“WASHINGTON (Dow Jones)–The U.S. Supreme Court on Monday threw out a ruling that could have forced the Boeing Co. (BA) and General Dynamics Corp. (GD) to repay $3 billion to the federal government because of the Pentagon’s long-ago cancellation of a multibillion-dollar contract to build a Navy stealth-fighter jet.
The court, in a unanimous ruling written by Justice Antonin Scalia, said a key issue in the case could not be litigated because it involved state secrets that could not be aired in court.
The case dates to 1991, when then-Secretary of Defense Dick Cheney canceled a $4.8 billion contract with General Dynamics and McDonnell Douglas Corp. to build a Navy stealth fighter, the A-12 Avenger.
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.
Monday’s decision tossed out a 2009 lower court ruling that found the government was justified in terminating the contract because the companies had failed to meet important milestones on the project. In light of that ruling, the government had demanded the companies repay roughly $3 billion in contract-progress payments and interest.”
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