78TH CONG. , 2D SESS.-CH. 63 -FEB . 25 ,1944 "(3) The terms 'renegotiate' and 'renegotiation' include a deter- mination by agreement or order under this section of the amount of any excessive profits. "(4) (A) The term 'excessive profits' means the portion of the profits derived from contracts with the Departments and subcontracts which is determined in accordance with this section to be excessive. In determining excessive profits there shall be taken into consideration the following factors: "(i) efficiency of contractor, with particular regard to attain- ment of quantity and quality production, reduction of costs and economy in the use of materials, facilities, and manpower; "(ii) reasonableness of costs and profits, with particular regard to volume of production, normal pre-war earnings, and compar- ison of war and peacetime products; "(iii) amount and source of public and private capital employed and net worth; "(iv) extent of risk assumed, including the risk incident to reasonable pricing policies; "(v) nature and extent of contribution to the war effort, includ- ing inventive and developmental contribution and cooperation with the Government and other contractors in supplying technical assistance; "(vi) character of business, including complexity of manufac- turing technique, character and extent of subcontracting, and rate of turn-over; "(vii) such other factors the consideration of which the public interest and fair and equitable dealing may require, which factors shall be published in the regulations of the Board from time to time as adopted. "(B) The term 'profits derived from contracts with the Departments and subcontracts' means the excess of the amount received or accrued under such contracts and subcontracts over the costs paid or incurred with respect thereto. Such costs shall be determined in accordance with the method of cost accounting regularly employed by the con- tractor in keeping his books, but if no such method of cost accounting has been employed, or if the method so employed does not, in the opinion of the Board or, upon redetermination, in the opinion of The Tax Court of the United States properly reflect such costs, such costs shall be determined in accordance with such method as in the opinion of the Board or, upon redetermination, in the opinion of The Tax Court of the United States does properly reflect such costs. Irrespec- tive of the method employed or prescribed for determining such costs, no item of cost shall be charged to any contract with a Department or subcontract or used in any manner for the purpose of determining such cost, to the extent that in the opinion of the Board or, upon redetermination, in the opinion of The Tax Court of the United States, such item is unreasonable or not properly chargeable to such contract or subcontract. Notwithstanding any other provisions of this section, all items estimated to be allowable as deductions and exclusions under Chapters 1 and 2 E of the Internal Revenue Code (excluding taxes measured by income) shall, to the extent allocable to such contracts and subcontracts (or, in the case of the recomputation of the amortiza- tion deduction, allocable to contracts with the Departments and sub- contracts), be allowed as items of cost, but in determining the amount of excessive profits to be eliminated proper adjustment shall be made on account of the taxes so excluded, other than Federal taxes, which are attributable to the portion of the profits which are not excessive. "(C) Notwithstanding any of the provisions of this section to the contrary, no amount shall be allowed as an item of cost (i) by reason "Renegotiate," "re- negotiation." "Excessive profits. " "Profits derived fram contracts with the De- partments and sub- contracts." 63 Stat. 4; 54 Stat. 975. 26 U. . c. §C1-36, 710-752; Supp. III, 3-476,710-783. Ante, p. 26 et seq. Post, pp. 231 t seq., 647. Reoomputation of amortization deducn tion. 58 STAT.] 79
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