would be subject to this title except for the provisions of section 106 (e).3 SEC. 103. DEFINITIONS. For the purposes of this title (a) DEPARTMENT.-The term "Department" means the Department of Defense, the Department of the Army, the Department of the Navy, the Department of the Air Force, the Maritime Administration, the Federal Maritime Board, the General Services Administration, the National Aeronautics and Space Administration, the Federal Aviation Agency and the Atomic Energy Commission. Such term also includes any other agency of the Government exercising functions having a direct and immediate connection with the national defense which is designated by the President during a national emergency proclaimed by the President, or declared by the Congress, after the date of the enactment of the Renegotiation Amendments Act of 1956; but such designation shall cease to be in effect on the last day of the month during which such national emergency is terminated.* (b) SECRETARY.-The term "Secretary" means the Secretary of Defense, the Secretary of the Army, the Secretary of the Navy, the Secretary of the Air Force, the Secretary of Commerce (with respect to the Maritime Administration), the Federal Maritime Board, the Administrator of General Services, the Administrator of the National Aeronautics and Space Administration, the Administrator of the Federal Aviation Agency, the Atomic Energy Commission, and the head of any other agency of the Government which the President shall designate as a Department pursuant to subsection (a) of this section.5 (c) BOARD.-The term "Board" means the Renegotiation Board created by section 107 (a) of this Act. (d) RENEGOTIATE AND RENEGOTIATION.-The terms "renegotiate" and "renegotiation" include a determination by agreement or order under this title of the amount of any excessive profits. (e) EXCESSIVE PROFITS.-The term "excessive profits" means the portion of the profits derived from contracts with the Departments 3 Matter in italics in section 102 (e) was added by Pub. Law 216, 84th Cong., approved August 3, 1955, as amended by Pub. Law 870, 84th Cong., approved August 1, 1956, and applies only to the extent of amounts received or accrued after December 31, 1953. Pub. Law 870 changed "section 106 (a) (8)" to "section 106(e)" with respect to fiscal years ending after June 30, 1956. Section 103(a) was amended by Pub. Law 870, 84th Cong., approved August 1, 1956, which struck out, effective December 31, 1956, the Department of Commerce, the Reconstruction Finance Corporation, the Canal Zone Government, the Panama Canal Company, the Housing and Home Finance Agency, and such other agencies of the Government as were designated by the President under the former subsection (a). Federal Civil Defense Administration, National Advisory Committee for Aeronautics, Tennessee Valley Authority, and U.S. Coast Guard were designated by Executive Order 10260, dated June 27, 1951; Defense Materials Procurement Agency, Bureau of Mines, and (United States) Geological Survey by Executive Order 10294, September 28, 1951; Bonneville Power Administration by Executive Order 10299, October 31, 1951; Bureau of Reclamation by Executive Order 10369, June 30, 1952; and Federal Facilities Corporation by Executive Order 10567, September 29, 1954. Section 103 (a) was further amended by Pub. Law 85-930, 85th Cong., approved September 6, 1958, which added the National Aeronautics and Space Administration and which made section 103 (a) applicable to contracts entered into by such Administration and to contracts transferred to such Administration from a Department under section 301 or 302 of the National Aeronautics and Space Act of 1958, and to related subcontracts; and by Pub. Law 88-339, 88th Cong., approved June 30, 1964, which added the Federal Aviation Agency and which made section 103(a) applicable to contracts with such Agency, and related subcontracts, to the extent of the amounts received or accrued by a contractor or subcontractor after June 30, 1964. 5 Matter in italics in section 103(b), except the references to the Administrator of the National Aeronautics and Space Administration and the Administration of the Federal Aviation Agency, was added by Pub. Law 870, 84th Cong., approved August 1, 1956, which also changed "the Chairman of the Atomic Energy Commission" to "the Atomic Energy Commission" and struck out the Board of Directors of the Reconstruction Finance Corporation, the Governor of the Canal Zone, the President of the Panama Canal Company, and the Housing and Home Finance Administrator, all effective on December 31, 1956. The Administrator of the National Aeronautics and Space Administration was added by Pub. Law 85-930, 85th Cong., approved September 6, 1958. The Administrator of the Federal Aviation Agency was added by Pub. Law 88-339, 88th Cong., approved June 30, 1964. reau of Internal Revenue (1942 edition) or, if an average useful life is not so set forth, then as estimated by the Board. (2) Definitions.-For the purpose of this subsection (A) the term "durable productive equipment" means machinery, tools, or other equipment which does not become a part of an end product acquired by any agency of the Government under a contract with a department, or of an article incorporated therein, and which has an average useful life of more than five years; and (B) the term "subcontracts for new durable productive equipment" does not include subcontracts where the purchaser of such durable productive equipment has acquired such equipment for the account of the Government, but includes pool orders and similar commitments placed in the first instance by a Department or other agency of the Government when title to the equipment is transferred on delivery thereof or within one year thereafter to a contractor or subcontractor. 1454.2 Application of act to subcontracts for new durable productive equipment.-The foregoing exemption has the effect of making the act applicable to subcontracts for new durable productive equipment only to the extent of that part of the amounts received or accrued in a fiscal year ending before June 30, 1953 after the effective date applicable to the related paragraph (c) of this section will be applied ance of prime contracts and subcontracts subject to the act, in the fiscal year of such contractor immediately preceding the year under review, will be allowed as a cost in the renegotiation of such contractor in the year under review to the extent that such loss did not result from the gross inefficiency of such contractor, and if such loss was sustained in a year ending on or after January 1, 1951. In computing a loss in a preceding fiscal year, no amount of a loss sustained in a year before such preceding fiscal year may be considered. If an over-all loss was sustained by the contractor during a preceding fiscal year ended during 1950, in the performance of prime contracts and subcontracts renegotiable under any law, such loss is a factor which may be considered in determining the reasonableness of profits in the year under review to the extent that such loss did not result from the gross inefficiency of the contractor. Any prime contractor claiming allowance or consideration for a loss suffered in a preceding fiscal year must show that it has reasonably pursued all remedies afforded by any agency of the Government for obtaining relief from such loss. (e) Over-all loss of consolidated group.For the treatment of an over-all loss sustained by a contractor in the fiscal year preceding the year under review, when such contractor was a member of a consolidated group in such preceding fiscal year or is a member of a consolidated group in the year under review, see § 1464.12 of this subchapter. (c) Proration of allowance among fiscal years.