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the long-term approach. Although the parties remained subject to
certain features of the annual appropriation process, their long-
term commitments, in many respects, changed the way they did
business.
Both petitioner and respondent make valid points concerning
the business exigencies and customs, but ultimately the Air Force
and petitioner were subject to a long-term contract with
interdependent pricing of all the aircraft deliverable under
Contract 2034.
7. Conclusion and Summary--Contract 2034
In the final analysis, respondent asks that we focus on
attributes of Contract 2034 that represent only a few of the
criteria contained in the regulations for deciding whether a
long-term contract should be severed or aggregated. Petitioner,
however, meets the most significant as well as the majority of
the regulatory criteria for its reporting the income and expenses
for all 4 years of Contract 2034 as a single long-term contract
under CCM.
The main thrust of respondent's argument is that
petitioner’s use of CCM to report the income and expenses of
Contract 2034 does not clearly reflect income unless the contract
is severed into 4 contracts each for the manufacture and delivery
of 120 aircraft. As petitioner has shown, however, Contract 2034
was a 4-year commitment for which pricing and resultant profit
were dependent on the fabrication and delivery of all 480 units.
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