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The Air Force asked GENDYN to analyze the savings potential
by using multiyear contracts. GENDYN surveyed its subcontractors
and suppliers to determine whether (and by how much) it could
negotiate lower prices for larger buys and higher production
rates. GENDYN also evaluated potential savings in the areas of
labor and overhead.
GENDYN and the Air Force anticipated that multiyear
contracting would enable GENDYN to lower its material cost
and result in labor cost savings. Overhead cost savings were
expected, and GENDYN and the Air Force anticipated other benefits
from a multiyear procurement of F-16's. Both GENDYN and the Air
Force had significant business purposes for entering into a
multiyear contract instead of the single-year contracts to which
they were then committed.
Under the military regulations governing multiyear
contracts, sole source contracts may be awarded if a Government
department can demonstrate certain benefits and conditions. In
order to meet the regulations, the Air Force, on January 22,
1981, issued a notice inviting GENDYN to submit comparative
alternate proposals for the production of 480 F-16 aircraft
applying either to a series of annual-buy contracts or a
multiyear contract.
GENDYN responded to the RFP on March 17, 1981. In its
comparative price proposals, GENDYN priced the aircraft using a
variety of assumptions. As requested in the RFP, GENDYN
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