Naval Aviation

This fact sheet provides a chronology of events affecting the A-12 program, from December 1989--at which time the Navy accepted the Phase II Critical Design Review even though the contractors' work was incomplete--through June 1991, when the contractors filed a lawsuit asking for a judgment that the A-12 contract was terminated for the government's convenience. GAO also lists the payments made to McDonnell Douglas Corp. for work on the A-12 full-scale development contract as well as additional payments

GAO found that: (1) in June 1990, the A-12 contractor disclosed to the Navy that the A-12 first-flight schedule would slip significantly, full-scale development costs would overrun the contract ceiling by an amount that the contractors could not absorb, and they could not meet certain performance specifications; (2) in January 1991, the Navy terminated the A-12 contract for default due to the difficulties the contractors had in executing the contract; (3) at termination, the government had made $2.68 billion in progress payments to the contractors, but the Navy had accepted only $1.33 billion worth of work from the contractors; (4) the government agreed to the contractors request to defer repayment of $1.35 billion in progress payments for A-12 contract work that the Navy had not accepted at the time of contract termination; (5) in June 1991, the A-12 contractors filed a lawsuit in U.S. Claims Court requesting that the court find that the Navy breached the contract and terminated the contract for the convenience of the government rather than for default; (6) although the lawsuit is still pending, if the court finds that the termination was for the convenience of the government, the contractors may not be required to return the $1.35 billion in progress payments; (7) the Navy paid one of the contractors $1.4 billion for work on the A-12 full-scale development contract and $25.6 million in additional payments for work performed under a separate basic ordering agreement; and (8) the Navy paid the second contractor about $1.3 billion for its work on the A-12 full-scale development contract.