General Dynamics Corporation and Subsidiaries - Page 7

                                        - 7 -                                         

          the enhanced versions more affordable.  One approach explored by            
          the Air Force and GENDYN was to use multiyear contracts (a                  
          contract covering more than 1 year) rather than a series of                 
          single-year contracts.  From GENDYN’s point of view, single-year            
          contracts provided little incentive to invest in capital                    
          equipment or otherwise attempt to reduce its costs.                         
          Additionally, they did not allow GENDYN to take advantage of                
          quantity discounts in ordering materials from subcontractors and            
          related suppliers.  Finally, GENDYN found the single-year                   
          contract approach to be more expensive to negotiate and                     
          administer, and it resulted in higher overhead costs per                    
               The Air Force, however, could not make a contractual                   
          commitment that transcended the Government's fiscal year because            
          of the Antideficiency Act, 31 U.S.C. sec. 1341 (1994) (formerly             
          31 U.S.C. sec. 665).  The Antideficiency Act prohibits the                  
          executive branch from obligating funds not yet appropriated by              
          Congress.  Multiyear contracting is an exception to the full-               
          funding rule.                                                               
               A multiyear contract enabled the Government to provide for             
          up to 5 years of requirements without authorized full funding at            
          the awarding of a contract.  With a multiyear contract, the first           
          year's requirement is usually funded in full, but the ensuing               
          years’ are not.  A multiyear contract commits the Government to             
          purchase the quantity of items specified in the contract.  The              

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011