Full opinion text
OPINION KUNZIG, Judge. These renegotiation cases come before the court on defendant’s exceptions to the findings of fact, conclusions of law, and recommended opinion issued by Trial Judge Louis Spector on November 18, 1976, in accordance with Rule 134(h), in which he held that Camel Manufacturing Company (Camel or plaintiff) had realized no excessive profits during the fiscal years in issue. Plaintiff initially brought these actions seeking redetermination of orders of the Renegotiation Board (the Board) that plaintiff had realized excessive profits on Government contracts, during its 1966,1967 and 1968 fiscal years (review years) in respective amounts of $200,000, $600,000 and $575,000 Plaintiff was successful in its redetermination efforts before the Trial Judge (who reduced the excessive profits to zero), and defendant now argues to this court that the decision of the Trial Judge should be, in effect, reversed on several grounds and that a judgment should be entered against plaintiff for at least the full amount of the aggregate excessive profits as determined by the Board, $1,375,-000 . We can agree totally with neither the plaintiff (and the Trial Judge) nor the defendant, and hold, for the reasons stated below, that plaintiff realized a total of $889,611 in excessive profits for the three review years. All facts necessary to the decision are contained in this opinion. The Camel Manufacturing Company was established as a proprietorship in 1923 and was incorporated under the laws of Tennessee in 1946; its principal place of business remains Knoxville, Tennessee. In 1949, it undertook what was to remain its primary activity through the early 1960’s, the manufacture of tents and other canvas products for defense agencies of the United States Government. Although its main production consisted of larger canvas items, it also manufactured such diverse items as duffel bags, packs, and mattress covers. Beginning in 1960, with the installation of Gene B. Laxer as president and general manager, Camel began a long-range growth program which included extensive entry into the commercial tentage and camping equipment market, which it had previously explored only peripherally. By 1963, commercial sales volume had increased so significantly that plaintiff was forced to expand to meet the rising commercial demand. This expansion consisted of enlargement of existing production facilities as well as rental and construction of new facilities. After that time, the commercial segment of plaintiff’s business continued to grow rapidly in comparison with its defense agency business. In fiscal years (FY) 1966, 1967 and 1968, plaintiff accepted sizeable contracts, awarded by the Defense Personnel Support Center (DPSC), for military tentage items. Profits earned' under these contracts were subject to the provisions of the Renegotiation Act of 1951 (the Act), 50 U.S.C. App. §§ 1211-24 (1970). By the terms of plaintiff’s review year contracts with DPSC, plaintiff was obligated to use certain Government furnished property (GFP), in the nature of tentage materials such as canvas and webbing, in the manufacture of tents. The Trial Judge found that the value of the GFP utilized by plaintiff in specified FYs was as follows: FY 1964 $ 825,321 FY 1965 1,560,541 FY 1966 2,173,601 FY 1967 3,309,197 FY 1968 3,221,823 Neither party takes exception to these figures and our review indicates no reason to disturb them. As stated above, the contracts during the review years were subject to renegotiation. In the instant cases, the Board entered three unilateral orders against Camel, directing refunds of the following amounts as excessive profits allegedly earned in the three review years: FY 1966 $200,000 Order of May 28, 1970 FY 1967 600,000 Order of November 4, 1971 FY 1968 575,000 Order of August 27, 1973 These three orders are now on appeal before this court, pursuant to § 108 of the Act which provides for de novo review. The record emphatically demonstrates that, from the time of its inception, this action, combining for purposes of redeter-mination the separate suits filed for each of the review years, was difficult and complex. The plaintiff and defendant could agree on only four, relatively minor, stipulations and, seemingly, every other fact or figure became a bone of contention between the parties. With so many facts contested, the relative burdens of proof assumed vital importance. The burdens of proof of each of the parties to a renegotiation proceeding in this court were first delineated in the landmark decision in Lykes Bros. S.S. Co., Inc. v. United States, 459 F.2d 1393, 1401-03, 198 Ct.Cl. 312, 327-30 (1972) [hereinafter cited as Lykes Bros.]. In Lykes Bros., this court clearly divided the burden of proof, and the consequent risk of non-persuasion, between the parties, requiring each to carry the burden at a different stage of the proceedings. Plaintiff’s burden, whenever there is a dispute concerning financial data, is to go . forward with evidence proving the accuracy of the financial data, including the segregation of the accounting on renegotiable business from non-renegotiable business and the propriety of plaintiff’s cost . allocations under accepted accounting principles. Lykes Bros., 459 F.2d at 1401, 198 Ct.Cl. at 326. Plaintiff also has the burden of pleading the statutory factors upon which it relies for favorable consideration and of establishing a prima facie case under each; however, this court, in an “exercise of discretion,” has held that this is only an initial burden and that, once plaintiff has pleaded these factors and established its prima facie case, “the burden shifts to the Government to prove that plaintiff’s profits were excessive and the extent thereof.” Lykes Bros., 459 F.2d at 1402, 198 Ct.Cl. at 327. As is indicated by this division of the burden of proof, we understand renegotiation cases to consist normally of two distinct analytical categories: I. ACCOUNTING DETERMINATIONS A. Total Dollar Profits B. Profits as a Percentage of Sales II. ARE PROFITS EXCESSIVE? A. Appropriate Standards of Comparison B. Statutory Factors A brief analysis of the meaning of these four vital headings might well help our discussion at this point: I. ACCOUNTING DETERMINATIONS A. Total Dollar Profits: This portion of the case is devoted to ascertaining how many dollars of profit the contractor actually earned on his renegotiable contracts. As the Lykes Bros, court pointed out, this may often be a stipulated fact, based on figures submitted by plaintiff or obtained by defendant’s audit from plaintiff’s books. It may, however, be an item of dispute to be resolved at trial. In any event, a dollar figure representing the plaintiff's renegotiable profit is a first step in any renegotiation proceeding. B. Profits as a Percentage of Sales: In order properly to compare the dollar profit figure obtained, it must be converted into figures which relate to other manufacturers’ or other years’ profit figures. This is most frequently done by comparing the dollar profit figure to the total sales figure to obtain a percentage profit figure which can then be related to other percentage profit figures. In this step of the process, the inclusion or exclusion of GFP in total sales plays a central role, since a smaller total sales figure (with GFP excluded) would make a constant dollar profit figure become a larger percentage profit. II. ARE PROFITS EXCESSIVE? A. Appropriate Standards