renegotiation refunds and that the amount of such reserves established in individual situations will vary widely depending upon the policy of the particular contractor concerned. Neither the existence nor the amount of such reserves is to be considered directly or indirectly in connection with the determination of excessive profits. The Board recognizes that conservative practice may result in setting up such reserves in excess of the anticipated liability and will not permit such a practice to prejudice the contractor in any way. 1460.3 Adjustment of sales.-The amount of excessive profits is always deducted from the renegotiable receipts or accruals, as well as from the profit thereon, for the purposes of determining the relation of retained profits to sales. 1460.4 Overextended contractors.-A contractor's lack of adequate working capital will not be taken into consideration in determining excessive profits to be eliminated. 1460.5 Minimum refund.-Except as hereinafter provided, and in the absence of unusual circumstances, no determination of excessive profits shall be made if such excessive profits before adjustment for State taxes measured by income amount to (paragraphs (a) and (b) removed to Appendix), or (c) less than $40,000 with respect to any fiscal year ending on or after June 30, 1953, or (d) less than $10,000 with respect to any fiscal year in the case of subcontracts described in section 103 (g) (3) of the act. If a determination of excessive profits would be made at or in excess of the applicable minimum amount but for the limitation set forth in section 105 (f) (1) or (2) of the act and § 1458.3 (a) or (b) of this subchapter, the determination will be made in accordance with such limitation even though the amount of the determination is less than the minimum prescribed by this section. For example, if renegotiable receipts or accruals are $258,000, and excessive profits would be determined as $20,000 but for the statutory limitation that the excessive profits to be eliminated in such case shall not exceed $8,000 (the difference between $258,000 and $250,000) a determination in the amount of $8,000 will be made. In the renegotiation of an affiliated or related group, whether or not consolidated, determinations of excessive profits with respect to individual members of the group may be made in amounts less than the applicable minimum specified in this section: Provided, That the aggregate of the determinations for all members of the group equals or exceeds such applicable minimum. If the fiscal year is a fractional part of twelve months, the applicable minimum specified in this section shall be reduced to the same fractional part thereof. -- 1460.7 Uncompleted portions of terminated contracts. (a) Separate consideration. When a segregation of the items allocable to the uncompleted portions of terminated prime contracts and subcontracts is made in accordance with the principles set forth in sections 1457.6 and 1459.1 (c) of this subchapter, separate consideration will be given to such items in the light of the applicable factors in determining excessive profits. The evaluation of the contractor's performance with respect to the uncompleted portions of terminated prime contracts and subcontracts will be considered in connection with the evaluation of the contractor's performance of the completed portions of such prime contracts and subcontracts and with that of other prime contracts and subcontracts and with that of other prime contracts and subcontracts in determining the excessive profits, if any, for the period involved in the renegotiation. (b) Evaluation of performance.-The evaluation of the contractor's performance with respect to the uncompleted portions of terminated prime contracts and subcontracts will be measured by the nature and extent thereof. The more nearly the nature and extent of such performance approximate the nature and extent of the contractor's performance of completed contracts and subcontracts of the same type, the more nearly the evaluation of such performance will approach that given to the contractor's performance of the completed prime contracts and subcontracts. On the other hand, if the contractor's the contractors renegotiable business for the performance under the uncompleted portions of terminated prime contracts and subcontracts has consisted largely of the acquisition 7-15-67 Sec. Part 1461 1461.1 Collection authority. Recovery of Excessive Profits After 1461.2 Recovery of refund pursuant to agreement. 1461.4 Withholding as a method of recovery. AUTHORITY: Sections 1461.1 to 1461.5 issued under section 109, Pub. Law 9, 82d Cong. Interpret or apply section 105, Pub. Law 9, 82d Cong. 1461.1 Collection authority.-Section 105 (b) of the act provides in part as follows: (1) In general.-Upon the making of an agreement, or the entry of an order, * determining excessive profits, the Board shall forthwith authorize and direct the Secretaries or any of them to eliminate such excessive profits * (A) by reductions in the amounts otherwise payable to the contractor under contracts with the Departments, or by other revisions of their terms; (B) by withholding from amounts otherwise due to the contractor any amount of such excessive profits; (C) by directing any person having a contract with any agency of the Government, or any subcontractor thereunder, to withhold for the account of the United States from any amounts otherwise due from such person or such subcontractor to a contractor, or subcontractor, having excessive profits to be eliminated, and every such person or subcontractor receiving such direction shall withhold and pay over to the United States the amounts so required to be withheld; (D) by recovery from the contractor or subcontractor, or from any person or subcontractor directed under subparagraph (C) to withhold for the account of the Untied States, through payment, repayment, credit, or suit any amount of such excessive profits realized by the contractor or subcontractor or directed under subparagraph (C) to be withheld for the account of the United States; or (E) by any combination of these methods, as is deemed desirable. 