Court Upholds Cancellation of Navy A-12 Contract

News from the U.S. Navy.
Focus on Defense:

WASHINGTON, June 4, 2009 -- The U.S. Court of Appeals for the Federal Circuit has affirmed a judgment upholding 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 $4.8 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, after the Department of Defense refused to approve additional funding for the program, the Navy terminated the contract because it was substantially over budget and behind schedule.

On appeal for the third time, the court of appeals on June 2, 2009 affirmed the 2007 judgment of Court of Federal Claims Judge Robert B. Hodges Jr., holding that the Navy had properly terminated the contract for default.

Under the decision, the contractors are required to repay the government more than $1.35 billion in principal for funds advanced under the contract, plus interest accruing since 1991, for a total sum that currently approaches $2.8 billion.

The Navy is pleased with the ruling of the Court of Appeals for the Federal Circuit and believes the decision is well reasoned and correctly decided.

(Report from a U.S. Navy news release.)

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