commission contract. It is immaterial in this instance whether the commission is a fixed amount or is measured by the amount of the renegotiable sales.

(b) All receipts or accruals which are contingent upon the procurement of renegotiable prime contracts or subcontracts or which are determined with reference to the amount thereof, are subject to the act without regard to whether they are paid or payable for the procurement of such prime contracts or subcontracts or for the servicing thereof.

Example. A sales organization is entitled by its contract with X Corporation to be paid 5% of all sales of X Corporation within a certain territory. Most sales during the year are repeat orders placed directly with X Corporation by regular customers who make their purchases in connection with renegotiable busiThe main function of the sales organization is to service the contracts, expedite shipments, and render engineering or other technical assistance to X Corporation in the improvements, use or maintenance of its products. All commissions received or accrued by the sales organization from X Corporation on renegotiable business are subject to the act.

ness.

(c) If the amount of the receipts or accruals under a subcontract described in section 103 (g) (3) of the act is not contingent upon the procurement of a renegotiable prime contract or subcontract, or measured by the amount thereof, but is received or accrued in whole or in part for soliciting, attempting to procure or procuring such a contract, that part of such receipts or accruals is subject to the act which the Board determines to be reasonably allocable to renegotiable sales.

Example. Pursuant to a fixed monthly retainer, a manufacturer's representative represents X Corporation, sells its products, assists in expediting shipment thereof, and performs engineering services in connection with such sales and the use of such products. Normally, segregation will be accomplished by applying to the receipts or accruals from the retainer contract the same ratio which the renegotiable sales of X Corporation bear to total sales. If it should appear, however, that the application of such ratio would not correctly reflect the part of such receipts or accruals which is properly referable to renegotiable business, segregation will be accomplished on such basis as will correctly reflect such part.

(d) A contract to furnish engineering or other technical services required for the performance of a renegotiable prime contract or subcontract is not a subcontract described in section 103 (g) (3) of the act if no part of the amount payble under such contract is contingent upon the procurement of a renegotiable prime contract or subcontract, or is measured by the amount thereof, and if no part of the services performed or to be performed thereunder consists of soliciting, attempting to procure, or procuring a renegotiable prime contract or subcontract. However, a contract to furnish such services is a subcontract described in section 103 (g) (1) of the act.

(e) Receipts and accruals under subcontracts described in section 103 (g) (3) of the act are exempt from renegotiation to the extent that such receipts or accruals are referable to prime contracts or subcontracts which are exempted from the provisions of the act by section 106 (d) thereof, or, for fiscal years ending on or before June 30, 1956, by any paragraph, other than paragraph (8), of section 106 (a) thereof. Receipts or accruals under subcontracts described in section 103 (g) (3) of the act, if such subcontracts are made after June 30, 1956, are not exempt from renegotiation to the extent that such receipts or accruals are referable to prime contracts or subcontracts which are exempted from the provisions of the act by paragraph (1) or (5) of section 106 (a) thereof. See §§ 1453.6 or 1455.7 of this subchapter. Receipts or accruals under subcontracts described in section 103 (g) (3) of the act are not exempt from renegotiation to the extent that such receipts or accruals are referable to prime contracts or subcontracts which are exempt from the provisions of the act by section 106 (e) thereof.

(f) Receipts and accruals under subcontracts described in section 103 (g) (3) of the act, to the extent that such receipts and accruals are referable to prime contracts or subcontracts for new durable productive equipment, are subject to renegotiation to the same extent as the receipts or accruals under the prime contracts or subcontracts to which they are referable.

1490.7 Determination of excessive profits under subcontracts described in section 103 (g) (3) of the act.-(a) General considerations.-(1) It is recognized that, in times of

emergency, the bona fide manufacturer's representative or salesman can render a useful service in the defense effort by making sources of materials available to defense contractors, coordinating procurement needs with the productive capacities of his principal, expediting shipments, and rendering expert technical assistance to the buyer, the seller and the Government.

(2) At the same time, under emergency conditions, the demand for materials is so enhanced that a normal return to a sales representative for selling goods or services or to a person compensated on a commission or percentage basis may become excessive when considered in relation to the character and amount of work performed by such person. To the extent that the emergency creates a sellers' market, it tends to reduce the amount of effort required to locate buyers and to induce them to purchase. At the same time, the increase in the volume of such purchasing frequently results in a corresponding dollar increase in sales commissions. When commissions are based on a rate of compensation which was established in normal times, when supply and demand were more evenly balanced, excessive compensation may result without corresponding benefits to the buyer and supplier of the materials. This excessive compensation, when paid for the procurement of defense prime contracts or subcontracts, is borne ultimately by the Government.

(3) Consequently, while there is definite value in the services of sales representatives in the prosecution of the defense effort, it is necessary to maintain the compensation paid for such services at a reasonable level commensurate with their character, amount and value, and thus to avoid excessive costs and profits. This applies with equal force to the commissions of established sales agencies and the commissions of agencies which have developed solely or principally as a result of the emergency.

(b) Application of statutory factors; general policy. Reasonable profits will be determined in every case by over-all evaluation of the particular factors present and not by the application of any fixed formula with respect to rate of profit, or otherwise. Renegotiation. proceedings will not result in a profit based on the principle of a percentage of cost. Brokers