of Comparison: Once a percentage profit figure is determined, it must be compared to some other figures to determine excessiveness. Much of the litigation process in this, and other cases is concerned with ascertaining the relative merits of each of many asserted comparisons. In selecting the proper comparisons, the similarity between the asserted standard and the contractor’s renegotiable operations is of utmost importance. Once the more appropriate standards are delineated, the apparent excessiveness of plaintiff’s profits can be determined by comparison with the standard profits. B. Statutory Factors: Although plaintiff’s profits may appear high upon initial comparison to the standard, we are directed by the Act, as the final step to this process, to give consideration to certain “statutory factors” in determining whether or not these profits are in fact “excessive.” High profits may not be “excessive” profits if they are justified by a statutory factor. The Trial Difficulties in this case arose at each stage of the proceedings. Plaintiff entered the trial with a set of financial figures which had been substantially revised from its initial filings with the Renegotiation Board and from its own books as they had appeared at the time of the Government audit for renegotiation purposes. Plaintiff’s new figures were, of course, far more favorable to plaintiff’s cause, showing much smaller dollar figures for net renegotiable profits and much larger figures for net commercial profits. This was largely the result of a reallocation of costs to its renegotiable from its nonrenegotiable work. In addition, plaintiff’s pre-trial accounting figures included the value of the GFP in arriving at the total volume of the renegotiable contracts, against which dollar profits had to be compared to arrive at percentage profits. This inclusion, of course, had the effect of lowering plaintiff’s apparent percentage profits. Much of plaintiff’s effort at trial was absorbed in introducing these figures into evidence through the testimony of a Mr. Bone, an accountant, and Mr. Laxer, Camel’s president. Plaintiff also produced the testimony of Mr. Laxer and officers of several other companies (which made related products) which seemed calculated to achieve a favorable “statutory factors” comparison. Finally, plaintiff argued that, because its profits were lower than the Government’s assertions (in both dollar and percentage figures), because its profits appeared low under all asserted comparisons, and because the statutory factors analysis showed many points favorable to the renegotiated contractor, the court should determine that plaintiff had realized no excessive profits during the review years. Defendant, on the other hand, introduced as its accounting evidence figures derived from the original, sworn RB-ls which were filed by Camel with the Board for each of the review years and from audits of Camel’s books. These figures were supported by the testimony of an FBI agent who had performed audits of Camel’s actual records for the review years. Defendant excluded the value of all GFP in computing the total renegotiable sales against which dollar profits had to be compared to arrive at percentage profits. This, of course, resulted in a much higher percentage profit than had been indicated by plaintiff’s pre-trial accounting figures. Defendant then put on the stand its expert witness, Mr. Katz, who proceeded with an analysis of the percentage profit figure obtained by the Government and how he had compared this figure, against the background of the statutory factors, against figures from Camel’s “base years,” in determining which profits were excessive. Defendant also introduced testimony of several other witnesses in an attempt to meet its burden with regard to specific statutory factors. After an extensive trial, the Trial Judge entered 180 specific findings of fact and produced a recommended opinion which totaled 93 pages. The extensiveness of this fact finding process, together with the length of the opinion, indicates not only the factual difficulty of this case, but also the lack of analytical clarity which still exists in areas of the renegotiation field. The Appeal The defendant excepted to this recommended opinion and to the findings of fact and conclusions of law. Having previously discussed the relative burdens of the parties, we will attempt briefly to summarize the Trial Judge’s opinion and the arguments of the parties on appeal to avoid placing an excessive burden on the reader. I. ACCOUNTING DETERMINATIONS A. Total Dollar Profits: The Trial Judge, in his own novel approach to the Lykes Bros, opinion, placed only a burden of going forward with some evidence on the plaintiff in both Parts I and II of this case. Utilizing this unprecedented approach, it is not surprising that he incorrectly resolved most accounting issues in favor of the plaintiff. Plaintiff’s new accounting data, based on special allocations (created after Camel'had been before the Board for FYs 1966 and 1967) was allowed into the record by the Trial Judge based on the testimony of plaintiff’s recently hired comptroller and its president, Mr. Laxer, who was admittedly unskilled in specialized accounting techniques. Though this testimony was highly generalized and often not based on specific personal knowledge, the Trial Judge determined that it was sufficient to meet plaintiff’s burden of “pleading.” On the other hand, the Trial Judge rejected defendant’s accounting, which was based on an audit of plaintiff’s original, basic documents (in sharp contradistinction to plaintiff’s new accounting which was based only on general allocations) and offered into evidence on the testimony of defendant’s FBI auditor, who had personally inspected Camel’s books, where they were available. He further noted that the auditor justified his figures only on the , ground that they were taken “directly from plaintiff’s cost accounts . . . .” Such justification, the Trial Judge determined, was not sufficient to carry defendant’s burden of disproving the figures which plain- . tiff had introduced into the record. Just how significant the sum total of all the Trial Judge’s accounting determinations in favor of the plaintiff actually were may be seen by comparing the Government’s figures with those found to be accurate by the Trial Judge. Defendant’s accounting showed the following picture: Renegotiable Nonrenegotiable (000 omitted) (000 omitted) Sales Costs Profits Profit Sales Costs Profits Profit 1966 2,780 2,210 570 20.5% 2,684 2,589 115 4.3% 1967 3,808 2,895 940 24.6% 4,097 3,915 189 4.6% 1968 3,798 2,734 1,064 28.0% 5,861 5,472 389 6.6% Plaintiff’s accounting, substantially adopted by the Trial Judge, paints a far different picture: Renegotiable Nonrenegotiable (000 omitted) (000 omitted) Sales Costs Profits Profit Sates Costs Profits Profit 1966 4,956 4,622 334 6.7% 2,683 2,374 306 11.4% 1967 7,117 6,446 671 9.4% 4,097 3,641 671 16.3% 1968 7,020 6,293 727 10.3% 5,861 5,136 725 12.3% The difference is clear, and virtually decisive, with renegotiable percentage profits being reduced from 20.5%, 24.6%, and 28.0% (respectively for each of the review years) to 6.7%, 9.4%, and 10.3%. The defendant took strong exception to the accounting determinations of the Trial Judge. Defendant’s arguments essentially center on the contention that the Trial Judge improperly reversed the Lykes Bros. burden of proof by allowing the plaintiff to