Boeing and General Dynamics v. the Navy

Boeing, General Dynamics and the Navy fought over billion-dollar claims involving a failed 1991 stealth fighter aircraft contract on Jan. 18. The contractors claimed that the government withheld information from them, and by invoking the state secrets privilege, prevented them from delivering a satisfactory product. The question is, does throwing around the word "state secrets" unnecessarily politicize a dispute that can be resolved by contract law?

The facts of the case: In 1991, the Defense Department pulled the plug on the inauspicious project to build a stealth fighter, the A-12 Avenger, when it ended up too heavy for aircraft carriers to handle. The plane never took off from blueprint into production. The 20-year-long dispute is a bitter blame game following a disastrous $4.8 billion deal that in truth, just amounted to expensive aircraft blueprints.

The government demanded a refund of $1.35 billion after it cancelled the contract and declared General Dynamics and Boeing in default. The contractors sued, countering that they were owed an additional $1.25 billion for work done that had not yet been billed.

Boeing and General Dynamics said it wasn't their fault that they hadn't delivered what the Navy wanted; the real problem was the abuse of the state secrets privilege. The government withheld sensitive information that would have allowed them to deliver satisfactory results, the contractors claimed. The government countered that this was done to protect national security.

The information that came was "too little and too late to effectively allow the contract to proceed as planned," said attorney Carter Phillips. "The weight specifics that we were being asked to provide or to supply were literally impossible to comply with based on what the government already knew," he said.

His argument sounded almost convincing until he dropped this:

The problem is we don't know precisely what information we didn't have and were never entitled to. So it's very difficult to say how strong is our defense under these circumstances.

That admission reveals that this case is going to be a difficult one to argue. The politically-charged rhetoric around "state secrets" masks what is at the heart of the debate: "All we're asking for is the actual amount of money that we expended," said Phillips, "maybe to some extent you could say we're sort of being a little greedy." But a contract is a contract, he added.

Framing the case as a constitutional precedent centered around "state secrets" unnecessarily politicizes more fundamental problems, namely mutual distrust and insufficient planning.

The insistence of General Dynamics and Boeing that the government provide more specifications could hint at a lack of enterprise, Justice Stephen Breyer seemed to suggest. "Sophisticated contractors are perfectly capable of negotiating their own contract," he said. If the government fed too much information to contractors, "we are not just throwing a monkey wrench into the gears of government contracting; we're throwing the whole monkey."

Chief Justice John Roberts and Justice Antonin Scalia seemed in favor of tossing the case out of the court, arguing that the dispute could be better resolved by contract law rather than constitutional law. If it is indeed settled behind closed doors, we'll never know who put the monkey wrench in the gears of this contract. But really, in a case involving two the top five government contractors, billions of dollars, and the U.S. Navy, are we surprised?