activity that all or substantially all of the quantity purchased is intended for ultimate installation or physical incorporation in aircraft.

(v) For the purpose of section 622 of the National Military Establishment Appropriation Act, 1950 and section 618 of the General Appropriation Act, 1951, the term "negotiated contracts" means (1) all contracts entered into by or on behalf of the Department of Defense (including the Department of the Army, Department of the Navy, and Department of the Air Force) pursuant to authority of one or more of the exceptions set forth in section 2 (c) of the Armed Services Procurement Act of 1947, Public Law 413, 80th Congress and all contracts for construction work entered into pursuant to authority contained in section 2 (e) of said act, and (2) all contracts entered into by or on behalf of the Department of Defense (including the Department of the Army, Department of the Navy and Department of the Air Force) without formal advertising pursuant to other statutory authorization either dispensing with or not. requiring formal advertising.

(w) For the purpose of section 622 of the National Military Establishment Appropriation Act, 1950 and section 618 of the General Appropriation Act, 1951, the term "procurement" means the purchasing, renting, leasing, or otherwise obtaining or acquiring any property, thing, or service, or any combination thereof.

(x) The term "Board" means the Renegotiation Board created by section 107 (a) of the Renegotiation Act of 1951 (Pub. Law 9, 82d Cong.).

(y) The term "Regional Board" means a Regional Board created by the Board by section 1 of the "Delegation of Authority to Regional Boards under the Renegotiation Acts of 1948 and 1951", dated February 8, 1952 (see 17 F. R. 1401).

[13 F. R. 8641, Dec. 29, 1948, as amended by Amdt. 5, 15 F. R. 168, Jan. 12, 1950; Amdt. 10, 15 F. R. 6987, Oct. 19, 1950; 17 F. R. 1384, Feb. 13, 1952]

Subpart C-Organization and Func

tion of the Renegotiation Board SOURCE: The provisions of this Subpart C appear at 17 F.R. 7218, Aug. 8, 1952; 17 F.R. 8362, Sept. 17, 1952, unless otherwise noted. § 1421.130 Statutory authority.

§ 1421.130-1 Renegotiation Act of 1948. The authority and discretion to administer the Renegotiation Act of 1948

are conferred upon the Secretary of Defense with power of delegation (subsections (f) and (g); see § 1428.801 of this subchapter).

§ 1421.130-2 Renegotiation Act of 1951.

Section 107(f) of the Renegotiation Act of 1951 provides in part that, notwithstanding any other provisions of law, the Secretary of Defense is authorized to delegate, in whole or in part, to The Renegotiation Board created by that act, the powers, functions and duties conferred upon him by any other renegotiation law.

§ 1421.131

Delegation by the Secretary of Defense to The Renegotiation Board.

On January 18, 1952, effective January 20, 1952, the Secretary of Defense delegated to The Renegotiation Board all of the powers, functions and duties conferred upon him by the Renegotiation Act of 1948, as amended or supplemented (see § 1428.825 of this subchapter).

§ 1421.132 Redelegation by The Renegotiation Board to the Secretary of Defense.

On January 20, 1952, The Renegotiation Board redelegated to the Secretary of Defense the power, function and duty of eliminating excessive profits under subsection (b) of the Renegotiation Act of 1948, as amended or supplemented, with power of redelegation (see § 1428.826 of this subchapter). § 1421.133 Redelegation by the Secretary of Defense to the Secretaries of the Army, Navy and Air Force. On January 20, 1952, the Secretary of Defense redelegated to each of the Secretaries of the Army, the Navy and the Air Force, respectively, the power, function and duty of eliminating excessive profits under subsection (b) of the Renegotiation Act of 1948, as amended or supplemented with power of redelegation (see § 1428.827 of this subchapter). Subpart D-Relation of Renegotiation Act and Royalty Adjustment Act Concerning Patents

SOURCE: The provisions of this Subpart D appear at 13 F.R. 8641, Dec. 29, 1948, unless otherwise noted.