-When the twelve months immediately following the close of the fiscal year in which an over-all loss was sustained are included in more than one successive fiscal year of the contractor, such loss will be prorated over such twelve months and a pro rata share of such loss will be allowed as a cost in each of such fiscal years which includes any part of such twelve months if, in the opinion of the Board, the allowance of such cost in more than one such fiscal year is necessary to avoid inequity and undue hardship. During such year, it had receipts or accurals from prime contracts and/or subcontracts subject to the Renegotiation Act of 1948 and also had receipts or accruals from prime contracts and/or subcontracts subject to the Renegotiation Act of 1951. (d) Allowance upon acquisition of business. When a contractor acquires the business of another contractor within twelve (12) months after the close of a fiscal year in which such other contractor sustained an over-all loss, the acquiring contractor will be allowed to charge such loss as a cost if, in the opinion of the Board, such allowance is necessary to avoid inequity and undue hardship. Acquisitions within the scope of this paragraph include those effected by inheritance, transfer or exchange, either inter vivos or by operation of law, including transfer or exchange of physical assets or of rights of ownership. The principles of 3-1-67 It is hereby requested that you agree, pursuant to section 102 (c) of the Renegotiation Act of 1951, to the application of Title I of such act to amounts which were received or accrued by the undersigned company before January 1, 1951. It is the understanding of the undersigned company that the receipts or accurals before January 1, 1951, to which Title I of the Renegotiation Act of 1951 will apply, in the event of your approval of this request, will be determined under the provisions of the 1948 Act and the Military Renegotiation Regulations issued pursuant thereto, and that this company will be entitled to the benefit of applicable mandatory and permissive exemptions from renegotiation under the 1948 Act in the same manner and to the same extent as if this agreement had not been made. The undersigned company understands, however, that it will not be entitled to the benefit of any mandatory (partial or complete) or permissive exemptions from renegotiation under the 1951 Act insofar as receipts or accruals before Janu (A-11) ary 1, 1951 are concerned. The renegotiable receipts or accruals of this company after December 31, 1950 will be determined, of course, under the provisions of the Renegotiation Act of 1951. It is also understood. in accordance with section 105 (f) (3) of the 1951 Act, that the limitation and "floor" applicable to the fiscal year covered by this agreement shall be $250,000. It is further understood and agreed that the periods of limitation for the commencement and completion of renegotiation proceedings for the fiscal year of this company covered by this agreement shall be as prescribed in section 105(c) of the Renegotiation Act of 1951 and that the periods of limitation for the commencement and completion of renegotiation proceedings set forth in section 202 of the Renegotiation Act of 1951 shall have no application to such year. Yours very truly, (b) In the case of a fiscal year beginning in 1950 and ending in 1951, the $250,000 amount and the $25,000 amount will be reduced to an amount which bears the same ratio to $250,000 or $25,000, as the case may be, as the number of days in such fiscal year after December 31, 1950, bears to 365. This provision will not be applicable if the contractor and the Board enter into an agreement with respect to said fiscal year for combined renegotiation pursuant to section 102(c) of the act. (c) In the case of a fiscal year beginning in 1950 and ending in 1951 and which is a fractional part of twelve months, the $250,000 amount and the $25,000 amount will be reduced to the same fractional part thereof if the contractor and the Board enter into an agreement with respect to said fiscal year for combined renegotiation pursuant to section 102(c) of the before March 31, 1962.-(1) Items of advertising expense comprising "help wanted" advertising, advertising in trade publications which are primarily directed to the dissemination of technical information within the contractor's industry, catalogues and technical pamphlets designed to aid users of the contractor's products, and house organs and other publications directed to labor and personnel management and relations, are recognized as costs allocable to renegotiable business. The aggregate of such costs will be allocated in accordance with the method of accounting found by the Board to be acceptable under section 1459.1 (b) of this subchapter. (2) Other advertising expense is allocable to renegotiable business as follows: (i) In the case of renegotiable business performed under subcontracts, advertising expense will be allocated thereto provided that the products sold under such subcontracts are substantially the same as those sold in such subcontractor's normal commercial business. In the allocation of such advertising expense consideration will be given to (a) the volume of nonrenegotiable business in the year under review as contrasted with the subcontractor's normal volume of commercial business, and (b) the total amount of such advertising expense in the year under review as contrasted with the subcontractor's normal advertising expense. (ii) In cases in which it can be demonstrated that a prime contractor or subcontractor engaged in renegotiable business to the detriment of its normal commercial business in the year under review, and thereby incurred the risk of loss of its competitive position in the industry concerned, the Board will allocate to renegotiable business that portion of the prime contractor's or subcontractor's normal advertising expense which the Board deems properly attributable to the effort by the prime contractor or subcontractor to forestall such loss of competitive position. (iii) When a prime contractor sells materials with brand names or of a proprietary nature to a Department for free issue by such Department to government personnel, and the Board is satisfied that the quantities purchased by the Department are determined in general by the preference of the ultimate consumers, advertising expense will be allocated to the rene |