make only unsubstantiated assertions and then requiring defendant to prove them wrong. The crux of the Government’s contention can be found in the following statement: If the Trial Judge’s findings of fact on accounting (which are also implicity [sic] erroneous conclusions of law), were to be adopted by this Court, it would put the Renegotiation Board in the impossible position of having to accept any contractor’s accounting allegations as correct and then undertaking to either verify or disapprove [sic] them in order to survive an appeal in this Court. This would be administratively impossible and abviously [sic] contrary to the expressed intent of the statute. The Board, like the Internal Revenue Service, must place the burden on the taxpayer to back up all of its claimed costs with solid evidence. This Court’s evidentiary rules on review must continue to respect these administrative realities. The Government proceeds to argue that the plaintiff’s cost allocations, which had been accepted by the Trial Judge, were totally unsupported by the record and were based upon artificial allocations rather than upon actual costs as shown on plaintiff’s books. No witness having any part in the preparation of the pre-trial statements was brought forward to support them, the only testimony being by the current comptroller who had not participated in their preparation and could offer no explanation of the various apparent discrepancies and by Camel’s president, who was admittedly not knowledgeable concerning accounting details. Camel’s response to defendant’s overall arguments on total dollar profits and accounting was confined to supporting the findings of the Trial Judge by citing entries in the record demonstrating that plaintiff had met its burden of pleading new accounting data. B. Profits as a Percentage of Sales: In determining the percentage profits earned by plaintiff during the review years, the Trial Judge reasoned that the value of GFP “must be taken into the net renegotiable sales figure in computing profit as a percentage of sale” primarily because the “GFP Bailment System” placed the bailee (plaintiff) in “virtually the same position as a materials purchaser as to benefits derived and burdens assumed from its receipt of the GFP.” This inclusion of GFP in the total sales and total cost figures resulted in a proportionate reduction in the percentage profit figure which must be compared to determine excessiveness. The Government argues that the inclusion of the value of GFP violates both a Board regulation and a holding of this court, and asserts that the plaintiff’s position vis-a-vis a purchaser of raw materials was vastly superior. The plaintiff, according to the Government, was much better situated than the normal purchaser because it did not have to search out sources of material and because it did not have to worry about normal financing problems or possible cost increases related to materials used in production. Plaintiff counters that the additional burdens incurred by a GFP recipient more than offset any small benefit which might accrue. Plaintiff notes that the Trial Judge found detriments to the plaintiff in such arrangements as plaintiff’s contractual inability to shop around for lower price goods, plaintiff’s contractual obligation to accept from the Government up to 10% “short” pieces (which increased plaintiff’s costs of production), and plaintiff’s contractual responsibility to account for and to store separately the GFP. Plaintiff, in summary, contends that the Trial Judge was correct in finding that plaintiff stood in “virtually the same position as the purchaser of raw materials.” II. ARE PROFITS EXCESSIVE? A. Appropriate Standards of Comparison: The Trial Judge assessed the numerous standards of comparison asserted by the parties and determined that comparisons between plaintiff’s commercial and renegotiable business and between plaintiff and four of its major competitors would be the most useful standards for determining ex-cessiveness. He rejected, out of hand, defendant’s asserted base years comparison, finding that the differences between the review years and the base years were too great to allow useful comparison. Defendant argues that the Trial Judge’s use of the commercial and competitors standards was in error because both of these standards utilized review year data and the existence of a wartime economy and a general “camping craze” during these years tended to inflate all profits. The Government further contended that its use of a base years comparison presented the only proper analysis, since the base years data depicted the profits which would exist absent a war emergency. Finally, the Government asserts that the dissimilarities between plaintiff and its competitors and between plaintiff’s commercial and renegotiable sales were so great as to preclude effective comparisons, while the differences between plaintiff’s base years’ and review years’ renegotiable operations, if any existed, were minimal. Plaintiff’s rejoinder is exactly the opposite of defendant’s argument; it cites the Trial Judge’s findings of competition in the commercial market and military tent market as supporting the utility of the commercial and competitors comparisons. B Statutory Factors: The Trial Judge found that the Government had relied on the single statutory factor of net worth to an inordinate extent and then rejected defendant’s proof even under that statutory factor because he rejected defendant’s base years standard of comparison. He determined that plaintiff had made a prima facie case and, therefore, had demonstrated entitlement to some credit under each of the statutory factors. Yet defendant argued that it had, in fact, properly analyzed and applied the statutory factors with respect to Camel and that it had carried its burden of proof under the statutory factors of efficiency, reasonableness of costs and profits, net worth, extent of risk assumed, and contribution to the defense effort. Plaintiff not only agrees with the Trial Judge but further counters that any such assertion on the part of defendant is “preposterous” since the Government failed to present any competent evidence whatsoever as to any statutory factor other than net worth. On these difficult and complex questions of law and fact presented to the court, we hold that, with the exception of the exclusion of GFP, the defendant is correct in its statement of the law concerning the accounting portion of this case and that, again with the exception of GFP, the Government’s figures represent a correct accounting from which our excessive profits analysis may begin. We also hold, however, that plaintiff is entitled to favorable recognition and credit under several of the statutory factors as outlined in detail below. At this point, having presented an introduction to the history of the case, the Trial Judge’s holdings, a brief explanation of the problems involved and what each party argues, we now move forward to our analysis on review, to our summary and computations and to our final holding. I. ACCOUNTING DETERMINATIONS As previously stated, any determination of excessive profits must begin with an accurate accounting — an accurate statement of the dollar and percentage profits realized by the renegotiated contractor in each of the years under review. A. Total Dollar Profits: It is well recognized in this court that the final burden of proving excessive profits (and the coincident risk of nonpersuasion) is on the defendant. This does not, however, remove all burdens from the plaintiff, who still bears the responsibility for proving any disputed financial data. Plaintiffs burden was aptly set forth in Lykes Bros. The words will bear reemphasis: . In the course of pretrial proceedings, which may include an audit of plaintiff’s books by defendant, the parties will likely stipulate the accuracy of much of the financial data submitted by plaintiff. However, if there is a dispute about such data, plaintiff has the burden of going forward with evidence proving the accuracy of the financial data, including the segregation of the accounting on renegotiable business from nonrenegotiable business and the propriety of plaintiff’s cost allocations under accepted accounting principles, (emphasis added). 