The A-12 Avenger Court Circus Continues

(MoneyWatch)  In 1991 then Secretary of Defense Dick Cheney canceled the A-12 Avenger advanced stealth attack aircraft under development for the U.S. Navy. This aircraft was to be the Navy's equivalent of the F-117 and replace the A-6 Intruder on the decks of aircraft carriers. Unfortunately the program awarded to McDonnell Douglas and General Dynamics had schedule and cost issues not unexpected for a program of this scope. To make matters worse the Navy program manager was covering up some of the issues and telling his superiors that the program was on track.

Cheney canceled the program for cause. As part of the termination process that followed the Government and the two companies began suing each other over who owed what to whom. The case has been in litigation since with Boeing now taking over as they absorbed McDonnell Douglas in the late Nineties. The cases have gone back and forth with one side winning or another. In the last major case the court ruled for the Government saying the two companies owed $2.8 billion. This was obviously appealed by the two contractors and today the Court of Appeals ruled.

They decided that the Government was in the right and that the $2.8 billion must be paid. Both Boeing and General Dynamics believe they have the necessary assets to pay the fine. Neither have commented or committed to appeal this case yet. There is a great deal of motivation for them to although they will have to pay interest on the $1.4 billion as the cases wind onward.

The contractors had sued themselves for unpaid costs related to the termination and also for illegal termination of the contract. One of the reasons given was that Cheney was not legally able to cancel the contract as he was not the Contracting Officer (KO). This is technically true and Cheney did say he was canceling the contract personally rather then the Naval Air Systems Command (NAVAIR) KO. To some, like the Project On Government Oversight (POGO), the case has become a poster child for contracts getting out of control and the Government not necessarily punishing contractors appropriately.