Companies Will Repay The U.S. Navy $200 Million From Canceled Program

The U.S. Navy will receive some $200 million in aircraft in services from Boeing and General Dynamics to repay that branch of the military for a program that was cancelled in 1991.

The cancelled program was the A-12 Avenger II (pictured in artist's rendering). The aircraft ran into schedule delays and cost overruns during development in the 1980s, and was finally scrapped by then-Defense Secretary Dick Cheney in 1991. The original contract was with McDonnell Douglas, which was acquired by Boeing in 1997.

Reuters reports that the government had demanded repayment of $1.3 billion when the programs were canceled. Boeing and General Dynamic had sued the government to keep the money and receive more than a billion dollars in additional compensation for a program they said the government had improperly terminated.

The decision announced by the Justice Department Thursday indicates that the government will not pay any money to the two companies to satisfy their claim. The agreement was authorized in the 2014 defense authorization bill.

Under the agreement, the Navy will receive three EA-18G "Growler" aircraft from Boeing, and a $200 million credit from General Dynamics for work on a destroyer.

FMI: www.navy.mil