- 15 -
of the Air Force and GENDYN in the event the Air Force cancels
its requirement for the items covered by the contract. Clause
I-6 of Contract 2034 permitted the Air Force to cancel for any
program year that had not yet been fully funded, in the event
Congress did not appropriate the necessary funds.
In the event that the Air Force canceled the contract,
GENDYN was entitled to recover costs incurred on items concerning
aircraft that were not yet fully funded. GENDYN was also
entitled to recover specified amounts on the aircraft that were
fully funded and would be ultimately completed and delivered to
the Air Force after the contract cancellation.
In particular, GENDYN's cancellation claim could include:
(i) reasonable preproduction and other non-
recurring costs, incurred by the Prime Contractor or
his subcontractors applicable to and which normally
would be amortized in all items to be furnished under
the multiyear requirements (such as plant
rearrangement, special tooling, preproduction
engineering, initial rework, initial spoilage, and
pilot runs);
(ii) labor, materials and other costs incurred by
the Contractor or its subcontractors for production of
the cancelled items consistent with Special Provision
H-77 entitled "Material Commitment";
(iii) the reversionary cost impact on the non-
cancelled items; and
(iv) a reasonable profit on such incurred costs.
“Reversionary cost impact” would involve cost variations
(presumably increased cost to GENDYN because of losing the
benefit of volume discounts and labor savings). In the event of
Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 NextLast modified: May 25, 2011