§ 1421.141 Royalty Adjustment Act.

(a) Under Public Law 768, 77th Congress, approved October 31, 1942, whenever an invention, patented or unpat

ented, is manufactured or used for the United States, with license from the owner, and such license provides for the payment of royalties at rates or amounts "believed to be unreasonable or excessive by the head of the Department or agency of the Government which has ordered such manufacture, use," etc., the head of the Department concerned shall notify the licensor and licensee. Within a reasonable time thereafter, he shall “fix and specify such rates or amounts of royalties, if any, as he shall determine are fair and just," and shall authorize the payment thereof by the licensee to the licensor. Under the statute, the licensee must not thereafter pay to the licensor or charge to the United States a royalty in excess of that specified in the order, and the licensor's sole and exclusive remedy for royalties in excess thereof is by suit in the Court of Claims or in such district courts as have concurrent jurisdiction.

(b) The Royalty Adjustment Act is in effect during the continuance of the war and for six months thereafter. It does not preclude the applicability of the Renegotiation Act of 1948. § 1421.142

Patent licenses subject to

1422.245-1

Statutory provision. Commencement

tion.

of renegotia

by

Conduct of renegotiation

Regional Board.

Conduct of renegotiation by Board.

Filing of information and re

quests by contractor.

Scope.

1422.245-2 Form and contents for fillings.

1422.245-3 Place for filing.

1422.245-4

Time for filing.

Subpart E-Clearance Procedure

When clearance procedure used.
Determination

1422.251 1422.252

by

Board.

1422.252-1

Class A cases.

1422.252-2

Class B cases.

1422.253

1422.254

Regional

Determination by Board.

Form of clearance.

1422.292 Furnishing of other statements. 1422.293 Requests for statements. Subpart J-Control of Renegotiation Records and Information Contained Therein

Subpart A-[Reserved]

Subpart B-Preliminary Information Required of Contractors

AUTHORITY: The provisions of this Subpart B issued under sec. 8, 62 Stat. 259; 50 U.S.C. App., 1193.

SOURCE: The provisions of this Subpart B appear at 13 F.R. 8644, Dec. 29, 1948, unless otherwise noted.

§ 1422.221 Statutory provision.

Subsection (c) of section 3 of the Renegotiation Act of 1948 provides as follows:

For the purpose of administering this section the Secretary of Defense shall have the right to audit the books and records of any contractor or subcontractor subject to this section. In the interest of economy and the avoidance of duplication of inspection and audit, the services of the Bureau of Internal Revenue shall, upon request of the Secretary of Defense and with the approval of the Secretary of the Treasury, be made available to the extent determined by the Secretary of the Treasury for the purpose of making examinations and audits under this section.

Subsection (f) of section 3 of the Renegotiation Act of 1948 provides, in part, as follows:

The Secretary of Defense shall promulgate and publish in the FEDERAL REGISTER regulations interpreting and applying this section and prescribing standards and procedures for determining and eliminating excessive profits hereunder using so far as he deems practicable the principles and procedures of the Renegotiation Act of February 25, 1944, as amended, having regard for the different economic conditions existing on or after the effective date of this Act from those prevailing during the period 1942 to 1945 •

Subsection (h) of section 3 of the Renegotiation Act of 1948 provides as follows:

Any person who willfully fails or refuses to furnish any information, records, or data required of him under this section, or who

In accordance with the statutory authority quoted in § 1422.221:

(a) The "Standard Form of Contractor's Report" as set forth in § 1427.702 of this subchapter is hereby prescribed as the form of mandatory statement generally required to be filed by contractors and subcontractors.

(b) No special form is prescribed for construction contractors, architects and engineers. Such contractors should adapt this "Standard Form of Contractor's Report" to the particular needs of the case.

§ 1422.222-2 Sufficiency of contents.