459 F.2d at 1401, 198 Ct.Cl. at 326. The rationale for such a requirement is clear. The plaintiff is in a much better position to prove financial facts concerning its own operations. While the defendant may have (and probably will have) the results of an audit on which to rely, the plaintiff has in its possession and control all essential documents and very probably employs any individuals who could in any way testify with regard to the veracity of various financial data concerning the renegotiated contractor’s operations. This makes it much easier for plaintiff to prove the accuracy or inaccuracy of any disputed accounting information. An interpretation which places both the burden of proof and the risk of non-persuasion for accounting data on the plaintiff is also in keeping with the decision of this court in Aero Spacelines, Inc. v. United States, 530 F.2d 324, 208 Ct.Cl. 704 (1976) [hereinafter cited as Aero Spacelines], where this court held: Plaintiff employed an established cost accounting method for 1966. Accordingly, in order to persuade the court to use its statutory authority to modify plaintiff’s chosen method of accounting, plaintiff must demonstrate that the method actually used does not properly reflect plaintiff’s costs, [footnote omitted] 530 F.2d at 335, 208 Ct.Cl. at 720. See also, 50 U.S.C. App. § 1213(f)(1970). Indeed, the situation which faced the court in Aero Spacelines is somewhat analogous to the case which confronts us now — a plaintiff seeking redetermination of excessive profits arrived at the trial with a set of accounting figures which were in disagreement with the figures which the plaintiff, itself, had earlier prepared (and, in the present case, submitted to the Board). The clear mandate of both Lykes Bros, and Aero Spacelines for the case at hand is that the plaintiff must carry the risk of non-persuasion as it attempts to establish its amended figures for each of the review years. In this respect, it was obvious error for the Trial Judge to place that risk on defendant. The effect of the Trial Judge’s misplacing this burden was devastating to the Government, whose entire case was based on the results of an audit which (at least for FYs 1966 and 1967 where plaintiff’s original records were available) was conducted on plaintiff’s actual, original records and on the sworn RB-1 submission which plaintiff had made to the Board. To allow plaintiff to enter into evidence new data, based solely on the highly generalized testimony of two of plaintiffs officers (who admitted they had neither assisted in the preparation of the earlier documents nor even completely surveyed the original materials), and then to require the defendant to disprove this new data based on the old audit figures, clearly places an inequitable burden on the defendant. In the case at hand, the accounting results of this misplaced burden were multiple. Monetarily, other than the GFP issue which we shall discuss separately, the largest factor involved the plaintiff’s reallocation of costs, which the Government characterized as an attempt to load “huge amounts of costs from the commercial business into the renegotiable business.” The relevant figures, as shown by defendant’s audit, were as follows: FY 1966 Total Business Renegotiable Business Commercial Business Net Sales $5,465,453.63 $2,780,606.39 $2,684,847.24 Cost of Goods Sold 4,116,760.40 1,947,126.62 2,169,633.78 Selling/ Adv. Expense 307,554.97 48,107.53 259,447.44 G&A Expenses 376,209.71 215,236.92 160,972.79 Net Operating Profit 664,928.55 570,135.32 94,793.23 % Profit (of total sales) 12.17% 10.43% 1.74% % Profit (of Renegot. sales) 20.50% % Profit (of Comm, sales) 4.3% FY 1967 Total Business Renegotiable Business Commercial Business Net Sales $7,905,020.12 - $3,808,248.02 $4,096,772.10 Cost of Goods Sold 5,706,559.26 2,433,550.68 3,273,008.58 Selling/Adv. Expense 557,299.71 155,601.71 401,698.00 G&A Expenses 534,801.79 294,670.03 240,131.76 Other Income 22,717.72 15,307.88 7,409.84 Net Operating Profit 1,129,077.08 939,733.48 189,343.60 % Profit (of total sales) 14.28% 11.89% 2.39% % Profit (of Renegot. sales) 24.68% % Profit (of Comm, sales) 4.62% FY 1968 Total Business Renegotiable Business Commercial Business Net Sales $9,659,000.00 $3,798,000.00 $5,861,000.00 Costs & Expenses 8,206,000.00 2.734.000. 00 5,472,000.00 Net Operating Profit 1,453,000.00 1.064.000. 00 389,000.00 % Profit (of total sales) 15.04% 11.01% 4.02% % Profit (of Renegot. sales) 28.01% % Profit (of Comm, sales) 6.6% These figures were entered into the record through the testimony of defendant’s witness, Frank Morris, an FBI special agent accountant, who had inspected the records of the company in both 1973 and 1974 in specific effort to develop profit and loss statements for the review years. His testimony at trial demonstrated both the diligence of his efforts to unravel the confusing track of the corporate enterprise and the inexact nature of the accounting science. He did, however, make an effort to relate all of his findings back to the records as they were kept by plaintiff, and to allocate or estimate only where gaps in the documentation or apparent discrepancies made it absolutely necessary. Plaintiff’s figures were not based on actual cost accounts. They were new, special allocations, having been created once the “inaccuracy” of the original records had been “established” by the testimony of Messrs. Bone and Laxer. The sum total of their testimony was to the effect that, although their accounting system showed costs by location of the plant, “some” renegotiable work was performed at plants classified commercial and “some” commercial work was performed at plants classified as renegotiable. Neither man could testify, nor were records produced, concerning the exact amount of costs which were “misplaced” as a result of the alleged inability of the established accounting system properly to reflect costs. Camel’s theory of its Lykes Bros, burden, apparently accepted by the Trial Judge, seems to be that once it has alleged that some “inaccuracy,” regardless of magnitude, exists in the figures arrived at through its standard accounting procedures, it may scrap all of those figures and calculate totally new figures, based on some allocative ratio of its personal choice, which it then became defendant’s burden to disprove. This is directly opposed, as we have previously discussed, to both the letter and spirit of Lykes Bros, and Aero Space-lines. It is plaintiff’s burden to go “forward with evidence proving the accuracy of the financial data” . . . “and the propriety of plaintiff’s cost allocations under accepted accounting