It has been a long time since the Pentagon killed the Navy’s A-12 stealth attack plane—the biggest weapons-program cancellation in U.S. military history. The U.S. government and the plane’s developers settled their epic clash over the termination just last week. The civil war inside the military-industrial complex lasted so long that:
—The fellow running the Pentagon at the time has since served two terms as vice president of the U.S…to the son of the man he served as defense secretary.
—A book explaining everything that went wrong was finally published—13 years ago.
—The guy running the Pentagon public-affairs shop at the time, who detailed the death sentence to the press now covers the Justice Department for NBC News…and has been so employed for more than 20 years.
“We’ve terminated the contract for default,” then-Pentagon spokesman Pete Williams said in the wake of the A-12’s cancellation on Jan. 7, 1991, shortly before the first Gulf War. “We have the right to demand payment immediately, but the department has agreed to defer collection of the amount—which is $1.3 billion—from McDonnell Douglas and General Dynamics to avoid putting extreme financial pressure on these companies which are, after all, two of the largest defense contractors in country…we will require them to pay interest.”
How the program began—and how it ended—offer up lessons for those who design and pay for military hardware. In a nutshell, the A-12 Avenger II program was a prototypical example of contractors promising too much in exchange for too little. Designed to replace the Navy’s A-6 Intruder, the A-12 contained too much unproven technology for its fixed-price $4.8 billion contract.
When then-defense secretary Dick Cheney learned that the Navy and General Dynamics (its warplane division is now part of Lockheed Martin) and McDonnell Douglas (now part of Boeing) were fudging the truth about the A-12’s cost and schedule woes, he ordered the service to kill it. The move stunned pretty much everybody in the military-industrial complex.
While that may have been the end of the program, it was only the start of the litigation that turned the Pentagon into a five-sided Bleak House, Charles Dickens’ tale of never-ending legal warfare. The contractors maintained that because Cheney, and not the Navy—which signed the contract—killed the program, the government actually owed the companies an additional $1 billion, plus interest. At one point, about 60 lawyers reportedly were working on the case.
It led to five trials and went all the way to the Supreme Court. The dust finally settled with Thursday’s announcement from the Justice Department that a settlement was at hand:
—Boeing will “provide” the Navy three EA-18G Growler electronic-warfare aircraft and convert some of its F-18 contracts to fixed price (which is where this whole case began, although the EA-18G is a proven design, unlike the A-12). F-18s now do what the A-12 was supposed to have done (remember that next time you hear about some new weapon the nation simply must have).
—General Dynamics will give the Navy a $200 million discount on a new destroyer.
“Under the settlement, the contractors will provide aircraft and services to the military valued at $400 million, and the government will not pay any money in connection with the contractors’ claims against the United States,” the Justice Department statement said.
So instead of pocketing $1.35 billion, plus interest, that the government said it was due, it got $400 million in goods and services that the government was already buying.
“The litigation was protracted and difficult, but it saved the Navy billions of dollars,” Navy Secretary Ray Mabus said.