Naval Aviation:

Events Surrounding the Navy's A-12 Aircraft Program

NSIAD-92-190FS: Published: May 12, 1992. Publicly Released: Jun 11, 1992.

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Pursuant to a congressional request, GAO provided information on: (1) significant events that affected the Navy A-12 Aircraft Program; and (2) A-12 contractor 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.

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