bargaining costs that are not included in the per diem amount of such costs because they are not regularly incurred. Thus, for example, unpredictably timed costs include such costs as wages incurred during reduced crew periods, severance pay, quid pro quo payments for reductions in manning below the crew complement approved by the Board, and special assessments for benefit funds if authorized by the Contracting Officer, area bonuses, and wages and other expenses of U.S. Merchant Marine Academy cadets.

(f) Calculation of U.S. and foreign wage costs-(1) U.S. wage costs. The per diem amount of U.S. wage costs shall be calculated on the basis of the actual negotiated crew complement in effect on January 1 of the fiscal year and in the manner provided in paragraph (e)(1) of this section except as provided in paragraph (f)(3) of this section. See paragraph (j)(1) of this section for an example calculation of U.S. wage costs.

(2) Foreign wage costs-(i) Per diem amount. The per diem amount of foreign wage costs for a principal competitive foreign-flag shall be calculated as provided in paragraph (e)(1) of this section, except as provided in paragraph (f)(3) of this section, and shall be based on the crew complement in effect on January 1 of the fiscal year, except that if such foreignflag was a principal competitive foreign-flag during the most recent base period, or during a previous interim year of the same base period cycle, the per diem amount of such foreign wage costs shall be based on the crew complement previously determined for the base period cycle.

(ii) Crew complement. For purposes of paragraph (f)(2)(i) of this section, a foreign crew complement, in number and nationality, shall be constructed for the subsidized vessel, in the following manner:

(A) Determination of normal foreign crew complement. A normal foreign crew complement will be determined for a foreign vessel substantially similar to the subsidized vessel in age and size, using as sources of data the crewing scales and practices of the competitive foreign flag developed through an examination of: Crew

manifests of such foreign flag vessels; payrolls; data obtained by the United States foreign Maritime Attaches; data submitted by or on behalf of operators; and other information that the Board determines, in its reasonable discretion, to be reliable.

(B) Adjustments to normal foreign crew complement. Adjustments to the normal foreign crew complement shall be made for significant differences between the physical characteristics of the foreign flag vessel and the subsidized vessel, taking into account the physical characteristics of physically comparable departments on other vessels under the same foreign flag. The adjusted crew complement shall only include crew members required by reason of foreign law, collective bargaining agreement, or normal practice. In the event of conflict between foreign law and normal practice, normal practice shall take precedence. These adjustments shall be made department by department, taking due account of the effect of changes in one department on the other departments.

(C) Adjustments not feasible. Where the foreign crew complement for a particular department of vessels under the registry of the competitive foreign country cannot be estimated or determined with reasonable substantiation, as provided above, so that the Board may exercise its reasonable discretion, the foreign crew complement for that department shall be deemed to be identical in number and rating with that of the subsidized vessel.

(3) Like-for-like concept. The calculation of U.S. and foreign wage costs is accomplished by matching each item of U.S. wage costs with each item of foreign wage costs. The matching process may necessitate the deletion of certain items of U.S. wage costs or the employment of a different method of calculating the U.S. wage costs for an item of expense. Where it is not possible to determine by any reasonable method a certain item of foreign wage costs, but such cost is known to exist, the cost shall be excluded from the computation of U.S. wage costs. For example, if the cost of travel cannot be determined for a foreign competitor, such cost will be excluded from U.S. wage costs. If it is not possi

ble to compute the foreign cost of a particular expense by the method that normally would be used for computing the U.S. cost, the U.S. cost shall be computed in the same manner as the foreign cost. For example, if it is not possible to determine the amount of payroll tax paid by competitive U.K. vessels in the manner that the amount of U.S. payroll tax paid is determined, the method used to determine U.K. payroll tax shall be used to determine U.S. payroll tax.

(g) Foreign currency exchange rates. Foreign currencies shall be converted into the U.S. currency equivalent at the average of the monthly foreign exchange rates for the year as recommended by the U.S. Department of the Treasury, except that when by contract or otherwise, an item of wage cost is paid to foreign seamen at a specified rate of exchange of U.S. dollars, the specified rate shall be used. For wage costs priced out as of January 1, the monthly average of foreign exchanges rates for the fiscal year in which such January 1 falls shall be used. For cost experience wage costs, the monthly average of foreign exchanges rates for the calendar year preceding the January 1 shall be used for the fiscal year in which such January 1 falls.

(h) Special rules for new operators and vessel types—(1) Calculation of collective bargaining and U.S. wage costs. If a new vessel type or operator has less than 6 months of operating experience in subsidized service during the calendar year immediately preceding January 1, the ratio of variable costs to base wage costs of the next succeeding calendar year with at least 6 months of operating experience in subsidized service shall be used in the calculation of the per diem aggregate of variable costs entering into the determination of collective bargaining and U.S. wage costs for the fiscal year in which such January 1 falls.

