to the extent set forth hereinafter under subparagraphs (2), (3), and (4) of this paragraph, which are necessary to the maintenance, repair or replacement by duplication of, or restoration to satisfactory condition of, damaged or worn parts of vessels, their machinery and equipment (including spare parts) installed as integral parts of vessels, as distinguished from items of a portable or removable nature, shall be eligible for subsidy at the maintenance (upkeep) and repair subsidy rate. (The word "domestic" as used herein, is defined as meaning within the continental limits of the United States.)

(1) Spare propellers and tailshafts, self-contained operable units of machinery or equipment as distinguished from items of a portable or removable nature, and spare parts purchased to be installed as integral parts of the vessel, shall be eligible for subsidy at the applicable maintenance (upkeep) and repair subsidy rate when placed aboard a subsidized vessel, provided reimbursement therefor be made by the operator to the Government in the event such items are not eventually utilized or installed in the subsidized vessel.

(2) Expenses eligible for subsidy under the maintenance (upkeep) and repair category for work performed by shore gang labor shall be limited to direct labor charges, spare parts, materials, and/or supplies as indicated in subparagraph (3) of this paragraph, and other costs incurred as the result of the payment of direct wages, such as payroll taxes and workmen's compensation insurance required by law, and welfare, pension and vacation fund payments required as a result of collective bargaining, if deemed fair and reasonable by the Maritime Subsidy Board. Such expenses shall be limited to those directly attributable to items of work that would be eligible for subsidy at the maintenance (upkeep) and repair subsidy rate if performed by an independent contractor aboard or for the subsidized vessel(s).

(3) Materials and/or supplies issued by the operator from ship's inventory, warehouse, or direct purchase to domestic ship repair yards, other domestic independent contractors, or shore gangs which are necessary to the maintenance, repair or replacement by duplication of or restoration to satisfactory condition of, damaged or worn parts of vessels, their machinery and equipment installed

as integral parts of vessels, as distinguished from items of a portable or removable nature, shall be eligible for subsidy.

(4) Spare parts issued by the operator from his warehouse or direct purchase to domestic ship repair yards, other domestic independent contractors or shore gangs, shall be eligible for subsidy. § 272.11 Examples of expenses ineligible for subsidy participation at the maintenance and repair rate.

The following are primary examples of expenses (but not limited to), which are ineligible for subsidy participation at the maintenance and repair rate:

(a) "Unsighted," "Deferred," and "Record" items: Repair items correcting conditions noted in "On-Subsidy Surveys" as "Unsighted," "Deferred" and/or "Record," where repairs clearly should have been made prior to the departure from last U. S. Continental port on the first voyage in subsidized service, or prior to the first voyage upon resumption of operation under the respective Operating-Differential Subsidy Agreement, are not eligible for participation in subsidy. The Chief, Division of Ship Repair and Maintenance, Washington, D. C., shall determine whether repairs performed in connection with an item unsighted in the initial "On-Subsidy Survey" are due to attrition after commencement of subsidized operation, or to prior non-subsidized operation, which determination shall be final. It is not the intent to pro-rate, between the periods before and after a vessel initially commences subsidized operation, the cost of individual repairs made or materials supplied.

(b) Overdue classification and inspection requirements: These are items required by the Classification Society or a Government Bureau which were due (grace periods not included) and not completed prior to the first voyage in subsidized service, or prior to the first voyage upon resumption of operation under the respective Operating-Differential Subsidy Agreement.

(c) Foreign repairs: Items of maintenance or repair of whatsoever nature, including insurance repairs, performed outside the continental limits of the United States.

(d) Marine loss: Repairs recoverable from insurance.

(e) Cargo expense: Special cargo fittings of a temporary nature (as differentiated from installations of a permanent

nature), dunnage, ceiling, battens, cleaning cargo holds and tanks for cargo, reading and certification of temperatures for refrigerated cargoes, etc.

(f) Stevedore damage: Any damage to the vessel or cargo gear directly attributable to the stevedore proper. (Damage occurring during stevedoring operations, but due to ship's personnel or equipment for which the stevedore is not liable, will, if satisfactorily supported by documentary evidence and if otherwise acceptable, be considered for subsidy participation.)

