GENERAL POLICY REGARDING USE OF STANDARD FORMS

1. As a means of assisting prime and subcontractors in the preparation of settlement proposals and of expediting the review of such proposals, the War Department has provided standard forms for general use.

2. These forms are to be used in connection with all fixed price supply contracts terminated after 15 May 1944. In exceptional cases, if the forms fail to present the essential facts or are not sufficiently applicable, the contracting officer may authorize some other method of presentation on forms specially designed for the purpose. Contractors having contracts terminated prior to 15 May 1944 should also use the forms, where proposals have not yet been prepared on other forms. All subcontractors should use the standard forms, to the greatest extent practicable.

3. Contracting officers are authorized to permit the omission of data called for by the standard forms in particular instances to the extent that such data are not applicable, are not reasonably obtainable, or are not deemed necessary for the adequate substantiation of proposals for settlement or for disposal of property; and to require additional data when necessary for settlement.

4. Information should be supplied in accordance with the requirements set forth on the forms. Failure to do this may result in delayed settlements.

5. The forms are designed to present information required for settlement of terminated contracts as well as for disposal of property resulting from such terminations. In connection with property disposal, contractors and contracting officers will be guided by the general policy that, without delaying the final settlement, surplus raw materials and work in process should be finally disposed of, to the extent practicable, promptly after termination so that delivery of property or passing of title to the Government will be unnecessary. Where the settlement proposal is less than an amount to be prescribed from time to time in regulations, all property involved should normally be finally disposed of so that no delivery or passing of title to the Government is involved.

TYPES OF STANDARD FORMS PROVIDED

1. The following outline indicates the individual forms provided and when they are to be used: (a) Where Settlement Proposal, before Disposal Credits, is $10,000 or over-Long Form Procedure.

Form A-1, Contractor's Settlement Proposal Summary Statement.

This statement is supported by a schedule of the contractor's own charges to date of terminationB-1 or B-2.

Form B-1, Contractor's Own Charges Schedule-If contractor is presenting his charges on an inventory basis.

Form B-2, Contractor's Own Charges Schedule-If contractor is presenting his charges on a total cost basis.

The "B" schedule is supported by inven-
tory forms:

Form C-1, Raw Materials, Pur-
chased Parts, and Supplies.
Form C-2, Work in Process.

Form C-3, Jigs, Tools, Dies, Fix-
tures, etc.

(b) Where Settlement Proposal, before Disposal Credits, is under $10,000-Combination Form Procedure.

The Combination Statement Form to be
used:

Form A-2, if contractor is presenting his
proposal on the inventory basis.
Form A-3, if contractor is presenting his
proposal on a total cost basis.

(c) Where Settlement Proposal is under
$500, the Short Form A-4 may be used.

2. Even though a particular settlement proposal, before disposal credits, is under $10,000 the contractor may use the "C" schedules if he finds them more appropriate, or he may use the entire long form procedure, if he prefers.

INVENTORY VS. TOTAL COST METHODS FOR PRESENTING PROPOSALS

1. Under the inventory method, the costs allocable to the work done on the uncompleted portion of the contract plus profit, if any, are presented in

FINISHED UNITS ON HAND AT DATE OF TERMINATION

1. Normally prime contractors will obtain payment for finished units at the contract price and such units will not be reported on inventory forms.

2. Subcontractors may not in all cases be permitted to obtain payment through regular billing procedure for finished units on hand at date of termination. If such finished units can properly be included in the settlement proposal under the existing contractual arrangements, they should be reported as follows:

Contractors Using Combination Form Procedure:

List and describe in Inventory Schedule provided on Form A-2 or A-3.

Contractors Using Long Form Procedure: Use a separate page of Form C-1 with headings appropriately modified.

INVENTORIES

1. In filling out the inventory schedules, it is permissible to lump small quantities of items under a "Sundry" caption with a general description of the type of items included, where the aggregate amount involved does not warrant greater detail. As a general rule, the cost of the items included under the "Sundry" caption should not total more than 20 percent of the total cost of the particular inventory classification or $1,000-whichever is less.

