White House Press Release, Executive Order Number 9786

#873 IMMEDIATE RELEASE OCTOBER 5, 1946 436 EXECUTIVE ORDER #9786 REGULATIONS GOVERNING THE CONSIDERATION, ADJUSTMENT, AND SETTLEMENT OF CLAIMS UNDER PUBLIC LAW 657, APPROVED 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 disposition of claims under contracts to which this order is applicable, the following Regulations are hereby prescribed to govern the filing, con- sideration, a djustment, 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, approved August 7, 1946. 101.2 The term "agency" means any department or agency of the Government. 101.3 The term "war agency" means any department or agency of the Government which, prior to August 14, 1945, was authorized to enter into contracts and amendments or modifications of contracts 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 standing in the place of an agency so authorized. 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 NARA 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 material- man) to a prime contractor or higher tier subcontractor of any agency at any time during the statutory period. 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 contractor or subcontractor consistently applied during performance of the contract or subcontract, provided such practices accord with recognized commercial accounting practices. Such cost shall include, to the extent reasonable and necessary, direct costs and a properly allocable proportion of indirect costs, but shall not include the following items: 2. Interest on invested capital. b. Unreasonable compensation paid to officers or employees, including any compensation in excess of wages or salaries approved under applicable wage and salary stabilization regula- tions; bonuses which constitute a distribution of profits; and royalties paid to officers and employees. C. Profit on transactions with business enter prises, of any kind, directly or indirectly controlling, controlled by, or under common control with, the contractor or subcontractor. d. Cost of unreasonable spoilage or defective work and excessive inventories of materials and supplies. (OVER)