(g) Special trade requirements: Initial installation of (other than replacement of existing worn or damaged) equipment necessary for the vessel's particular trade route, such as Suez Canal Davit, etc. New requirements coming into effect after vessel's entry into the particular subsidized service, as differentiated from previously established requirements shall be considered for subsidy participation.

(h) Procurement cost of any consumables, expendables or portable equipment when used or installed by crew, or furnished for inclusion in ship's inventory.

(i) Procurement costs, maintenance and repair costs, or replacement costs, incident to portable or expendable equipment.

(j) Apparent excessive maintenance and/or repair costs after operator has had an opportunity to lay before the Administration all relevant facts pertinent thereto. Any such costs determined to be excessive shall not be taken into account for reserve fund or recapture purposes as provided under Part 286 of this chapter as amended from time to time.

(k) Costs included in shore gang labor charges which the Comptroller of the Maritime Administration determines to be "overhead" as prescribed in § 282.900 of this chapter.

(1) Rental of equipment; e. g., compressors, paint floats, etc., for use by shore gangs or ship's crew in carrying out repairs or other work.

(m) Items included in repair summaries and/or supplements not submitted to Ship Repair and Maintenance Field Offices within 120 days after vessel's sailing from her last United States port of call, unless such non-submittal can be proven conclusively by the Operator to be due to circumstances beyond his control.

(n) Items included in appeals to an original determination not submitted by

the operator to the Chief, Division of Ship Repair and Maintenance within 90 days of the date of the original determination.

(0) Items included in appeals to the Maritime Subsidy Board which are not submitted by the operator within 60 days after the date of the "final determination" of the Chief, Division of Ship Repair and Maintenance.

(p) Operational: In general, the types of items disallowed from repair and maintenance subsidy participation under this classification are those where no actual maintenance or repairs in the literal sense of the words are involved, e. g., loading stores, landing and sorting laundry, pilot service, tug charges, removing surplus equipment to warehouse, etc.

(q) Builder's and/or Repair Contractor's liability: Those items adjudged or noted as being builder's and/or repair contractor's guarantee items.

(r) Items of repair that can be definitely and entirely attributed to nonsubsidized operation.

(s) Work incident to an improvement spread over more than one repair period for which application to the Chief, Division of Ship Repair and Maintenance was not submitted as required by § 272.9 (g).

(t) Costs incident to Marine Loss not compensated by insurance which are not reported to the District Comptroller in the manner and within the time specified in § 272.7 (f).

§ 272.12 Definition of "consumables”, "expendables", and "expendable equipment."

The words "consumables", "expendables", and/or "expendable equipment", as used in this part are defined in section 3, Part I of Maritime Administration Inventory Manual, Vessel Inventories (issued July-1957 under Authority Management Order No. 627) and as implemented by Maritime Administration Inventory Books-Deck Department Consumable Stores and Expendable Equipment (Form MC 4736A-May 1, 1947), Engine Department Consumable Stores (Form MA 4736B-March 1951), Engine Department Expendable Equipment (Form MA 4736C-March 1951), Steward Department Consumable Stores and Expendable Equipment (Form MA 4736D-March 1951). In case of any conflict between this definition and the other provisions of this order the other provisions shall control.

275.2 Allowance purchases by Contractor and by Applicant.

275.3 Contractors' and Applicants' purchase procedure.

275.4 Determination of applicable construction-differential subsidy.

275.5 Furnishing of material or equipment by Board.

AUTHORITY: The provisions of this Part 275 issued under sec. 204, 46 Stat. 1987, as amended; 46 U.S.C. 1114. Interpret or apply sec. 502, 49 Stat. 1996, as amended; 46 U.S.C. 1152.

SOURCE: The provisions of this Part 275 contained in General Order 37, Revised, 22 F.R. 8121, Oct. 12, 1957, unless otherwise noted.

§ 275.2

Allowance purchases by Contractor and by Applicant.

