''General Dynamics Corp. v. United States'', 563 U.S. 478 (2011), is a U.S. Supreme Court case in which the

State Secrets Privilege The state secrets privilege is an evidentiary rule created by United States legal precedent. Application of the privilege results in exclusion of evidence from a legal case based solely on affidavits submitted by the government stating that court ...

prevented the plaintiff from using the evidence it needed to protect itself from an expensive judgement.

Background

In 1988 the U.S. Navy ordered a new

stealth aircraft Stealth aircraft are designed to avoid detection using a variety of technologies that reduce reflection/emission of radar, infrared, visible light, radio frequency (RF) spectrum, and audio, collectively known as stealth technology. The F-117 N ...

, the

A-12 Avenger The McDonnell Douglas/General Dynamics A-12 Avenger II was a proposed American attack aircraft from McDonnell Douglas and General Dynamics. It was to be an all-weather, carrier-based stealth bomber replacement for the Grumman A-6 Intruder in ...

, to be built by contractors

General Dynamics General Dynamics Corporation (GD) is an American publicly traded, aerospace and defense corporation headquartered in Reston, Virginia. As of 2020, it was the fifth-largest defense contractor in the world by arms sales, and 5th largest in the Uni ...

and

McDonnell Douglas McDonnell Douglas was a major American aerospace manufacturing corporation and defense contractor, formed by the merger of McDonnell Aircraft and the Douglas Aircraft Company in 1967. Between then and its own merger with Boeing in 1997, it produ ...

. The parties agreed to what would be the main problem with the contract: instead of a "cost-reimbursable" contract (which would have limited the contractors' liability to the funding provided by the Government, and is the most commonly used when dealing with new weapons systems, especially with new technology), they agreed to a "fixed-price" contract (which required the contractors to complete the work regardless of final cost) of around US$4.8 billion (the competing industry team, composed of contractors Northrop,

Grumman The Grumman Aircraft Engineering Corporation, later Grumman Aerospace Corporation, was a 20th century American producer of military and civilian aircraft. Founded on December 6, 1929, by Leroy Grumman and his business partners, it merged in 1994 ...

, and

Vought Vought was the name of several related American aerospace firms. These have included, in the past, Lewis and Vought Corporation, Chance Vought, Vought-Sikorsky, LTV Aerospace (part of Ling-Temco-Vought), Vought Aircraft Companies, and Vought Ai ...

, somewhat surprisingly never submitted a final bid and dropped out of the competition, possibly due to the intended contract type). Not unexpectedly (given the nature of the program) the contract encountered difficulty in meeting the technical requirements, which resulted in huge cost overruns, but in this case the overruns (combined with the contract type) threatened the existence of both companies, two of the largest United States defense contractors. The contractors' requested that the fixed-price contract be converted to a cost-reimbursable contract, agreeing to absorb $150 million in cost overruns as consideration. Instead, in 1991 the Navy gave up and cancelled the contract, saying too little progress had been made. Yet the cancellation would cause another problem: instead of cancelling the contract as a "termination for convenience" (where the Government decides it no longer wants an item; this may require the Government to spend additional funds to make a contractor whole), it instead chose to cancel it as a "termination for default" (where the Government cancels a contract upon belief that the contractor is not performing in accordance with contract terms, and often demands repayment of funds provided), and asked the contractors to return roughly US$1.35 billion of "progress payments" (payments based upon work performed) already made. The contractors refused, saying the government had kept too much information secret under the "state secrets privilege" for there to be adequate progress, and therefore a default termination was not justified. The manner in which the program was canceled led to years of litigation between the contractors and the

Department of Defense Department of Defence or Department of Defense may refer to: Current departments of defence * Department of Defence (Australia) * Department of National Defence (Canada) * Department of Defence (Ireland) * Department of National Defense (Philippin ...

over breach of contract: *Initially the

United States Court of Federal Claims The United States Court of Federal Claims (in case citations, Fed. Cl. or C.F.C.) is a United States federal court that hears monetary claims against the U.S. government. It was established by statute in 1982 as the United States Claims Court, ...

