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 plane.

The 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 billion.

FMI: www.usdoj.gov