DISCUSSION We have little difficulty with the last item above, the cost of the space rented at the Boston Memorial Auditorium in connection with the annual meeting and technical display of the American Institute of Aeronautics and Astronautics. The Government relies on the letter of the second sentence of 15-205.1 that advertising media include conventions and exhibits but reads into that sentence more than is there. The sentence does not purport to make unallowable the costs of all conventions and all exhibits but only to identify them as among the media which may be used for the advertising for which costs may be allowed. If the convention or the exhibit is not a medium for advertising then the subparagraph does not make the cost unallowable. There is nothing whatsoever in this record to bring this exhibit, whatever it was (and it is not identified), and its use, within our definition of advertising. "We had engineers give periodic presentations on a number of aspects of the company's activities." (Tr. 241) Similar costs of rental space for the module, under items 13 and 15, the annual meetings of the Air Force Association and the Association of U. S. Army, respectively, present a somewhat different picture. Under item 1 above we quoted an outline of Boeing's briefing as it appeared in the announcement of the event. It was elaborated on as follows by Boeing's witness (p. 232): "You will note from the picture that we have a "This particular presentation to the group in 1966 We reject as improper for consideration here the Defense Contract Audit Manual from which the Government attorneys have quoted (above) in their brief (p. 31). Not only is it not part of the contract or otherwise binding on the contractor but the Defense Department has even resisted, so far successfully, its disclosure to at least one defense contractor's legal representative. (Cuneo et al v. Laird, 338 F. Supp. 504 (1972), remanded for further proceedings sub nomine Cuneo et al v. Schlesinger D. C. Cir. No. 72-1328, 5 Sep. 1973. The Government's expert, Chairman of the Part 2 Section XV Subcommittee, testified to his belief that Section 15-205.43 would allow costs of business meetings "to the extent that it is primarily for technical purposes" (Tr. 563). This is exactly what the Section says. This problem is not easy of solution for the presentation in question has both technical aspects and advertising features. On balance we cannot find that the primary purposes of this expenditure and the similar expenditures for the Association of U. S. Army (item 15) were the dissemination of technical information or the stimulation of production. On the contrary, we find the briefings and related displays were advertising directed to potential customers and the cost may not be allowed. As such non-reimbursable activities they cannot support the cost ($1,030) of the four banquet tables and two tickets to the Chief Executives Reception in connection with the Aerospace Development Briefings. Nor can we find support for reimbursement for the cost of 20 tickets (2 tables) at the Honor's Night Banquet, a feature of the Annual Convention of the Air Force Association, claimed here under item 14. Neither this organization nor the Association of U. S. Army nor the Navy League is a trade, technical or professional organization within the meaning of Sec. 15-205.43 and the identity of Boeing's guests (business associates and customers) and the program itself unmistakably establish this affair as entertainment under Sec. 15-205.11. On the other hand, we have no difficulty finding that the primary purpose of the meeting of the Society of Experimental Test Pilots (item 17) was the dissemination of technical information and the banquet was an integral part of the affair. The costs here claimed for the Navy League Convention (item 16) differ from the costs for the other service-related organizations in that they are not payment for goods or services but are "support" for a convention. Inasmuch as this "support" cost is not covered as a selected cost under Section 15-205, we think it should be allowed or disallowed as the "dues" expenses for all of these military-related organizations are allowed or disallowed under the next heading. The costs of the Boeing management dinner (item 18) presents a close and difficult question because here, too, the dinner was calculated to improve the morale of those employees attending (although it is doubtful that the principle [ASPR 15-205.10] was written with management personnel in mind) and it also had many aspects of amusement, diversion and social activities (ASPR 15-205.11). We do not recognize as controlling or even apposite the Government's offering as precedent for disallowance decisions in Garwood Industries, Inc., Audio Products Corp., and Ranier, Inc. v. United States, supra. All three were price redetermination cases. In