principles.” This is particularly true where, as here, the figures it disputes are based on its own established accounting system and procedures. The risk of nonpersuasion must also remain on the plaintiff. This distribution of the burden and risk is, indeed, as defendant argues, in keeping with “administrative realities.” Neither the Board nor the Act under which it operates could continue to function if this procedure were reversed. The Board, and this court, must place the burden on the renegotiated contractor to back up all of its claimed costs with solid evidence. We hold that plaintiff has not sufficiently done so. In this case, Camel has failed to carry its burden. The failure of proof by the plaintiff extends to all of the accounting data contested by the Government, and the figures put forward by the defendant, as detailed supra, are hereby found, with the exception of GFP, to represent an accurate accounting from which all statutory comparisons must begin. B. Profits as a Percentage of Sales: Prior to converting the dollar profits into percentages, however, one significant modification must be made to those figures put forward by the Government. The figures which represent total sales and cost of goods sold must be adjusted upward to reflect the inclusion of GFP. Not only did plaintiff make a far more convincing proof for its position of including GFP, but the standard for inclusion of GFP has been significantly modified by developing case law since general standards were enunciated in Lykes Bros. In Major Coat, Judge Bennett undertook a thorough, exhaustive and well-reasoned analysis of the GFP problem. Since the Major Coat opinion was authored after the Board’s determinations in these consolidated cases, the Board clearly did not have the advantage of the Major Coat analysis when it decided to exclude GFP. However, based on Major Coat, we find that Trial Judge Spector correctly analyzed the problem and correctly included GFP in the sales and cost of material figures. In resolving a question of whether inclusion of GFP would be proper, Major Coat outlined as the court’s task: . we must determine whether a GFP ‘bailee’ bore virtually the same burdens and derived the same benefits in the handling of the GFP as would a purchaser of raw materials. A negligible difference between the two requires that the GFP be accounted for in the same manner as materials purchased. 543 F.2d at 106, 211 Ct.Cl. at 16. We believe this to be a clear and sound statement of the problem before us now. The Government cites 32 C.F.R. § 1499.1-24 (Renegotiation Ruling No. 24) (1976) in support of its contention that GFP must be excluded in our current analysis. That section states, in part: . Since the contractor does not purchase, and at no time owns, the Government-furnished materials, his return of the finished product does not constitute a sale of such materials. Therefore, the value of the furnished materials may not be included in renegotiable sales or costs. 32 C.F.R. § 1499.1— 24(d) (1976). The Government then argues that this “administrative interpretation” if reasonable, must be followed by the court. The fallacies of this assertion are numerous. As plaintiff notes, the cited section constitutes only a ruling and is thus not due the same deference as a properly-issued regulation. In addition, this ruling was issued, in 1969, after the FYs under review here. Application of the ruling to exclude GFP in fiscal years prior to its issuance would yield inequitable results and would be, at best, a questionable practice. Finally, and most importantly, the Act itself states in clear and distinct terms that: . A proceeding before the Court of Claims to finally determine the amount, if any, of excessive profits shall not be treated as a proceeding to review the determination of the Board, but shall be treated as a proceeding de novo. 50 U.S.C. App. § 1218 (Supp. V. 1975). This language indicates that the Court of Claims is not bound in any way by the final determinations of the Board, but is free to review all of the evidence and arrive at its own determinations. Our court has previously held to this effect. In Gibraltar Mfg. Co. v. United States, 546 F.2d 386, 212 Ct.Cl. 226 (1976) [hereinafter cited as Gibraltar ], we stated that: . We think that in executing our responsibilities under 50 U.S.C. App. § 1218, ... we may not accord the Board decision a presumption of correctness, or treat it as evidence in support of its conclusion. . . . 546 F.2d at 388, 212 Ct.Cl. at 229-30. If this court, then, is not bound by a final determination of the Board, why should it be restricted to following, as the Government argues, a rule of procedure which the Board applies in reaching its determinations? There is no convincing reason. Indeed, if we were to accept the Government’s assertion as correct, the Board could, conceivably, issue a sufficient number of “rulings” so that its procedures in accounting became so structured as to make the process almost a ministerial function — and this court would be bound by those procedures. We cannot, and will not, accept such reasoning. The only way in which the purposes of the Act in this regard can properly be achieved is for this court to accord the renegotiated contractor a totally fresh hearing which, from the start, is free from the strictures of Board procedures and any presumption of correctness in the Board’s determinations. This is not to say that we may not benefit from the Board’s expertise. Indeed, “we may [often] take a sideways glance at [a Board decision] as a mere suggestion.” Gibraltar, 546 F.2d at 388, 212 Ct.Cl. at 230. However, after taking our “sideways glance” at the Board ruling here at issue, we believe the rationale of the Major Coat analysis to be far superior in fairly determining the GFP issue. If there be, in fact, a “negligible difference” between a recipient of GFP and a regular purchaser of raw materials, then fairness “requires that the GFP be accounted for in the same manner as materials purchased." Major Coat, 543 F.2d at 106, 211 Ct.Cl. at 16. The Major Coat opinion analyzed the GFP bailment system at some length and detailed some important touchstones which could be utilized in determining whether more than a “negligible difference” existed between the GFP bailee and the raw materials purchaser. The court there distinguished the GFP bailment system from the earlier “free issue system” (although it noted that under both systems the contractor was “relieved” of both the problem of source location and any difficulties encountered in normal financing), pointing out that, under the GFP bailment system, the entire risk of end-item yield was placed squarely on the contractor. After carefully balancing the benefits of the GFP bailment system to the contractor against the numerous component risks subsumed in this end-item yield risk, the Major Coat court stated: On balance, we conclude that, on the facts of this case, the value of the GFP should be taken into the net renegotiable sales figure and included in calculations of renegotiable profit as a percentage of sales, to place plaintiff on a parity with a manufacturer that purchases all the materials it uses. 543 F.2d at 108, 211 Ct.Cl. at 20. The court also cautioned, however, that it was not enunciating a universal rule of GFP inclusion, that the balancing must be done on the facts of each particular case, and that the GFP-included percentage profit figure could not be compared