General Dynamics Corporation and Subsidiaries - Page 51

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          multiyear contracts, was not fully funded at its inception, and             
          that the Government retained the right to cancel unfunded                   
          portions of Contract 2034 in certain circumstances.  We find                
          petitioner’s interpretation to be correct and consistent with the           
          analysis of the above-quoted cases holding that the Government’s            
          ability to cancel a multiyear contract is not discretionary, but            
          is limited to situations in which Congress fails to appropriate             
          funds for the goods ordered under the contract, or the Government           
          no longer has a need for the goods ordered under the contract.              
               Contract 2034 obligated the Air Force to fund each program             
          year under the contract as long as Congress continued to                    
          appropriate funds and the Air Force continued to need the F-16's            
          ordered under Contract 2034.  If, for example, costs of                     
          petitioner’s performance dramatically declined during the term of           
          Contract 2034, the Air Force was not entitled to cancel Contract            
          2034 or require petitioner to produce the remaining F-16's at a             
          lower price.                                                                
               The Air Force’s ability to cancel prior to full funding of             
          all 4 fiscal years was sufficiently limited as a matter of                  
          Government contracting law so as to deplete the substance of                
          respondent's claim that the funding of each successive fiscal               
          year was merely an increase in order quantity.  The Air Force did           
          not have unqualified or unlimited legal power to cancel, and the            
          480 aircraft procured were interdependently priced.                         





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