(a) The Applicant's proposed plans and specifications for the construction of the vessel for which aid is applied or the proposed plans and specifications for the reconstruction or reconditioning work for which aid is applied shall state what, if any, materials or equipment will be furnished by the Contractor upon the basis of a contract price "allowance" and what, if any, materials or equipment will be furnished to the Contractor by the Applicant (without charge to the Contractor). Such "allowance" materials

and equipment and such Applicant furnished materials and equipment shall be listed and each item thereof priced on the basis of its estimated acquisition cost, and shall be subject to approval by the Board.

(b) In the event the Applicant cannot at the time of its submittal to the Board of its proposed plans and specifications furnish the itemized and priced lists of materials and equipment to be covered by a contract price "allowance" or to be furnished to the Contractor by the Applicant, Applicant should so state and should at the same time request to be adivsed that the Board will consider such lists at a later date. Such lists and prices shall be furnished before the proposed plans and specifications are submitted to shipyard bidders.

(c) Each item of material or equipment purchased by an Applicant or the Contractor shall be purchased upon the basis of competitive bids; provided however, with the prior approval and subject to such conditions as the Board may require, the following items of material or equipment may be purchased upon a negotiated basis.

(1) "Art objects".

(2) Patented items of material and equipment.

(3) Items of material and equipment for which the need was not initially foreseen when the original lists were submitted or which subsequently became necessary because of changes in plans and specifications, the purchase of which on a competitive basis will unduly delay the work.

The Applicant or the Contractor, if directed by the Applicant, may select material or equipment not of the lowest bidder, the subsidy to be determined in such case as provided in § 275.4. § 275.3 Contractors' and Applicants' purchase procedure.

(a) Prior to the inviting of any bid, the Applicant or the Contractor shall submit to the Board the specifications covering the item of material or equipment in question and shall also submit a list of the vendors from whom bids will be invited.

(b) Bids shall be invited on such specifications, as approved, or as modified by the Board from the submitted list of bidders as that list is approved and amplified by the Board. Bids shall be invited upon the basis of terms and

conditions approved by the Board, which will include the section 505 (b) of the Merchant Marine Act, 1936, recapture of profits provisions and other provisions applicable to Government procurement.

(c) Bids shall be transmitted to the Board's representatives as designated in the invitation request, and shall be enclosed in sealed envelopes.

(d) The bids will be opened by the Board's representative who shall tabulate the bids and deliver one copy to the Applicant or the Contractor with the bids and one copy to the Board. The Applicant or the Contractor will evaluate the bids and forward to the Board his recommendation of award with copy of bids.

§ 275.4 Determination

of applicable construction-differential subsidy.

The construction-differential subsidy applicable to an item of material or equipment selected or purchased by the Applicant or the Contractor shall be determined upon the basis of the lowest responsible responsive bid as determined by the Board, and the Applicant or the Contractor duly notified.

§ 275.5 Furnishing of material or equipment by Board.

In lieu of approving the Applicant's or the Contractor's inviting bids for an item of material or equipment on specifications approved by the Board, the Board reserves the right to furnish to the Contractor or to the Applicant, as the case may be, such item of material or equipment procured by the Board. In the event such an item of material or equipment is furnished to the Contractor by the Board under an "allowance" provision of the shipyard contract, the total "allowance" in the specifications will be deducted from the contract price. In the event such an item of equipment or material is furnished by the Board to the Applicant, the full estimated price of the item to the Applicant will be deducted from the sum approved by the Board for the Owner's Budget. In either event the unsubsidized portion of the sum of the Board's cost of acquisition of such item and the Board's cost of delivery of such item to the shipyard will be recovered from any amounts which may be due the Applicant or otherwise as the Board may direct.

In every instance where a vessel, with respect to which a construction-differential subsidy has been paid or allowance therefor has been made in calculating the basic charter hire under section 714 of the Merchant Marine Act, 1936, as amended (49 Stat. 1995, 52 Stat. 995; 46 U.S.C. 1151) is operated in other than exclusively foreign trade, the owner or charterer thereof shall pay to the Maritime Administration, not later than March 31 of the calendar year succeeding such operation, the proportion of the difference between the domestic and foreign cost of such vessel that is required to be paid to the Maritime Administration in such act, and particularly sections 506 and 714 thereof.

§ 276.2 Filing of general financial state

ments.

