BA Boeing Co

The U.S. Supreme Court agreed Tuesday to consider The Boeing Co. (BA) and General Dynamics Corp.'s (GD) challenge to the Pentagon's long-ago cancellation of a multi-billion dollar contract to build a Navy stealth fighter, the A-12 Avenger.

The case has been in litigation for nearly 20 years.

The companies say the government is demanding that they repay nearly $2.9 billion in contract-progress payments and interest.

A federal appeals court ruled last year that the companies' failure to meet important milestones, along with other factors, gave the government ample reason to terminate the Avenger contract.

In a boost to the companies, the high court agreed to review that ruling.

Then-Secretary of Defense Dick Cheney terminated the contract in 1991, saying the companies had failed to make progress on the project.

General Dynamics and McDonnell Douglas Corp. entered into the $4.8 billion Avenger contract in 1988, which called for them to design, build and test eight A-12 prototypes.

The first jet was to be delivered to the Navy in June 1990. The contractors, however, had problems from the start and couldn't meet the proposed schedule. They also said the cost of finishing the project would substantially exceed the price of the contract.

No planes were ever delivered.

McDonnell Douglas merged with Boeing in 1997.

In their petitions to the Supreme Court, Boeing and General Dynamics argued that the government had superior knowledge of the stealth technology needed to build the fighter jet, but refused to share it with the contractors.

The companies hadn't been allowed to make this claim in court because the government invoked its "state secrets" privilege and argued that litigation of the issue could lead to the inadvertent disclosure of sensitive military information.

Two lower courts sided with the government's position.

The companies argued that it wasn't fair for the government to assert a multi-billion dollar claim against them while also refusing to disclose information that the companies said was central to their defense.

Oral arguments are likely to take place early next year, with a decision expected by July.

-By Brent Kendall, Dow Jones Newswires; 202-862-9222; brent.kendall@dowjones.com

Boeing (NYSE:BA)
Historical Stock Chart
Von Mär 2024 bis Apr 2024

Boeing (NYSE:BA)
Historical Stock Chart
Von Apr 2023 bis Apr 2024