classification designated "No value," and no further classification of such items is required. For items deemed to have commercial value, use a new sheet for each classification (except as permitted under paragraph 6 above). Insert the name of the classification in the top right-hand corner of the inventory form and arrange the items falling under that classification in sequence under separate subheadings. For example, on the sheet or sheets used to list Chemicals, group separately all acids, all alkalis, all resins, etc. Under the general classification of insulated wire and cable, group separately all asbestos-insulated copper wire, all rubberinsulated copper wire, all magnet wire, etc. On the sheets used for drugs, group separately all antitoxins, all vaccines, all strychnine derivatives, all morphine derivatives, etc.

10. On Form 2c-Work in process. No classification of items is required on this schedule. However, a description must be given sufficient to enable the Government representative to identify the property and determine the appropriate method of disposal. Finished components should not be listed on this form but on Form 2b. Other materials which have not lost their identity through whole or partial assembly and which are deemed to have a further commercial use should similarly be listed on Form 2b.

11. On Form 2d-Dies, jigs, fixtures, etc., and special tools. Note that on this form items having no commercial value may be placed in a single classification designated "No Commercial Value." Such items require no further classification. For items deemed to have commercial value, general classifications may be limited to the following:

Use a new sheet for each such general classification (except as permitted under paragraph 6 above). Insert the name of the classification in the top right-hand corner, and list the items falling under that classification in sequence. For example, on the sheet used to list Dies, group separately all Extruding Dies, all Forging Dies, all Forming Dies, etc. On the sheet used for Gauges, group separately all Thread Gauges, all Radius Gauges, all Depth Gauges, etc.

12. If perishable tools are charged to indirect factory expense, they may not also be included in termination inventory. Where, however, indirect factory expense is adjusted to exclude such a charge, or where the perishable tools are charged directly to the contract, they should be included in the inventory, but should be listed on Form 2b and not 2d.

APPENDIX B (SEE INSTRUCTIONS, PAR. 25)— FORM OF TERMINATION INVENTORY SCHEDULE CERTIFICATE

to

The contractor hereby certifies that the attached Termination Inventory Schedules, pages inclusive, have been prepared in accordance with applicable instructions; that the inventory described therein is allocable to the designated contract and is located at the places specified; that the quantities are not in excess of the reasonable quantitative requirements of the terminated portion of the contract; and that the prices shown in column 8 (contractor's offer, or proceeds of authorized sale) are fair and reasonable and comply with Government price regulations.

The attached Schedules constitute the contractor's statement showing the materials claimed to be termination inventory which, if not otherwise disposed of, the contractor desires to have removed by the Government within 60 days from receipt hereof by the Government, or such shorter period as may be prescribed under the Contract Settlement Act of 1944, or such other period as may be agreed upon. Subject to such prior disposition, title to such materials is hereby tendered to the Government and is warranted to be free and clear of all liens and encumbrances.

Upon request of the Government, the contractor (will) (will not) negotiate to store

(Strike out one)

at the Government's expense all or part of the inventory listed in the attached Schedules.

(Name of contractor or subcontractor)
By

(Name of authorized officer)
(Title)
(Date)

The supervisory accounting official is:

(Signature) (Title)

NOTE: These Instructions have been approved by the Bureau of the Budget in accordance with the Federal Reports Act of 1942.

(Read instructions for use of Standard Contract Settlement Proposal Forms) Form Approved. Budget Bureau No. 17-R001. Forms are printed for information only. and do not follow the exact format prescribed by the issuing agency.

Form 1-Office of Contract Settlement

If moneys payable under the contract have been assigned, give name and address of assignee

Is Form 3 (Schedule of Accounting Information) attached? If not, explain

Govt. Agency

Govt. Prime Contract No. Contractor's Reference No. Effective date of termination

CERTIFICATE

The undersigned, individually and as an authorized representative of the contractor, certifies that he has examined this Settlement Proposal and that, to the best of his knowledge and belief: (1) AS TO CONTRACTOR'S OWN CHARGES The Proposed Settlement (exclusive of charges set forth in Item 14) and supporting schedules and explanations have been prepared from the books of account and records of the contractor in accordance with recognized commericial accounting practices; they include only those charges allocable to the terminated portion of this contract; they have been prepared with knowledge that they will, or may, be used directly or indirectly as the basis of settlement of a claim or claims against the United States or an agency thereof; and the charges as stated are fair and reasonable. (2) AS TO SUBCONTRACTORS' CHARGES— (a) The contractor has examined, or caused to be examined, to an extent it considers adequate in the circumstances, the claims of its immediate subcontractors (exclusive of claims filed against such immediate subcontractors by their subcontractors); (b) the settlements on account of immediate subcontractors' own charges are fair and reasonable, said charges are allocable to the terminated portion of this contract and said settlements were negotiated in good faith and are not more favorable to its immediate subcontractors than those which the contractor would make if reimbursement by the Government were not involved; (c) the contractor

has received from all its immediate subcontractors appropriate certificates with respect to their claims, which certificates, if the claims are for more than $1,000, are substantially in the form of this certificate; and (d) the contractor has no knowledge leading it to doubt (i) the reasonableness of the settlements with more remote subcontractors or (ii) that the charges for them are allocable to this contract. Upon receipt by the contractor of amounts covering settlements with its immediate subcontractors, the contractor will pay or credit them promptly with the amounts so received, to the extent that it has not previously done so. The term subcontractor as used above includes suppliers.

The undersigned certifies that to the best of his knowledge and belief the statements with respect to accounting matters made in the above Certificate are true.