Page:United States Statutes at Large Volume 58 Part 1.djvu/673

 58 STAT.] 78TH CONG. , 2D SESS.-CH. 358-JULY 1, 1944 653 or for advance or partial payments, but amounts payable under such settlement agreement for completed articles or work at the contract price and for the discharge of the termination claims of subcon- tractors shall be deducted. (d) Except as hereinafter provided, the methods and standards ertem to be conid. established under subsection (b) of this section for determining fair fair compensation compensation for termination claims which are not settled by agree- ment shall be designed to compensate the war contractor fairly for the termination of the war contract, taking into account- (1) the direct and indirect manufacturing, selling and distri- bution, administrative and other costs and expenses incurred by the war contractor which are reasonably necessary for the per- formance of the war contract and properly allocable to the ter- minated portion thereof under recognized commercial accounting practices; and (2) reasonable costs and expenses of settling termination claims of subcontractors related to the terminated portion of the war contract; and (3) reasonable accounting, legal, clerical, and other costs and expenses incident to termination and settlement of the terminated war contract; and (4) reasonable costs and expenses of removing, preserving, storing and disposing of termination inventories; and (5) such allowance for profit on the preparations made and work done for the terminated portion of the war contract as is reasonable under the circumstances; and (6) interest on the termination claim in accordance with sub- section (f) of this section; and (7) the contract price and all amounts otherwise paid or pay- able under the contract. The following shall not be included as elements of cost: Items (i) Losses on other contracts, or from sales or exchanges of capital assets, fees and other expenses in connection with reorganization or recapitalization, antitrust or Federal income-tax litigation, or prosecu- tion of Federal income-tax claims or other claims against the Govern- ment (except as provided in paragraph (3) above); losses on invest- ments; provisions for contingencies; and premiums on life insurance where the contractor is the beneficiary. b (ii) The expense of conversion of the contractor's facilities to uses other than the performance of the contract. (iii) Expenses due to the negligence or willful failure of the con- tractor to discontinue with reasonable promptness the incurring of expenses after the effective date of the termination notice. (iv) Costs incurred in respect to facilities, materials, or services purchased or work done in excess of the reasonable quantitative requirements of the entire contract. The failure specifically to mention in this subsection any item of IctemJenot cost is not intended to imply that it should be allowed or disallowed. cy The Director may interpret the provisions of this subsection (d) and may provide for the inclusion or exclusion of other costs in accordance with recognized commercial accounting practice. Where the small size of claims or the nature of production or Ad te n otive m et performance or other factors make it impracticable to apply the prin- fai compenain. ciples stated in this subsection (d) to any class of settlements which are subject to this subsection (d), the contracting agencies may estab- lish alternative methods and standards for determining fair compen- sation for that class of termination claims. The aggregate amount UMa" aomp' of compensation allowed in accordance with this subction (exad- ing amounts allowed under paragraphs (3) and (4) above) shall not

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