agreed with the contractors, changing the termination for default into a termination for convenience (the contractors sought US$1.2 billion in total costs under such a termination); however, the

United States Court of Appeals for the Federal Circuit The United States Court of Appeals for the Federal Circuit (in case citations, Fed. Cir. or C.A.F.C.) is a United States court of appeals that has special appellate jurisdiction over certain types of specialized cases in the Federal judiciary of ...

reversed the decision and remanded the case back to the Court of Federal Claims. (But during discovery, on at least two separate occasions inadvertent disclosure of classified information took place, forcing the Court to halt further discovery.) *Upon remand, the Court of Federal Claims then sided with the Government, ordering a repayment; however, the Court of Appeals for the Federal Circuit again reversed and remanded. *On the second remand, the Court of Federal Claims again sided with the Government; this time, on 1 June 2009, the Court of Appeals for the Federal Circuit upheld the lower court's ruling that the U.S. Navy was justified in canceling the contract. The ruling also required the two contractors to repay the U.S. government the roughly US$1.35 billion it initially sought, plus interest charges, making the total owed around US$1.45 billion.

Boeing The Boeing Company () is an American multinational corporation that designs, manufactures, and sells airplanes, rotorcraft, rockets, satellites, telecommunications equipment, and missiles worldwide. The company also provides leasing and product ...

(which had acquired McDonnell Douglas) and General Dynamics (which by then had sold its military aircraft business to

Lockheed Martin The Lockheed Martin Corporation is an American aerospace, arms, defense, information security, and technology corporation with worldwide interests. It was formed by the merger of Lockheed Corporation with Martin Marietta in March 1995. It ...

, but as part of the sale retained its rights in this case) vowed to appeal the ruling. In September 2010, the U.S. Supreme Court said it would hear the arguments of the two companies that the government canceled the project improperly and that the use of a state secrets claim by the U.S. prevented them from mounting an effective defense.

Opinion of the Court

In May 2011, the Supreme Court set aside the Appeals Court decision and returned the case to it "for proceedings consistent with this opinion". The Court unanimously held that "when litigation would end up disclosing state secrets, courts may not try the claims and may not award relief to either party." Thus it neither granted the contractors the US$1.2 billion awarded in the earlier termination for convenience, nor the Navy the roughly US$1.35 billion in prior payments made. In January 2014, the case was settled with Boeing and General Dynamics agreeing to pay US$400 million to the Navy, equally divided between them."UPDATE 1-Boeing, General Dynamics reach $400 mln A-12 settlement with U.S. Navy".
Reuters, 23 January 2014.

References

External links

* {{caselaw source , case = ''General Dynamics v. United States'', {{ussc, 563, 478, 2011, el=no , courtlistener =https://www.courtlistener.com/opinion/217288/general-dynamics-corp-v-united-states/ , googlescholar = https://scholar.google.com/scholar_case?case=3785842234151298475 , justia =https://supreme.justia.com/cases/federal/us/563/478/ , oyez =https://www.oyez.org/cases/2010/09-1298 , other_source1 = Supreme Court (slip opinion) (archived) , other_url1 =https://web.archive.org/web/0/https://www.supremecourt.gov/opinions/10pdf/09-1298.pdf
OPINION AND ORDER
from 1998 case of McDonnell Douglas and General Dynamics v. United States, on

Federation of American Scientists The Federation of American Scientists (FAS) is an American nonprofit global policy think tank with the stated intent of using science and scientific analysis to attempt to make the world more secure. FAS was founded in 1946 by scientists who wo ...

site * Aaron D. Van Oort; Marie E. Williams
Supreme Court Decides General Dynamics Corp. v. United States
23 May 2011. United States Supreme Court cases United States Supreme Court cases of the Roberts Court United States government secrecy 2011 in United States case law General Dynamics Military scandals United States state secrets privilege case law

Background

Opinion of the Court

See also

References

External links