2. If the proposal is submitted on the inventory basis, no item of property for which the contractor does not propose to make a charge need be listed. If, however, the contractor seeks any profit on such items, the basis of such a charge must be clearly set forth.

MISCELLANEOUS INSTRUCTIONS

1. A separate set of forms should be submitted for each contract terminated unless grouping of several contracts of the same contractor for settlement purposes is approved by the contracting officer.

2. All certificates must be signed by authorized representatives of the contractor. Only one executed certificate is required for each form or schedule irrespective of the number of pagesunless additional certificates are requested by the contracting officer.

OTHER APPLICABLE REGULATIONS-WAR DEPARTMENT CONTRACTS

1. The general procedures for the handling of terminated War Department fixed price supply contracts are contained in Procurement Regulations No. 15. Instructions as to the accounting review of termination settlements by Government personnel are contained in TM 14-320, Termination Accounting Manual for Fixed Price Supply Contracts.

2. These regulations should be consulted by contractors as further guides as to the nature of the data to be presented in these standard forms.

TIME OF PRESENTING INDIVIDUAL FORMS

1. The plan here outlined may be followed, to the extent practicable:

(a) Submit "C" Inventory Schedules as

quickly as possible to facilitate disposition of inventory. Cost data should be completed to the extent practicable, without unduly delaying submission of forms. However, cost information is particularly needed for property disposal purposes in connection with property listed on the C-1 form.

(b) Submit "B" Contractor's Own Charges Schedule, supported by "C" schedules containing cost data, so that the accounting review of these charges may be started.

(c) Submit "A" Contractor's Settlement Proposal Summary Statement, which is the basis for the negotiation of a final settlement.

2. All of above forms and schedules may, however, be filed at one time. In some cases the "C" schedules can be filed first and then

the "B" schedule and "A" form be filed together. INVENTORY SCHEDULES

1. Where any inventory schedule requires the use of two or more sheets, the entire heading need not be repeated on the second and subsequent sheets. Only the contractor's name and the Government contract number need be repeated, plus the required page number information.

2. Inventory schedules listing Government owned property should be submitted only for property disposition purposes and should not be filed as a part of the Settlement Proposal. "Contractor Owned" inventory includes all property for which reimbursement may be claimed even though security title may have passed in connection with partial or progress payments.

3. Special instructions for describing inventory in column 2 of all "C" forms have been prescribed to facilitate property disposition and to comply with the requirements of the various property disposal agencies. These instructions are attached as Appendix A. Additional instructions and administrative interpretations may be given from time to time through contracting officers.

591911-44-3

RAW MATERIALS, PURCHASED PARTS, AND SUPPLIES (SCHEDULE C-1)

1. Purchased parts and components identified with a particular assembly may be listed together under the group heading in which the assembly would normally fall, notwithstanding the fact that they are standard parts or common components which would otherwise be included under the group headings listed below.

2. With the exception of the above, items should be listed under the following group headings. The group headings should be shown at the top of each group listing. A new page should be started for each group; or, in the case of small inventories, groups may be separated by extra space.

Crude animal and vegetable products, edible. Crude animal and vegetable products, inedible.

Fibers, vegetable and animal, unmanufactured.

Leather.

Boot and shoe cut stock and findings,

Wood basic materials.
Pulp, paper, and paperboard.
Textile basic manufactures.

Food and beverage basic materials.

Oils, fats, waxes, and derivatives, animal and vegetable.

Petroleum and coal products, except raw materials for cemical industries. Chemicals.

Paints, varnishes, lacquers, japans, thinners, pigments, driers, fillers, and related products.

Iron and steel, including pigs, ingots, castings and forgings (before machining), plates, sheets, strips, bars, structural shapes, piling, rails, tubular products, wire, and other shapes and forms.

