VHC Inc. had a contract with the Air Force to supply power sources. When the Air Force terminated part of the contract for convenience, VHC asked to be paid for labor efficiency gains (learning costs) it had achieved on the remaining work. The Air Force and the lower court said no because VHC's pricing wasn't level across contract options. The Federal Circuit reversed, ruling that a contractor can recover unamortized labor learning costs if it can prove it actually became more efficient during performance, regardless of pricing structure.
Document your actual labor efficiency improvements during contract performance—learning curve data is your evidence for recovery claims after termination.
Don't accept a blanket denial of learning cost recovery just because your pricing wasn't uniform across contract phases; you have the right to prove actual costs incurred.