Except as stated in this part, the forms of "Standard Form of Contractor's Report" are required to be prepared in accordance with the instructions which relate to them and which appear in § 1427.702-1 of this subchapter. The reports are required to contain all applicable information and exhibits specified by the forms and the instructions. However, if any of the information called for by the appropriate "Standard Form of Contractor's Report" for a fiscal year has been furnished previously by the contractor, the contractor may complete the "Standard Form of Contractor's Report" by incorporating by reference the information so furnished and making a specific statement of the time and place of such filing.

[13 F. R. 8644, Dec. 29, 1948, as amended by Amdt. 10, 15 F. R. 6987, Oct. 16, 1950] § 1422.222-3 Time for filing.

The mandatory statements hereby prescribed shall be filed on or before the last day of the fifth month following the close of the contractor's fiscal year whether or not any specific request for filing has been made.

§ 1422.222-4 Place for filing.

The mandatory statements hereby prescribed shall be filed in duplicate with The Renegotiation Board, Washington 25, D.C.

[13 F. R. 8644, Dec. 29, 1948, as amended at 17 F. R. 1384, Feb. 13, 1952]

The filing of a mandatory statement in accordance with the provisions of §§ 1422.222 to 1422.222-7 will not relieve any contractor or subcontractor of the duty to furnish such other information, records or data which are determined by the renegotiating agency to be necessary to carry out its responsibilities under the act.

§ 1422.222–7 Filing of mandatory statements on a consolidated basis.

Parent and subsidiary corporations which constitute an “affiliated group" as defined in subsection (d) of section 141 of the Internal Revenue Code may satisfy the requirements for filing of mandatory statements under the Renegotiation Act of 1948 by filing a "Standard Form of Contractor's Report" on a consolidated basis. When such a consolidated "Standard Form of Contractor's Report" is filed there shall also be filed a "Standard Form of Contractor's Report" for each subsidiary corporation (except as noted below) but any such subsidiary corporation report may be completed by writing thereon a statement that a consolidated report has been filed by the parent company. Where any such subsidiary corporation has not received or accrued during the applicable period any amount whatever under subject contracts and subcontracts no separate report need be filed by it. The filing of a consolidated "Standard Form of Contractor's Report" does not necessarily commit the members of the group to renegotiation on a consolidated basis nor does the acceptance of such a filing commit the Government to this course. Commonly owned enterprises not constituting an "affiliated group" and, therefore, not entitled to file a consolidated "Standard Form of Contractor's Report" may nevertheless be renegotiated upon a consolidated basis if mutually agreeable (see § 1423.309 of this subchapter).

50-078-71- -2

§ 1422.223 quiry.

§ 1422.223-1

Letter of preliminary in

Unassigned contractors.

The Board may send to contractors and subcontractors the "Letter of Preliminary Inquiry" (set forth in § 1427.701 of this subchapter) for the purpose of determining whether the contractor should be assigned for renegotiation and to what Division such assignment, if any, should be made.

§ 1422.223-2 Assigned contractors.

The Renegotiation Division may send to contractors who have been assigned to them for renegotiation the "Letter of Preliminary Inquiry" (set forth in § 1427.701 of this subchapter) and the appropriate "Standard Form of Contractor's Report." In such cases, the filing of the "Standard Form of Contractor's Report" will constitute compliance with the requirements of mandatory filing under §§ 1422.222 to 1422.222-7 if filed within the time prescribed, and, with respect to assigned cases, will enable a determination to be made as to whether further renegotiation proceedings will be necessary. If it is decided that no further action is necessary the contractor will be so advised. § 1422.224 Contractor's information and work sheet for renegotiation. The Board may send to a contractor or subcontractor a form designed to assist him in preparing information when it is contemplated that formal renegotiation proceedings will be carried to conclusion (see § 1422.242). The form prepared for the use of supply contractors is the "Contractor's Information and Work Sheet for Renegotiation" (see § 1427.704 of this subchapter).

Subpart C-Assignment of Contractors for Renegotiation

AUTHORITY: The provisions of this Subpart C issued under sec. 109, 65 Stat. 22; 50 U.S.C. App. 1219.

