May 21, 2013
Credit: Architect of the Capitol
In a sign of movement in the epic legal battle over the A-12 Avenger II, the Obama administration is asking Congress to allow the Navy to accept a settlement in the case.
In a letter outlining amendments to the administration’s fiscal 2014 request for appropriations, the Pentagon is seeking legislation that would “authorize the Secretary of the Navy to accept and retain in-kind goods and services in lieu of monetary payment, for the purposes of a settlement of the A-12 aircraft litigation.”
The A-12 Avenger is one of the longest-running disputes over military procurement in history. In 1991, then-Defense Secretary Dick Cheney canceled the $4.8 billion stealth attack aircraft program, run by General Dynamics and McDonnell Douglas, which has since been acquired by Boeing. General Dynamics and Boeing sued the government for wrongfully terminating the contract. The case has remained in dispute ever since.
After two decades, the Supreme Court weighed in in 2011, sending the case back to the lower courts.
Spokesmen for Boeing and General Dynamics declined to comment on the letter, citing the pending litigation.
In its annual report to investors for 2012, General Dynamics said it believes the lower courts “will ultimately rule in the contractors’ favor on the remaining issues in the case.”
And the company said it expects that no money will be due to the contractors or the government.
“If, contrary to our expectations, the government prevails on its default claim and its recovery theories, the contractors could collectively be required to repay the government, on a joint and several basis, as much as $1.4 billion for progress payments received for the A-12 contract, plus interest, which was approximately $1.6 billion on December 31, 2012,” according to the annual report. “This would result in a liability to us of half of the total (based upon The Boeing Company satisfying McDonnell Douglas’ obligations under the contract), or approximately $1.5 billion pretax.”