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Petitioner argues that the Air Force and Congress
established that substantial cost savings would be accomplished
using the multiyear form of procurement in place of the previous
annual contracts. Petitioner hoped to benefit from this by
earning a higher profit rate than it had earned under annual
contracts.
Petitioner concedes that the Air Force and petitioner
tracked costs by program year and that each aircraft ordered was
identified in connection with a program year. Petitioner also
agrees with respondent that billing prices could be adjusted to
reflect petitioner’s performance under Contract 2034.
Petitioner, however, argues that it is equally clear that
Contract 2034 was one contract, with one pricing formula, and,
regardless of amounts advanced to petitioner during the course of
the contract, all 480 aircraft ordered by Contract 2034 were
interdependently priced, and petitioner’s profit was not
determinable until Contract 2034 was completed.
The customary business practices of the parties had not been
to enter into multiyear contracts. Instead, annual price
negotiation and funding were the customary practice. The parties
retained some of the prior practices such as reliance on the
annual Government budget process. The parties also departed
significantly from the prior practices by their entry into a 4-
year commitment. Each side stood to benefit by the extended
period, and each exposed itself to certain risks by undertaking
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