SOURCE: The provisions of this Subpart C appear at 17 F.R. 1384, Feb. 13, 1952, unless otherwise noted.

§ 1422.231 When assignment is made.

After receipt of a Standard Form of Contractor's Report from a contractor, the Board will assign the case to a Regional Board for renegotiation if it determines that further proceedings in the matter are warranted. Generally, an assignment will be made whenever a

contractor's receipts and accruals during a fiscal year are in excess of the statutory minimum. (See § 1423.347 of this subchapter.) However, no assignment will be made when the Board can readily decide on the basis of the information contained in the Standard Form of Contractor's Report that the contractor has not realized excessive profits for the fiscal year and that no purpose would be served by making an assignment to a Regional Board. If the Board decides not to make an assignment, the Board will notify the contractor to this effect and will not take any further action with respect to the fiscal year, in the absence of a subsequent indication that there is a possibility that the contractor has realized excessive profits for such fiscal year.

§ 1422.232 How assignment is made. § 1422.232-1 Assignment to a Regional Board.

An assignment may be made to a Regional Board on some basis other than geographical in an appropriate case when it is believed that such assignment will promote efficiency in the renegotiation procedure. Similarly, the Board will reassign a case from one Regional Board to another if it appears that efficiency of renegotiation procedure will be promoted thereby.

§ 1422.232-2 Designation of cases.

At the time of assignment, every case will be designated by the Board as either a Class A case or a Class B case. Generally, a Class A case will be one in which the contractor reports on the Standard Form of Contractor's Report that it has derived from subject contracts profits of more than $400,000, and a Class B case will be one in which the contractor reports on the Standard Form of Contractor's Report that it has derived from subject contracts profits of $400,000 or less. The Board has delegated to the Regional Boards authority (a) in Class A cases, to make recommended determinations of excessive profits to the Board for final determination by the Board, and (b) in Class B cases, to make final determinations of excessive profits. § 1422.232-3

Notification to contractor

of assignment.

The Regional Board to which the case is assigned will notify the contractor of the assignment and will also advise the contractor whether the case is a Class A case or a Class B case.

[17 F. R. 2045, Mar. 8, 1952]

§ 1422.233-1 Class A cases.

The Board will cancel an assignment in a Class A case whenever it appears that the contractor has not realized excessive profits for the fiscal year in question. Ordinarily, the Board will cancel an assignment only after the Regional Board to which the assignment has been made has advised the Board that in its opinion the contractor has not realized excessive profits and that the assignment should be canceled.

(17 F. R. 2045, Mar. 8, 1952]

§ 1422.233-2 Class B cases.

The Regional Board to which a Class B case is assigned may cancel such assignment whenever it appears that the contractor has not realized excessive profits for the fiscal year in question. [17 F. R. 2045, Mar. 8, 1952] § 1422.233-3

Effect of cancellation.

After an assignment has been canceled, no further action will be taken by the Board or the Regional Board, as the case may be, with respect to the fiscal year in question in the absence of a subsequent indication that there is a possibility that the contractor has realized excessive profits for such fiscal year.

[17 F. R. 2045, Mar. 8, 1952]

§ 1422.234 Reassignment to Board.

A case will be reassigned from a Regional Board to the Board in the circumstances set forth in § 1422.244.

Subpart D-Conduct of Renegotiation

AUTHORITY: The provisions of this Subpart D issued under sec. 109, 65 Stat. 22; 50 U.S.C. App. 1219.

Subsection (b) of the act provides in part as follows:

Whenever in the opinion of the Secretary of Defense excessive profits are reflected under any contract or contracts or subcontract or subcontracts required to contain the Renegotiation Article prescribed in subsection (a), the Secretary is authorized and directed to renegotiate such contracts and subcontracts for the purpose of eliminating excessive profits. He shall endeavor to make an agreement with the contractor or subcontractor with respect to the amount, if any, of such excessive profits and to their elimination. If no such agreement 18