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FEDERAL
VOLUME 11

REGISTER
4 J N1 9n3t4o
,
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NUMBER 196

,
Washington Tuesday October 8, 1946
The President "
EXECUTIVE ORDER 9786
R egulations G overning the C onsidera tion , A djustm ent , and S ettlement of C laims U nder P ublic L aw 657, A p
proved August 7, 1946

By virtue of and pursuant to section 1 of Public Law 657, 79th Congress, 2d Session, approved August 7, 1946, and in the interest of the expeditious disposi tion of claims under contracts to which this order is applicable, the following Regulations are hereby prescribed to gov ern the filing, consideration, adjustment, and settlement of claims by contractors against departments and agencies of the Government under the said Public Law.
PART I DEFINITIONS

101. As used in these Regulations 101.1 The term Act means Public Law 657, 79th Congress, 2d Session, ap proved August 7, 1946.
101.2 The term agency means any department or agency of the Govern ment.
101.3 The term war agency means any department or agency of the Gov ernment which, prior to August 14, 1945, was authorized to enter into contracts and amendments or modifications of con tracts under section 201 of the First War Powers Act, 1941 50 U. S. C., Supp. IV, App., sec. 611. The term war agency also includes any successor agency stand ing in the place of an agency so author ized.
101.4 The term statutory period"
means the period September 16, 1940, to August 14, 1945, inclusive.
101.5 The term contract means any agreement of any kind whether in the form of a letter of intent, purchase order, or otherwise entered into by an agency pursuant to which work, supplies, or services were furnished by the contractor to the Government at any time during the statutory period.
101.6 The term subcontract means any agreement of any kind whether in the form of a letter of intent, purchase order, or otherwise pursuant to which work, supplies, or services required for the performance of a prime contract were
furnished by a subcontractor including a materialman to a prime contractor or higher tier subcontractor of any agency at any time during the statutory period.
m 101.7 The term cost of performance means the reasonable and necessary cost to a contractor or subcontractor of work, supplies, or services furnished during the statutory period pursuant to a contract or subcontract, determined in accordance with the accounting practices of the con tractor or subcontractor consistently ap plied during performance of the contract or subcontract, provided such practices accord with recognized commercial ac counting practices. Such cost shall in clude, to the extent reasonable and neces sary, direct costs and a properly allocable proportion of indirect costs, but shall not include the following items:
a. Interest on invested capital.
b. Unreasonable compensation paid to officers or employees, including any com pensation in excess of wages or salaries approved under applicable wage and sal ary stabilization regulations; bonuses which constitute a distribution of profits;
and royalties paid to officers and em ployees.
c. Profit on transactions with business enterprises, of any kind, directly or indi rectly controlling, controlled by, or under common control with, the contractor or subcontractor.
d. Cost of unreasonable spoilage or de fective work and excessive inventories of materials and supplies.
e. Entertainment, expenses.
/. Donations.
g. Taxes and expenses on issues and transfers of stock.
h. Income and excess profits taxes.
i. Losses on other contracts or sub contracts, not limited to contracts and subcontracts as herein defined; losses from sales or exchanges of capital assets;
losses on investments; and bad debt losses and charges to reserves therefor, includ ing expenses of collection and exchange.
j. Cost or losses arising from fraud or wilful misconduct of any officer, em ployee, or agent, or negligence of any officer, of the contractor or subcontractor.
k. Fines and penalties.
l. Amortization of unrealized appre ciation of values of assets; amortization Continued on p. 11555

CONTENTS
THE PRESIDENT
E xecutive O rders :

Page
Claims by contractors against
departments and agencies of Government; filing, con sideration, adjustment and settlem ent__ ___________ 11553
San Clemente Island Naval De fensive Sea Area; establish ment ___
11556
REGULATIONS AND NOTICES
A lien P roperty C ustodian :

Vesting orders, etc.:
Aoki, Fukuitsu_____________ 11616
Numninghoff, Dr. Richard___ 11616
Shimada, Masuzuchi______11617
Spieles, Nicholas___________ 11617
Stamer, Franz C_________
11618
Steinbrenner, Anna C______11618
Ude, Ernest_______________ 11618
Walter, F red-_____________ 11619
Winkler, Laura_____________ 11619
Zickerman, Charles__________11619
C ivil A eronautics B oard :

Certification of aircraft radio equipment; non compliance of requirements_________ 11556
Transportation of property;
Universal Air Freight_____ 11597
C ivilian P roduction Administra
t io n :

Priorities system operation PR
33; Sch. A_______________ 11560
Ratings for equipment to es tablish veterans in busi ness, restriction on use PR 28, Dir. 20_______ 11560
Suspension orders, etc.:
Co-Ed Rollerdrome Co______11563
Cohen Hardware & Xumber Co., Inc_ 11597
Lowe Supply Co___ ___
11563
Robbins, R. G., Lumber Co., In c ___________________11563
Stewart Construction Co___ 11563
Veterans emergency housing program:
Construction and repairs, re strictions VHP-1 _i___ 11564
Non-structural items VHP-1, Supp. 4 ______________ 11568
Structures, small job allow ances and classification VHP-1, Supp. 3_______ 11566
11553