Garwood, the Board said the contract set forth no costing principles. In Audio Products Corp., the Board applied an "incident to and necessary for" standard, and in Ranier we find no cost similar to the cost in question here. Nevertheless, and despite some but no controlling similarity between this even and the "patio party" in Brown Engineering Co., Inc., supra, we think the costs under this item do not qualify for payment. There are many similarities between this affair, the management dinner, and item 19, the Logistics Management Institute dinner. All business at the two-day meeting of the Institute was scheduled to be conducted prior to and after the "Dinner with Mr. Allen" (Tab 15.7c). The costs of that dinner have to be classified as "entertainment" under Sec. 15-205.11. The costs incident to the Seattle Chamber of Commerce luncheon are disallowed for the same reason. Chambers of Commerce may be "trade, business or professional organizations" as the company argues but the primary purpose of the incurrence of this costs was not the dissemination of technical information or the stimulation of production. The allowance of the cost of the anniversary civic banquet (item 9a.) is no authority here. We there allowed only certain incidental costs for an emergent reason under Secs. 15-201.1 through 15-201.4. D. DUES EXPENSE 22. Greater Seattle, Inc. $600.00 This is an organization to promote the City of Seattle, largely the outgrowth of an original week-long festival a number of years ago known as "Seafair," and expanded to sponsor cultural and entertainment events, to promote sports events and, since the end of Seattle's World Fair, to handle the programming and promotion of Seattle Center (Tab 4.1e). It is likened to a Chamber of Commerce (Tr. 78). This expense item is the total of a "Firm Membership Renewal" of $100 (Tab 4.1b) and an "Underwriting Renewal" of $500 of which nothing more is disclosed by this record. "1Q. The second invoice is $500, a contribution which you made and have been making for underwriting theoperation of Greater Seattle, Inc., and the first invoice is for the membership dues, is that correct? "A. I don't personally know the specific membership fee or whether they have a fee structure. I know we did pay this amount in accordance with what we had been doing in the form of two separate checks." (Tr. 411) The Company's president when these payments were made was a member of the Board of Directors of the organization (Tab 4.1d). In a letter to the Contributions Committee of Boeing in April 1967, subject "Participation of the Boeing Company in the rebuilding and expansion of Greater Seattle, Inc., asking for a contribution of at least $5,000, the organization's president said, "In 1966 corporate support of Greater Seattle totalled approximately $80,000. of this $500 was contributed by the Boeing Company." (Tab 4.1e) 23. Municpal League of Seattle and King County $1,200.00 This organization is "an independent, non-partisan group of Seattle-Kind County citizens whose objective is the improvement of local government" and which has set for itself the following goals: 1. Honest, efficient, effective government 2. 3. 4. 5. Helping voters evaluate ballot propositions Boeing paid for quarterly firm membership the sum of $300.00 (Tab 4.2b). 24. Stanford University Business School $1,500.00 The expenditure here is what Boeing paid for membership in the Affiliate Program of the Graduate School of Business of Stanford University. The following is a digest of that Plan (Tabs 4.3a, 4.3c): "Stanford University Affiliate Program The Affiliate Plan of the Stanford Graduate. School of Business was created to establish a closer, mutually beneficial relationship between the School and the Business Community. What Affiliate Membership means to Business: 1. An improved and enriched two-year program of 2. Vigorous research to expand knowledge of administrative problems and processes. 3. A more intensive and extensive doctoral program. 4. A program of continuing education for existing Values received by Affiliates: 1. Invited to participate in all management programs and business conferences. 2. Use of Jackson Library of Business. 3. School's placement service extends the fullest 4. Research reports and other publications are sent 5. Special seminars are held on such subjects as The cost of membership is variable and ranges from $1,000 to $10,000. In January 1966 the company held a $1,000 membership. In February of that year it paid the $1,500.00 here in question to renew its membership for the year. No explanation is made of the increase. "I think they must have bought a $1,500 membership in 1966. There must have been some communication about the price between the parties." (Tr. 416) In a letter to the president of Boeing from the president of Standard Oil Company of California in 1961, inviting Boeing to become |