(ii) Other than a base period. If the new operator or vessel type enters subsidized service during a fiscal year other than a base period, the collective bargaining costs in effect as of January 1 of such fiscal year, determined in accordance with paragraph (h)(1) of this section, shall be regressed to January 1 of the base period most recent to January 1 of the fiscal year. The collective bargaining costs so determined for January 1 of the most recent base period shall be the base period costs for purposes of determining the subsidizable wage costs in effect during the fiscal year.

(i) Data sources and reporting requirements—(1) U.S. wage cost data. The operator shall submit Form MA790 by March 31 of each year covering the costs incurred on voyages terminated during the preceding calendar year and copies of all current collective bargaining or other agreements, memorandums of understanding, and arbitration awards that specify fixed costs in effect on January 1, concluded between the operator and the applicable maritime labor organizations, or otherwise promulgated. Such data shall be submitted to the Director, Office of Subsidy Administration, Maritime Administration, Washington, DC 20590.

(2) Disclosure of data. Foreign wage cost data presented to the Maritime Administration or collected on its request or in its behalf shall be available for inspection by any operator unless the Board shall find that such disclosure will prevent its obtaining such data in the future.

(j) Example calculations. (1) Example calculation of collective bargaining costs (CBC) and U.S. wage costs (WC):

ABC STEAMSHIP CO., T8-S-101C VESSEL-WORLDWIDE SERVICES

[Calculation of wage subsidy rates 1]

Averaging in base

periods (4)+(5)÷2

1 This computation is based on a new vessel entering subsidized service in July 1972. 2 Base period for example purposes only.

(Approved by the Office of Management and Budget under control number 2133-0040)

[40 FR 43490, Sept. 22, 1975, as amended at 42 FR 45308, Sept. 9, 1977; 45 FR 8024, Feb. 6, 1980; 47 FR 25530, June 14, 1982]

§ 252.32 Maintenance and repair.

(a) Subsidy rate. The subsidy rate for eligible costs of maintenance and repair work equals the sum of the weighted differentials of all principal competitive foreign-flags. See paragraph (e)(3) of this section for an example calculation.

(b) Definitions. When used in this section:

(1) Eligible costs means all fair and reasonable costs not compensated by insurance and otherwise eligible for subsidy under the provisions of Part 272 of this subchapter (dealing with certain vessel surveys and the performance of maintenance and repair work), incurred by the operator during the calendar year for eligible items.

(2) Eligible items means maintenance and repair work performed in the United States or the Commonwealth of Puerto Rico by ship repair yards, independent contractors shore gang labor.

or

(3) Weighted differential means the proportionate cost differential of a principal competitive foreign-flag multiplied by such flag's competition weight factor.

(4) Proportionate cost differential means the sum, for all countries where a principal competitive foreign-flag performs maintenance and repair work, of the percentage of such work performed by such flag in each country multiplied by the country's percentage cost differential.

(5) Percentage cost differential of a country means 100 percent less the sum for such country of the weighted cost ratios of all principal categories of maintenance and repair work. See paragraph (e)(2) of this section for an example calculation of the percentage cost differential.

(6) Weighted cost ratio means a percentage, determined by multiplying the cost ratio for a principal category of maintenance and repair work by the group cost weight for such principal category of work.

(7) Cost ratio means a ratio, expressed as a percentage, the numerator of which is the average of price quotations for a principal category of maintenance and repair work for a foreign country, and the denominator of which is the average of U.S. price quo

tations for such principal category of work.

(8) Group cost weight means a percentage established by the Maritime Administration to give effect to the relative importance of price quotations in each principal category of maintenance and repair work. Form MA-140 submitted by each operator pursuant to Part 272 of this subchapter shall be used to provide data for this purpose.

(9) Average of U.S. price quotations means the average of U.S. price quotations for a principal category of maintenance and repair work for the U.S. coast and coastal areas from which the vessel operated during the calendar year. Average price quotations shall be established by the Maritime Administration for each of the four coastal areas: East, West, Gulf and Great Lakes.

(10) Principal categories of maintenance and repair work means drydocking and underwater repairs, boiler repairs, machinery repairs, hull and deck repairs, electrical repairs, and exterior and interior painting.

(c) Determination of U.S. and foreign price quotations—(1) Cost survey. Not more frequently than once every 3 years nor less frequently than once every 5 years, the Maritime Administration shall request reliable ship repair contractors located in selected U.S. and foreign ports to provide price quotations for representative samples of maintenance and repair work described in a standard set of specifications prepared by the Maritime Administration. Included in the standard set of specifications shall be sample jobs that are representative of the various types of work performed in each principal category of maintenance and repair work.

(i) Price quotation unavailable. When a price quotation cannot be obtained for a particular country where a vessel of a principal competitive foreign-flag had work performed, the price quotation from the nearest country in the same general geographical area shall be used. If a price quotation is not available in the same general geographical area, the percentage of work performed in the country for which a price quotation is unavailable shall be treated as performed pro rata