Mon, May 07, 2007
Someone Owes Uncle Sam A LOT Of Moolah
The US Court of Federal Claims has upheld the Navy's termination
for default of a contract with McDonnell Douglas and General
Dynamics for the A-12 stealth attack aircraft.
In 1988, the Navy awarded the $4 billion fixed-price contract
for development of the A-12, which was to be a stealthy,
carrier-based attack aircraft. The program encountered serious
technical difficulties, and in 1991, then Secretary of Defense Dick
Cheney terminated the A-12 program because it was substantially
over budget and behind schedule. The Navy subsequently terminated
the contract for default, without ever receiving a single
contractors challenged the termination, resulting in 16 years of
litigation. The court originally overturned the termination,
holding that then Secretary of Defense Cheney had wrongfully
terminated the A-12 program over the Navy's objections. Following
two appeals, the court held that the Navy had properly terminated
the contract for default.
"We are gratified by the court's decision, which explains why
the Navy was within its rights to terminate the contract for
default and protect the American taxpayer's interests, and
hopefully will bring this long litigation closer to resolution,"
said Deputy Assistant Attorney General Michael F. Hertz.
Unless the judgement is overturned on appeal, the contractors
will be required to return to the government payments of about
$1.35 billion, plus interest, a sum which currently exceeds $2.6
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