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1983, that an agreement on price was reached and July 31, 1983,
that the agreement was formalized in an amendment to Contract
2034.
In late 1981 GENDYN became aware that 300 of the 480 F-16
aircraft to be produced under Contract 2034 were to be
technologically advanced models. Accordingly, GENDYN submitted
revised cost estimates consistent with the technological
upgrades. After a revision of the initial submission, the Air
Force accepted GENDYN's proposal for negotiation.
The Air Force conducted extensive “fact-finding” with
respect to the assumptions underlying GENDYN's proposals. For
example, the Air Force reviewed purchase orders accounting for at
least 90 percent of GENDYN's material and subcontract costs to
confirm their prices, terms, and conditions. It also reviewed
the learning curves on which GENDYN's labor hour estimates were
based to ensure that GENDYN was performing and could continue to
perform at the levels indicated in the proposal.
Because Contract 2034, was to be a fixed-price incentive,
firm-target contract, the Air Force and GENDYN did not negotiate
the contract price itself but instead negotiated the formula by
which the final price would be determined upon completion of the
contract. Specifically, the Air Force and GENDYN agreed upon the
target cost, target profit, target price, ceiling price, and
sharing ratio to be included in the contract. Target cost is the
negotiated estimated cost at completion. Target price is the
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