to other, GFP-excluded percentage profit figures with any expectation of helpful or equitable results. Applying the Major Coat balancing test to the case at hand, we find that the Trial Judge had on the record more than a sufficient number of facts from which he could properly conclude that Camel, as a GFP bailment system bailee, was in “virtually the same position as a materials purchaser as to benefits derived and burdens assumed from its receipt of the GFP.” Indeed, the Trial Judge could, and did, find on the basis of the record developed by plaintiff that the plaintiff, as a GFP bailee, assumed obligations, in addition to those of a materials purchaser, which served to offset the benefits argued by the defendant. We hold that the appropriate value of GFP provided to Camel must be included in its review year figures for purposes of renegotiation. Such inclusion would have the following results on the Government audit figures already approved, with the exception of the GFP issue, as correct statements of plaintiffs review years accounting. FY 1966 Total Business Renegotiable Business Commercial Business Net Sales $7,639,054.63 * $4,954,207.39 * $2,684,847.24 Cost of Goods ' Sold 6,291,361.40 * 4,120,727.39 * 2,169,633.78 Selling/Adv. Expense 307,554.97 48,107.53 259,447.44 G&A Expenses 376,209.71 215,236.92 160,972.79 Net Operating Profit 664,928.55 570,135.32 94,793.23 % Profit (of total sales) 8.7% * 7.46% * 1.2% * % Profit (of Renegot. sales) 11.51% * % Profit (of Comm, sales) 4.3% * FY 1967 Total Business Renegotiable Business Commercial Business Net Sales $11,214,217.12 * $7,117,445.02 * $4,096,772.10 Cost of Goods Sold 9,015,756.26 * 5,724,747.68 * 3,273,008.58 Selling/Adv. Expense 557,299.71 155,601.71 401,698.00 G&A Expenses 534,801.79 294,670.03 240,131.76 Other Income 22,717.72 15,307.88 7,409.84 Net Operating Profit 1,129,077.08 939,733.48 189,343.60 % Profit (of total sales) 10.06% * 8.37% * 1.69% * % Profit (of Renegot. sales) 13.20%* % Profit (of Comm, sales) 4.62% * FY 1968 Total Business Renegotiable Business Commercial Business Net Sales $12,880,823.00 * $7,019,823.00 * $5,861,000.00 Cost of Goods Sold 11,427,823.00 * 5,955,823.00 * 5,472,000.00 Net Operating1 Profit 1,453,000.00 1,064,000.00 389,000.00 % Profit (of total sales) 11.2% * 8.20% * 3.00% * % Profit (of Renegot. sales) 15.16% * % Profit (of Comm, sales) 6.6% * As can be seen by a comparison of the GFP-inclusive and the GFP-exclusive tables, the most significant effect of the inclusion of GFP is the reduction of percentage profits (from renegotiable business) from 20.50%, 24.68%, and 28.01%, respectively, for the three review years, to 11.51%, 13.20% and 15.16%, respectively. We further hold, as a matter of fact and of law, that these are the appropriate figures, as developed in the immediately preceding tables, for use in the Standards of Comparison and Statutory Factor analyses which follow. In summarizing the accounting portion of this opinion (Part I), weighing all the evidence, we hold that defendant has overcome the Rule 147(b) presumption of correctness attaching to Judge Spector’s opinion and fact finding, insofar as the Trial Judge misconstrued the Lykes Bros. — Aero Spacelines burden of proof requirements and incorrectly accepted as persuasive plaintiffs accounting data. However, we further hold that Judge Spector was correct in denying defendant a default judgment for FY 1968 and was correct in his inclusion of the value of GFP in figuring percentage profit. II. ARE PROFITS EXCESSIVE? With the proper accounting figures thus determined, it is now possible to move on to compare this data, as directed by the statutory factors, against other available data to determine whether the profits realized by Camel were excessive. In this next phase, the determination of excessiveness, the burden of proof shifts to the defendant, who must convince us of both the fact and amount of excessive profits. A. Appropriate Standards of Comparison : Another vigorously contested aspect of this case involves the proper comparisons to be made in determining what portion, if any, of a company’s renegotiable profits were excessive. As previously discussed, the Government asserts that, according to the >prior opinions of this court, a “normal years” or “base years” method of analysis constitutes the proper comparison. Plaintiff adopted a more scattershot approach, introducing evidence derived from its own commercial business, its whole group of military tentage competitors, and an Internal Revenue Service grouping of 150 loosely related fabric and textile manufacturers. The Trial Judge assessed this veritable plethora of options and arrived at the conclusion that Camel had realized no excessive profits in any of the review years. The confusion and disagreement here, as well as the wide range of theories put forth, indicate the need for some further guidelines in this comparative area of renegotiation law. Initially, we should state that we forego the opportunity to wander into the intellectual mine field that is the Government’s exercise in semantics concerning whether the Act is primarily aimed at prices or profits. It serves no useful purpose. In fact, in many respects, prices and profits represent two sides of the same coin. For our purposes, the goals of the Act were more than adequately set forth in Major Coat: . Renegotiation merely seeks to reconstruct the competitive price to the Government, and the competitive profit for the contractor, that negotiation would have produced absent the suddenness of wartime demand on the marketplace. 543 F.2d at 110, 211 Ct.Cl. at 24. (emphasis added) Thus, in order properly to determine what profits of the renegotiated contractor, if any, were excessive and the result of the “suddenness of the wartime demand on the marketplace,” this court must attempt to “reconstruct” some sort of normality from what is essentially an abnormal environment, the wartime marketplace. The basically theoretical nature of such an attempt at reconstruction often necessitates a “broad brush” approach to the entire matter, see, e. g., Gibraltar, 546 F.2d at 388, 212 Ct.Cl. at 229; A. C. Ball Co. v. United States, 531 F.2d at 996, 209 Ct.Cl. at 229, with the ultímate goal being a fair and equitable adjustment which allows a contractor to retain what he has rightfully earned, but requires him to disgorge any sums which have accrued to him through what might properly be termed “profiteering.” In undertaking this effort, the court has been directed by statute to consider certain factors. It is what the statute does not say, however, which causes the difficulty; it does not say how, or against what background, we are to “consider” these factors. Since no absolute standards are dictated (which would be virtually impossible to formulate), it seems clear that renegotiation must be a “comparative process.” See, e. g., Major Coat, 543 F.2d at 102, 211 Ct.Cl. at 9. The goal of this comparative process is to answer a very “important question in renegotiation [which] is ‘ . . . where the contractor in a defense industry belongs in the hierarchy of profit returns of industry as a whole and the reason for his being placed in that particular position.’ ” Aero Spacelines, 530 F.2d at 340, 208 Ct.Cl. at 730. (citation omitted) In our previous renegotiation cases, we have formulated a sort of seriatim approach to the consideration of each of the statutory factors. See, e. g. Major Coat, 543 F.2d 97, 211 Ct.Cl. 1 (1976); Butkin, 544 F.2d 499, 211 Ct.Cl. 110 (1976); Mason & Hanger-Silas Mason Co., Inc. v. United States, 518 F.2d 1341, 207 Ct.Cl. 106 (1975). While this approach has enabled us to maintain the flexibility so vital to achieving the purposes of the Act, see Mason & Hanger, 518 F.2d at 1346-48, 207 Ct.Cl. at 115-18 (citing Lichter v. United States, 334 U.S. 742, 773 and n. 18, 68 S.Ct. 1294, 92 L.Ed. 1694), it has also, apparently, encouraged a scatter-shot approach by plaintiffs and the Government alike. In these cases, we have compared renegotiated contractors to themselves (a “base years” or “normal years” approach), see, e. g. Gibraltar, 546 F.2d at 391, 212 Ct.Cl. at 235, to other contractors with varying degrees of similarity to the renegotiated contractor, see, e. g. Major Coat, 543 F.2d at 120, 211 Ct.Cl. at 41, and to both themselves and other contractors, see, e. g. Mason & Hanger, 518 F.2d at 1365, 207 Ct.Cl. at 146-47. Of these various approaches, the dual comparison appears most appropriate; in fact, if our purpose is actually to “reconstruct” normality, the greater the number of useful comparisons we can make, the closer we can come to estimating what a normal business environment might be. We have often, however, been limited to one comparison or another by the absence or lack of utility of evidence from which to draw any others. We have also previously recognized that the relative utility of a given comparison is based on the similarities which can be established between the renegotiated contractor and the standard to which we attempt to compare it. See, e. g., Major Coat, 543 F.2d at 120, 211 Ct.Cl. at 42. The perhaps inevitable result of our looking at various unrelated standards and attempting to assess the relative utility of each is apparent in the case at hand; the renegotiated contractor and the Government each selects a standard on which to rely and argues the statutory factors in relation to that standard. As a consequence, they almost totally “miss each other” in their attempted proofs; neither adequately answers the other. The result is an incomplete patchwork of asserted economic data from which we must pick and choose in our attempt to reconstruct normality. In this case, the proceedings before the Trial Judge represented nearly a classic example of the parties’ arguing past each other. The plaintiff, as was its burden under Lykes Bros., went forward by pleading the statutory factors upon which it relied for favorable consideration. However, it chose as standards of comparison its own commercial business and the businesses of other military tent producers and other textile manufacturers. Defendant responded by relying primarily upon the statutory factor of net worth and employment of capital, but it chose as its standard of comparison the plaintiff’s own business during the base years. The Trial Judge was thus faced with the monumental task of sorting, picking and choosing among numerous diverse facts in an effort to arrive at a fair and equitable conclusion. Our next analytical task, then, would appear to involve an evaluation of the asserted standards of comparison, in order that we may determine which of these standards can effectively be utilized as a “starting point” in our determination of excessiveness. Plaintiff has asserted a number of possible standards against which we could measure its profits. First, it produced evidence of its profitability in comparison with certain of its competitors in various groupings. (For clarity in further discussion, we will term this “competitor’s comparison” Comparison X.) The first grouping suggested by plaintiff is a grouping of primarily military tent manufacturers by their earnings on General Purpose Medium (GPM) tent contracts, which contracts constituted the bulk of their renegotiable work. While we decline to utilize this grouping because we do not have sufficient data to determine how properly to calculate plaintiff’s GPM profit, as plaintiff would have us do, we note in passing (and taking our “sideways glance” at Board proceedings) that these contractors with similar volume, whose GPM tent contracts constituted significant portions of their renegotiable work, had their GPM profits renegotiated by the Board to 14.1% in FY 1966 and to between 13.6% and 15.4% in FY 1967. While these figures may be of questionable probative value since we have no record of the Board’s deliberations in obtaining them, they may constitute a useful background by indicating what the Board, in exercising its experience and expertise, believed to constitute a “normal” profit in each of those FYs. Plaintiff’s second suggested grouping under Comparison X is more generalized, consisting of all military tent makers earning profits within the review period and reporting to the Board. This grouping consisted of plaintiff’s regular competitors, plus ten other firms without such prior experience, who joined the military tent market during the review years. A table of this comparison could be depicted as follows: Comparison X FY 1966 Plaintiff Others No. of Others Sales range Actual profit $2.8 million 20.50% $1.4-$2.8 million 9.2%-34.4% (4) After Board action ** 9.2%-15.4% FY 1967 Plaintiff Others No. of Others Sales range Actual profit $3.8 million 24.68% $l.l-$6.7 million 6.9%-39.1% (7) After Board action ** 6.9%-15.4% FY 1968 Plaintiff Others No. of Others Sales range Actual profit $3.8 million 28.01% $l.l-$5.4 million 7.6%-50.0% (H) After Board action ** 6.8%-15.6% Plaintiffs third suggested grouping under Comparison X involved companies listed by the IRS in its Corporation Source Books of Statistics of Income under IRS’s Standard Enterprise Classification 2398. This grouping consisted of 150 “Miscellaneous Fabricated Textile Producers” (of which Camel was one) with assets between $1 million and $5 million. Unfortunately, the IRS statistics (as presented by plaintiff) show nothing about individual companies’ involvement with military tent manufacturing, product mix, sales volume or facilities and operations. More importantly, however, the IRS profit figures are given only as averages and, therefore, are not useful to us since we cannot assume Camel to have been merely an average manufacturer. In any event, tax figures are not the same as book figures. Thus, the first and third of plaintiff’s suggested groupings under Comparison X must be rejected outright. We also note, as did the Trial Judge and the Government, significant difficulties with the second suggested grouping. The review period product mixes for most of the other manufacturers are unknown, as are the nature and similarity of the other manufacturers’ plants and operating facilities. Perhaps the most troublesome factor, however, is the one pointed out by the Government. In any comparison with competitors during a year under review, there exists the danger that the competitors’ profits, too, will be excessive because of a generally overheated market. The Trial Judge, aware of this problem, noted that the situation here was not as non-competitive as the situation in Major Coat, where the Government was forced to resort to “rated orders.” The Government cites this language of the Trial Judge concerning “competition” as evidence that he confused antitrust law with renegotiation law. We do not believe this to be the case. Certainly, when one is comparing relative profit figures, the nature of competition in the market in which those profits