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related to costs incurred on the entire contract, and were not
broken out by program year.
Petitioner was able to annualize its costs and receipts for
reporting to the Air Force. This reporting may have been used as
the basis for annual Government appropriations, progress
payments, and other administrative purposes underlying Contract
2034. Petitioner, however, did not calculate or report its
profit by segregating 120 aircraft into any form of annualized
configuration. It is important to understand that irrespective
of its annualized reporting of costs and receipts to the Air
Force for administrative contract purposes, petitioner’s profit
or loss from Contract 2034 was interdependent and depended on the
receipts and costs for all 480 deliverable units.
The annualized income for 120 aircraft is more easily and
reasonably computed retrospectively; i.e., after delivery of all
480 aircraft under Contract 2034. The estimation of the profit
or loss for 120 aircraft becomes less accurate and hence less
reasonable the more that it precedes the delivery of the 480th
aircraft. This is so because the production of the F-16 aircraft
under Contract 2034 was a progression of continually more
sophisticated and complex machines. In that same vein, the
aircraft are interdependently priced, and the final "definitized"
price and any profit or loss thereon were dependent on risks that
may not have existed or been discovered until delivery of the
480th aircraft. Accordingly, it would have been difficult to
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