Supreme Court to hear contractors’ appeal in lengthy fight over Navy’s canceled A-12 airplane

Tuesday, September 28, 2010

High court enters legal fight over Navy plane

WASHINGTON — The Supreme Court is getting involved in the longstanding dispute between the Pentagon and two contractors contesting the government’s demand for $3 billion over the Navy’s ill-fated A-12 Avenger attack plane.

The justices on Tuesday agreed to hear an appeal from the Boeing Co. and General Dynamics Corp., the main contractors on a $4.8 billion project that the Pentagon, then headed by Richard Cheney, canceled in 1991.

The government is seeking repayment of $1.35 billion, plus more than $2.5 billion in accumulated interest, arguing that the companies failed to meet the terms of the contract.

The issue before the court involves the state-secrets privilege, which typically arises in national security and terrorism cases. Invoking the privilege, which the Supreme Court ratified in the 1950s, the government tells a court that allowing a case to go forward would force the disclosure of information that could damage national security.

In this case, the parties are arguing over whether the government’s claims about national security have prevented the companies from defending their position that they should not have to repay the money. A federal appeals court sided with the government.

Both Boeing and General Dynamics have disputed the Pentagon’s claims that they did not live up to the contract.

The A-12, designed with stealth technology to hide it from radar, was more than 18 months behind schedule and at least $1 billion over budget when it was canceled. The government and the contractors dispute who was responsible for the delays and overages.

The Navy wanted the A-12 Avenger in operation by the mid-1990s to replace older carrier-based airplanes. At one point, the military was planning to buy 850 A-12s.

The case will be argued early next year.

The consolidated cases are General Dynamics v. U.S., 09-1298, and Boeing v. U.S., 09-1302.

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