Every owner of a vessel for which a construction-differential subsidy has been paid and every charterer of a vessel constructed under the provisions of the Merchant Marine Act, 1936, shall file with the Maritime Administration a General Financial Statement in the form and at the times prescribed by the Maritime Administration but not less frequently than annually; the amount of the payment due the Maritime Administration on account of the operation of such vessel in other than exclusively foreign trade must be shown in Balance Sheet Account No. 430; and a schedule reflecting the details of the manner in which the amount of such payment was determined must be made a corporate part of the General Financial Statement.

PART 277—DOMESTIC AND FOREIGN

TRADE; INTERPRETATIONS

§ 277.1 Guam, Midway and Wake.

Steamship service between ports of the United States mainland and ports in the islands of Guam, Midway and Wake is not "domestic intercoastal or coastwise service" within the meaning of section 805 (a) of the Merchant Marine Act, 1936. This interpretation is limited to Guam, Midway and Wake and does not signify that a similar interpretation is or I would be applicable to Hawaii, Puerto Rico or Alaska.

(Sec. 204, 49 Stat. 1987, as amended; 46 U. S. C. 1114. Interprets or applies sec. 805, 49 Stat. 2012, as amended; 46 U. S. C. 1223) 73, 15 F. R. 9065, Dec. 19, 1950]

[G. O.

PART 281-INFORMATION AND PROCEDURE REQUIRED UNDER OPERATING-DIFFERENTIAL SUBSIDY AGREEMENTS

Sec. 281.1

281.2

281.3

281.4

281.5

281.6

Information and procedure required under the operating-differential

subsidy agreement. Definitions.

Method of commencing and terminating voyages and of determining lay-up periods.

Treatment of subsidy during period of idleness, lay-up period and offhire period.

Right of Administrator to recover subsidy for any period of idleness. Interpretation.

NON-SUBSIDIZED VOYAGES

281.11 Scope and general comments. 281.12 Application for non-subsidized voyages.

281.13 Hearings.

281.14 Prior authorization.

281.15 Criteria for approval of non-subsidized voyages.

281.16 Conditions to attach in event of ap

proval of application.

281.17 Determinations and questions of interpretation.

AUTHORITY: The provisions of this Part 281 issued under sec. 204, 49 Stat. 1987, as amended; 46 U.S.C. 1114. Interpret or apply sec. 606, 49 Stat. 2004, as amended; 46 U.S.C. 1176. § 281.1 Information and procedure required under the operating differtial subsidy agreement.

In compliance with the terms of the operating-differential subsidy agreement, the following information shall be submitted to the Maritime Administration

by each operator who is a party to any such agreement.

(a) Sailing schedules, routes, etc. (1) One copy of tentative sailing schedules is required to be submitted not later than 15 days prior to the commencement of the month in which the proposed sailings are to be made. Such schedules shall show separately for each vessel: (i) Voyage number, whether owned or chartered, and whether subsidy is requested; (ii) the subsidized service in which the proposed sailing is to be made; (iii) the date on which the vessel is expected to sail outbound from the last United States port, and the names of other scheduled United States and foreign ports of call; and (iv) explanation of any proposed variations from the service described in the applicable contract.

are

(2)(i) If substantial changes made in any sailing schedule subsequent to the submission of the tentative sailing schedules the Maritime Administration shall be notified of such changes not later than the 10th day of month following the month in which the sailing is made. A substantial change, for the purpose herein, includes the addition or cancellation of a voyage or voyages in a subsidized service, substitution of a vessel or vessels, and a change in the range of ports to be served on a particular voyage.

(ii) Notwithstanding the requirements of subdivision (i) of this subparagraph, prior approval of the Maritime Administration must be obtained before the occurrence of all proposed changes which would result in the operator failing to meet minimum requirements with respect to sailings or port coverage, and for changes for which such prior approval is required by applicable contracts.

(3) A "Final Report" in five copies shall be submitted not later than 15 days after the end of the month in which the voyage is terminated and shall show: (i) The time and ports at which the voyage commenced and terminated; (ii) the arrival and sailing dates of the vessel at and from each United States and foreign port, including ports of call for bunkering and/or mail only; (iii) explanation of any delay in excess of 2 days at a United States or foreign port; (iv) appropriate notation of official authorization for any deviations from the