Department of Justice Seal


FRIDAY, FEBRUARY 20, 1998 (202) 616-2765

TDD (202) 514-1888


The Department of Justice firmly believes the government's position in this case is correct and is appealing today's decision to the Court of Appeals for the Federal Circuit.

The case involves a 1991 decision by the Navy to terminate a contract with General Dynamics and McDonnell Douglas to develop and produce the A-12 carrier-based, "stealth" attack aircraft.

The Department of Defense terminated the contract after the contractors failed to deliver a single airplane after receiving more than $2 billion in payments. Instead, the contractors refused to continue with the contract unless they received extraordinary relief in the form of relaxed terms and extra funds. At the same time, they would or could not assure delivery of an aircraft by a time certain, specify the aircraft's performance capabilities, or commit to a specific price for the aircraft.

It would have been irresponsible for the government to enter into such an open-ended agreement and, as a result, the government rejected the request and ultimately terminated the contract. In an earlier ruling, the court found that the refusal of the Secretary of Defense to agree to the contractors' demands constituted "improper interference" in the contracting process.

The Department maintains that today's decision and earlier rulings are inconsistent with the law and hamper the ability of cabinet officers, including the Secretary of Defense and other senior agency officials, to administer and supervise important and expensive procurement programs and to ensure taxpayer dollars are spent wisely. We continue to believe that responsibility for the failure to produce these aircraft rests with the plaintiff companies.