were obtained will be useful in determining the probative value of those figures and the weight which should be given the comparison in a final determination of “excessiveness.” Where there is proof of a total lack of competition, such a comparison may be of virtually no use, see, e. g., Major Coat, 543 F.2d at 113, 211 Ct.Cl. at 28; on the other hand, where effective competition is proven, such a comparison may be quite useful in “reconstructing normality.” The case at hand appears to present a sort of middle of the road situation — not as non-competitive as the one in Major Coat, and yet certainly not a model of a fully competitive market. We must take this factor into account in weighing Comparison X. Also, in taking yet another “sideways glance” at the Board’s determinations, we note that the Board considered up to a 15.6% profit to be “normal.” Despite the problems noted and the cited dissimilarities, we find that plaintiff’s Comparison X, when the grouping of all other military tent manufacturers is employed, may be of value to us in determining what constituted “normal” profits during the review years, so long as an appropriate discount in probative weight is allowed for the cited difficulties with this standard. The plaintiff asserts yet another comparison which it claims will assist us in our task of reconstructing normality, a comparison with plaintiff’s own commercial market (Comparison Y). The Trial Judge considered plaintiff’s evidence disclosing its own profitability in commercial sales to be “highly relevant” for the purpose of establishing an index of reasonable profit in the pertinent commercial sector. He, in turn, considered the commercial market to paint an excellent picture of “normality” because the Government presented no evidence that a “viable pricing mechanism” did not exist in the concurrent commercial market. As with Comparison X, we note the difficulties in comparing the plaintiff’s renegotiable business with its commercial business. For example, the Government has pointed out the dissimilarities between the products which plaintiff produced for the commercial market and the products which it produced for the Government. The Trial Judge has noted, however, his reasons for considering Camel’s commercial business to be a useful comparison and we find his conclusions on this matter persuasive. Since it appears that there was greater competition in the commercial market than there was in the military tent market and since we find the similarity between Camel’s commercial and renegotiable business to be at least as great as the similarity among the “all military tentmakers” group, we conclude that plaintiff’s Comparison Y is entitled to relatively greater weight as a “starting point” than is Comparison X. The Comparison Y standard may be depicted in the following fashion: Comparison Y Renegotiable Commercial FY Sales (000) Profits Sales (000) Profits 1966 4,954 11.51% 2,684 4.3% 1967 7,117 13.20% 4,097 4.6% 1968 7,019 15.15% 5,861 6.6% Ironically, because of the accounting adjustments made in Part I supra, neither one of the standards asserted by the plaintiff paints a picture entirely favorable to the plaintiff. About the only thing that can be said is that plaintiff’s review year profits were not as high as some of its competitors in the military tent market. On the other hand, all those competitors with higher profits had them renegotiated downward by the Board, so Camel cannot be heard to complain that it was singled out for special treatment. The defendant contends that the only appropriate comparison must involve as a “starting point” the plaintiff’s renegotiable business before the Vietnamese War caused a heat-up in the market. The Trial Judge rejected this so-called “base years” comparison (Comparison Z) out of hand, citing as a reason the many differences which he drew from the evidence presented between the plaintiff’s base years’ renegotiable operation and its review years’ renegotiable operation. This summary rejection was an incorrect approach. The dissimilarity between Camel’s base years and review years was not of a different magnitude than that between Camel’s renegotiable and commercial business or than that among the various military tent manufacturers. The dissimilarity cited by the Trial Judge was an eminently sufficient reason to discount the weight accorded the comparison (as we discounted Comparisons X and Y), but it was certainly not enough to compel total rejection, particularly when the comparative standards offered by the plaintiff were as flawed and difficult to apply as were the ones offered here. It is conceivable that a plaintiff, in presenting a prima facie case, could introduce such an airtight wealth of economic data, could introduce such a complete and detailed analysis of its change in economic conditions or its change in realized profits, that a comparative standard as inexact and dissimilar as the Trial Judge determined defendant’s base years analysis to be could be discounted almost to the point of rejection. However, in the situation we face here, where plaintiff has itself offered only the skimpiest of economic data, and has offered no explanation of its own upon which we could draw, concerning its apparently healthy increase in profits between base years and review years, defendant’s asserted comparison (Comparison Z) should be balanced and weighed with the rest. In our effort to reconstruct normality, every comparison we can make will be helpful, so long as we allow for the relative shortcomings of each. The defendant’s asserted comparison with GFP included shows the following: Comparison Z Total Sales Renegotiable Sales Renegotiable % Profit Base Years PY 1964 3.499.693.00 $1,934,809.00 6.1 % PY 1965 4.591.568.00 2,503,541.00 4.7 % Review Years PY 1966 7,639,054.63 4,954,207.39 11.51% FY 1967 11,214,217.12 7,117,445.02 13.20% PY 1968 12,880,823.00 7,019,823.00 15.16% Based on a relative balancing as described above, we find that this standard of comparison (Comparison Z) is entitled to weight greater than Comparison X, but not as great as Comparison Y. While we find Comparison Y to be the most useful standard for determining a “starting point” in the instant ease, we do not dismiss totally either Comparison X or Comparison Z; instead, we retain these useful comparisons to assist us in reconstructing “normality.” Regardless of which standard is accepted as a starting point, however, it appears that the profits realized by plaintiff on its renegotiable work during the review years were relatively high and that the Board’s determination or some determination of exces-siveness may have been proper. It remains to be seen, though, by an analysis of the statutory factors, weighted according to the comparisons upon which they rely, whether plaintiff is entitled to any favorable consideration sufficient to allow retention of those profits which now may appear to be excessive. B. Statutory Factors: (1) Efficiency: This, the most emphasized of the statutory factors, is the one factor for which we are directed to allow the renegotiated contractor “favorable recognition,” where merited. It appears that the Government has overstated its case a bit when it argues that the purpose of the Act is to ensure that “a contractor with experience and efficient equipment should pass on the benefits of its expertise to the government.” As we have already stated, the purpose of the Act is to restore, to the greatest pos