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cancellation, not all of the costs identified in clause I-6(f)
would necessarily be recoverable. Only those costs that were
allowable could be recovered, and only in an amount that did not
exceed the negotiated cancellation ceiling. The cancellation
ceiling agreed to in Contract 2034 was less than the amount
GENDYN had originally estimated and proposed would be necessary
to make itself financially whole in the event the program was
canceled.
In addition to its right to cancel Contract 2034 for lack of
funding or because it no longer needed the aircraft, the Air
Force possessed the right (which is standard and required in all
Government contracts) to terminate the contract for convenience
or for default. In a termination for convenience, the Government
orders a contractor to stop work for any or no reason at any time
prior to the delivery of the last item required under the
contract. The contractor then submits a claim to recover its
incurred costs plus a reasonable profit. Not all of the
contractor's costs may be recoverable.
In a termination for default, the Government orders the
contractor to halt work because the contractor has not complied
with all of the material terms and conditions of the contract.
The Government may then have a claim against the contractor to
recover unliquidated advances and other contract damages.
As of the execution of POO 2, Contract 2034 remained
“undefinitized”, that is, unpriced. It was not until March 11,
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