General Dynamics Corporation and Subsidiaries - Page 12

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          “Economic Order Quantity” (EOQ) for all 4 fiscal years, including           
          the 1983, 1984, and 1985 program years.  Long-lead items consist            
          of parts or components required to protect future delivery                  
          schedules, even beyond the year of procurement.  EOQ items are              
          parts and components that a contractor may procure in sufficient            
          volume to obtain quantity discounts.  EOQ is a concept that is              
          unique to multiyear contracting.                                            
               In certain types of Government contracting, after a contract           
          has been awarded and work commenced, prices may be ultimately               
          negotiated by a process known as “definitization”.                          
          Definitization of the Air Force's price for the F-16's was to be            
          accomplished with respect to all 480 aircraft.  Contract 2034               
          identified the items required to be delivered by use of Contract            
          Line Item Numbers, or “CLIN’s”.  CLIN’s, in the broadest of                 
          terms, describe the part or item under contract.  For example,              
          CLIN 0002AC contains the following:  “45 EACH - USAF FY83 F-16C             
          AIRCRAFT”.  Other CLIN’s in Contract 2034 required GENDYN, among            
          other requirements, to:  Incorporate engineering changes in the             
          aircraft, furnish training equipment and incorporate engineering            
          changes in such equipment, provide support equipment and                    
          incorporate engineering changes in such equipment, furnish                  
          retrofit kits and alternate mission equipment, generate a variety           
          of test and other data, and provide repair services for certain             
          Government-furnished equipment.                                             

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