Copper and copper-base alloy basic shapes and forms.

Aluminum and aluminum-base alloy basic

shapes and forms.

Magnesium and magnesium-base alloy basic shapes and forms.

Other nonferrous basic shapes and forms. Fabricated metal basic products, including basic hardware, wire products, insulated wire and cable, stamped, pressed, and perforated metal basic products. Nonmetallic mineral basic products, including natural stone products, clay products, glass basic products, hydraulic cements, concrete products, gypsum products, pottery basic products, mineral wool basic products, abrasive basic products, asbestos basic products, graphite and carbon products, mica and refractorie▾

Raw materials not clas ed above. Mechanical common components, including engines, pumps, power-transmission equipment, bearings, valves and steam specialties, lubrication equipment (i. e., standard components that can be used in more than one product). Electrical common components, including motors, controls, switches, wiring devices, lamps (i. e., standard components that can be used in more than one product). Noncommon components, parts, equipment, and accessories (i. e., components that can be used only in the particular industry in which any given product falls). For example, if the product is motor vehicle, the group heading should read "Motor Vehicle Noncommon Components" and should include automotive engines, tires, etc. If the product is aircraft, the group heading would read "Aircraft Noncommon Components" and should include aircraft hardware, aircraft electrical fittings, etc.). Containers and closures. Purchased parts and supplies not classified above.

WORK IN PROCESS (SCHEDULE C-2)

Property should be segregated into groups of similar items; for instance, component parts of a particular subassembly should be grouped to

gether, completed subassemblies should be shown in the same group, partially fabricated items of the same general type should be listed together. Appropriate headings should be used for the different groups so that a prospective buyer may readily locate the type of property in which he is interested. Whenever practicable, the group headings set forth for Schedule C-1 should be used for this purpose.

Parts fabricated by the contractor should be included in the Inventory Schedule C-2 for Work in Process to the extent practicable. Where such parts are not easily segregated by the contractor from similar items of purchased parts, it is permissible to include them with purchased parts in Inventory Schedule C-1 for "Raw Materials, Purchased Parts, and Supplies." The term "Manufactured Parts" is intended to represent completely fabricated units which are identifiable as piece parts or subassemblies and which have been manufactured in the contractor's own plant.

JIGS, TOOLS, DIES, FIXTURES, ETC. (SCHEDULE C-3)

Items should be listed under the following group headings. The group headings should be shown at the top of each group listing. A new page should be started for each group; or, in the case of small inventories, groups may be separated by extra space:

Gages and precision measuring instruments.
Perishable tools.

Jigs, dies, and fixtures.

LARGER ITEMS OF PRODUCTION EQUIPMENT UNDER SCHEDULE C-3

This form should also prove satisfactory for the

listing of major items of production equipment for property disposal, particularly Government-furnished production equipment. When used for such purposes, items should be listed under the following group headings (attachments, accessories, and auxiliaries should be included with the major item of equipment to which they pertain):

General-purpose industrial machinery and

equipment, including engines and turbines, compressors and pumps, conveyors, cranes, derricks, hoists and winches, industrial trucks, trailers, tractors, and stackers, and fan and blower equipment.

Electrical machinery and apparatus, includ-
ing rotating equipment, transmission and
distribution equipment, motor starters and
controllers.

Special industry machinery (machinery for
industries requiring specialized machines).
Metal-working machinery, including machine
tools, primary and secondary metal form-
ing and cutting machinery and equipment.
Office machines.
Motor vehicles.

Furniture and fixtures.

Miscellaneous machinery and equipment.

NOTE. In order to assist in classifying property as specified above, it is expected that a supplement will be issued at an early date setting forth alphabetically some 1,500 items and types of property frequently encountered in contract terminations, and indicating under which of the classifications specified in these Supplementary Instructions particular property should be listed. The Standard Commodity Classification Number for each item and type will also be indicated.