General Dynamics Corporation and Subsidiaries - Page 11

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          In this regard the Air Force generally would determine whether              
          lower prices could be negotiated.                                           
               The Air Force, by reviewing GENDYN's Fort Worth operation,             
          confirmed that there would be savings in a multiyear approach.              
          Based in part on the information it received in response to the             
          RFP, the Air Force submitted a justification package to Congress            
          in October of 1981, as required under the multiyear legislation.            
          Late in 1981, the Air Force decided it wished to purchase the               
          aircraft through a multiyear procurement.  At that time, however,           
          Congress had not yet authorized the Air Force to proceed in that            
          manner.  In addition, Congress had not amended the multiyear                
          legislation to increase the maximum allowable cancellation                  
          ceiling to an amount above $5 million, a change that was                    
          necessary to permit multiyear contracting for large contracts.              
               While awaiting congressional action to increase the maximum            
          allowable cancellation ceiling, on December 3, 1981, GENDYN and             
          the Air Force entered into the 480-aircraft agreement (Contract             
          2034).  Contract 2034 concerned the production of 480 F-16                  
          aircraft, 120 in each of the 4 program years 1982-1985.  Contract           
          2034 was subjected to numerous modifications.  Although it                  
          provided for 480 aircraft to be delivered at a rate of 120 per              
          program year, GENDYN was authorized to perform work leading to              
          the delivery of all 480 aircraft.                                           
               Initially, money for the first year's production (1982) was            
          appropriated, along with funding for long-lead items and                    

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