1461.2 Recovery of refund pursuant to agreement. (a) In general.-The elimination of excessive profits ordinarily will be effected pursuant to an agreement providing for a refund in renegotiation proceedings with respect to a completed fiscal period. Such refund may be made by the contractor in a single payment or in installments as the agreement may provide. (b) Interest-(1) In general.-Except as set forth in this paragraph, and in the absence of unusual circumstances, renegotiation agreements will not provide for the payment of interest on any refund of excessive profits. (2) Installment payments.-When a renegotiation agreement provides for a refund of excessive profits in installments, the agreement will require the payment of interest at the rate of 4 per centum per annum upon the amount of any such installment (other than the first installment payable under the agreement) which is provided to be paid more than two years after the close of the fiscal year to which the agreement relates, such interest to accrue and be payable from and after the date which is two years after the last day of the fiscal year to which the agreement relates, or from and after the date on which the first installment is due and payable, whichever is later. (3) Default.-Pursuant to section 105 (b) (2) of the act, in cases of default, interest at the rate of 4 per centum per annum shall accrue and be paid on any amount due and unpaid under a renegotiation agreement from the date of such default to the date of payment. Such interest shall accrue and be paid whether or not the agreement contains a provision for the payment of interest. 1461.3 Recovery of refund pursuant to unilateral order.-Pursuant to section 105 (b) (2) of the act, interest at the rate of 4 per centum per annum shall accrue and be payable on the amount of excessive profits determined from the thirtieth calendar day after the date of the order of the Board or, in Class B cases (see § 1471.2 (b) of this subchapter), if the Board does not initiate a review of a determination made by a Regional Board, from the thirtieth calendar day after the date that the order embodying such determination is deemed to be the order of the Board pursuant to the provisions of § 1475.3 (b) (3) or (4) of this subchapter, respectively. 1461.4 Withholding as a method of recovery. (a) Excessive profits may be eliminated by withholding the amount thereof from amounts otherwise due to a prime contractor or by directing any person having a contract with any agency of the Government, or any subcontractor thereunder, to withhold for the account of the United States amounts otherwise due from such person or such subcontractor to a prime contractor, or subcontractor, having excessive profits to be eliminated. Excessive profits to be eliminated by such direction shall include the interest thereon, if any, as provided by section 1461.2 (c). (b) Withholding by any person having a contract with any agency of the Government, or by any subcontractor thereunder, will be effected by such person or such subcontractor upon a direction issued by a Secretary of a Department or pursuant to his authority. No amounts shall be withheld, in accordance with the provisions of this section, by any such person or any such subcontractor other than by authority of a direction issued by, or pursuant to the authority, of a Secretary of a Department. Any amount so withheld by any person or any such subcontractor shall be held by him for the account of the United States and shall be paid only upon a direction issued by or pursuant to the authority of a Secretary of a Department. The act indemnifies each person against all claims on account of amounts so withheld and paid over to the United States. (c) Action to withhold under prime contracts and subcontracts may be taken upon default in the elimination of excessive profits determined by agreement as well as in cases of determinations of excessive profits made by unilateral order. (d) Any withholding or recovery under any prime contract with any Department or agency, or related subcontract, when claims under such prime contract or subcontract have been assigned to any bank, trust company, or other financing institution, shall be subject to the applicable provisions of section 105 (b) (5) of the act and also to the applicable provisions of the Assignment of Claims Act of 1940, as amended. 1461.5 Administration of determinations by agreement or order.-(a) The Secretary of each of the Departments is authorized to eliminate, by any of the methods set forth in section 105 (b) of the act, all excessive profits which he is directed by the Board to eliminate. (b) When an agreement is made, or when the Board makes and enters an order determining excessive profits, or when an order of a Regional Board determining excessive profits is deemed to be the order of the Board pursuant to the provisions of section 1475.3 (b) (3) or (4) of this subchapter, respectively, the Board will direct the Secretary of one of the Departments to elminate such excessive profits by any of the methods set forth in section 105 (b) of the act. (c) Pursuant to each direction referred to 7-15-67 ! |