- 59 -
contractor's costs exceed the target cost), its profits
are being impacted, even prior to reaching the point of
total cost assumption. Prior to reaching the point of
total cost assumption, however, the contractor bears
its share of the cost overrun as provided for by the
share line. In [Contract 2034], petitioner would have
borne 40 cents of every dollar of cost overruns up to
the point of total cost assumption at which point it
would have borne 100% of the cost overruns. [Citations
omitted.]
We agree with petitioner that the point of total cost
assumption in a fixed-price incentive contract is determined by
the relationship between the target cost, the target profit, and
the share line. Contract 2034 had only one share line and,
accordingly, only one point of total cost assumption. Thus,
respondent's argument is not borne out by the facts.
Respondent has also asked us to find that
Under the provisions of Contract 2034, as definitized
by * * * [P00 80], when a final determination is made,
if no single program year exceeds its ceiling, then the
profits on the other three program years, would not be
affected.
We agree with petitioner that respondent's requested finding
is misleading because there is only one ceiling price and one
incentive price revision for the entire contract; there are no
separate program year ceilings or price determinations.
In a similar vein, respondent also argues that the
dependency of price terms among the program years under the
incentive provisions might be entitled to some weight in the
determination to treat Contract 2034 as several agreements if
there was a significant probability that the cost overruns
Page: Previous 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 NextLast modified: May 25, 2011