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Justices to review Navy's cancellation of aircraft contract

By Bill Mears, CNN Supreme Court Producer
STORY HIGHLIGHTS
  • $5 billion contract for the defunct A-12 Avenger stealth attack plane, canceled in 1991
  • Government says plane did not work as advertised
  • Government invoked "state secrets" privilege, which kept case from going to trial
  • High court will decide whether "state secrets" claim can apply to an essentially financial dispute

Washington (CNN) -- The Pentagon wants two defense contractors to pay up for an almost-forgotten Navy plane the government says did not work as advertised.

Now the Supreme Court will settle the nearly two-decade old dispute that involves competing claims of national security secrets and the financial assets of a taxpayer-funded project gone sour.

At issue is the nearly $5 billion contract for the defunct A-12 Avenger stealth attack plane, which the Defense Department canceled in 1991. The government had argued the sensitive technology on the aircraft allowed them to invoke the "state secrets" privilege, which has kept the case from going to trial. The contractors countered that has prevented them from fully arguing their claim they should not have to repay the government.

The justices will decide whether such "state secrets" claims -- normally arising in terrorism and national security matters -- can be applied in a what has essentially become a financial dispute. A federal appeals court last year ruled for the U.S. Navy. The justices announced Monday they will settle the constitutional issue, when they hear oral arguments next year.

Administration officials want Boeing Co. and General Dynamics to repay at least $3.85 billion -- including accumulated interest -- concluding the companies violated the terms of the contract by developing a substandard and overly expensive aircraft.

Then-Defense Secretary Dick Cheney canceled delivery after costs for each plane had grown to $165 million, according to court records. About 850 A-12s were initially planned for purchase by the Pentagon. But the project was 18 months behind and $1 billion over budget when it was terminated.

McDonnell-Douglas (which merged with Boeing in 1997) teamed with General Dynamics in the initial design and development of the A-12 Avenger Advanced Technology Aircraft. The all-weather, carrier-based stealth bomber had a unique "triangle" design, and was supposed to have special on-board radar-eluding technology, earning it the nickname the "Flying Dorito," after the well-known brand of corn chips.

The A-12's demise led the Navy to purchase F/A-18E/F Super Hornets, which replaced the aging fleet of A-7, A-6, and F-14 attack aircraft.

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