Information on the A-12 Default Termination

GAO discussed the Department of Defense's (DOD) termination of the Navy's A-12 aircraft program. GAO noted that: (1) total A-12 program appropriations totalled approximately $6.7 billion; (2) at termination, DOD had spent approximately $3 billion on the program; (3) the Navy demanded that the contractors return $1.35 billion, which represented Navy progress payments for uncompleted work at the time of termination; (4) DOD terminated the A-12 contract for default because the contractors were unable to complete the design, development, fabrication, assembly and testing of the A-12 aircraft within the contract schedule; (5) the contractors intended to file legal action to contest the default termination and convert the termination to one for the government's convenience; (6) the contractors claimed additional price adjustments; and (7) the government's liability would increase substantially if the termination were converted, and would include most of the costs the contractors incurred.