Boeing, General Dynamics Settle with Navy Over Scrapped A-12 Avenger II Program

Defense contractors Boeing and General Dynamics have reached a $400 million settlement with the US Navy over the cancellation of the $4.8 billion A-12 Avenger II aircraft in 1991, putting an end to a 23-year legal dispute. Under the terms of the agreement, Boeing and General Dynamics will each pay the Navy $200 million in aircraft and services.

The A-12 Avenger II concept was first introduced in the mid-80s, with the team of McDonnell Douglas (acquired by Boeing in 1997) and General Dynamics selected as winners of the development contract in 1988. In 1991, the entire program was scrapped by then-Secretary of Defense Dick Cheney due to scheduling delays and spiraling costs.

At the time, the government demanded the companies pay back the $1.3 billion they had already received as part of the program. Both companies sued the U.S. government to retain the money, plus an additional $1 billion with interest. The case remained in the courts over the next two decades.

“We are closing a 23-year-long chapter in the annals of naval aviation and further strengthening, through the contractors’ in-kind payment, the Navy’s capabilities and capacities,” Navy Secretary Ray Mabus said. “The litigation was protracted and difficult, but it saved the Navy billions of dollars.”

“Boeing is pleased that this decades-old litigation has come to an end,” Boeing spokesman John Dern said. “We appreciate the efforts of the Navy and the Justice Department to resolve this matter, once and for all, on terms acceptable to all parties.”