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Petitioner also notes that the majority of the aircraft
produced under Contract 2034 was delivered after all 4 program
years were fully funded, and Contract 2034 was at all times
administered as one contract for 480 aircraft. Petitioner also
points out that if separate delivery per se justified severing,
then Contract 2034 should be severed into 480 contracts for 480
separately delivered aircraft.
Respondent contends that the Air Force and petitioner were
required to establish target costs for each program year.
Petitioner counters that the target costs were due to Congress'
annual appropriations and inability legally to obligate funds for
future years. The use of target costs and profits broken down by
program years, however, had no bearing on petitioner’s ultimate
profit upon completion of the contract, which was determined
solely by reference to the single target cost, target profit, and
share line or ratio adopted for Contract 2034.
Respondent also argues that the liquidation of progress
payments as each aircraft was accepted supports the attempt to
sever Contract 2034 by program year. Respondent argues that the
liquidation of progress payments under Contract 2034 is evidence
that each of the 4 program years was independently priced.
Liquidation of progress payments, however, would not enable
petitioner to determine its profits on a program year basis with
respect to each aircraft. Moreover, by calculating the amounts
liquidated for each aircraft identified to a program year,
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