Proposed Legislation To Revise and Extend the Renegotiation Act of 1951

The proposed legislation to revise and extend the Renegotiation Act of 1951, H.R. 4082, is constructive and should lead to major improvements in the renegotiation process. Making the Renegotiation Board a permanent agency of the federal government could enhance its ability to recruit qualified personnel and provide an incentive for long-range planning. Extending the act to cover contracts of all government agencies would also be an improvement. Eliminating the percentage of completion method of accounting for contracts which are subject to renegotiation is an important improvement. Excessive profits can be determined with reasonable certainty only when units are delivered or at contract completion. Requiring contractors to report renegotiation business on the basis of division and product line is a much needed reform. The elimination of the oil and gas well exemption from renegotiation is a necessary reform due to changing world conditions. Raising the minimum levels of annual sales subject to renegotiation does not appear to be advisable. Congress should eliminate the partial exemption of sales of new, durable productive equipment from renegotiation. Congress should consider including a provision requiring the Board to establish guidelines for applying statutory factors for determining excessive profits in the proposed legislation.