General Dynamics Corporation and Subsidiaries - Page 8

                                        - 8 -                                         

          contractor commences work on the entire quantity, not just the              
          (lesser) quantity that has been fully funded.  So, for example,             
          the contractor may commit to purchase sufficient quantities of              
          parts from subcontractors to construct all of the contracted                
          items, even though the parts may not be utilized until several              
          years later.                                                                
               The Government may cancel or terminate a multiyear contract            
          if funds are not appropriated by Congress or the contracting                
          department or agency no longer requires the item being procured.            
          If a multiyear contract is canceled, the contractor may attempt             
          to recover certain of its incurred costs, plus a reasonable                 
          profit, not to exceed a specified “cancellation ceiling”.  The              
          provisions governing cancellation are unique to multiyear                   
          contracts; no other form of Government contract may be canceled.            
          The Government may cancel a portion of a multiyear contract only            
          on the first day of each successive fiscal year encompassed                 
          within the contract.  Any cancellation applies to all remaining             
          years in the canceled contract.                                             
               In the second half of 1980, the Air Force assembled a task             
          force to study the potential benefits of multiyear contracting              
          for the F-16.  Based upon its analysis, it was estimated that the           
          Air Force could save approximately 10 percent per aircraft by               
          procuring the F-16 through one or more multiyear contracts as               
          opposed to using the annual contracting approach.                           

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