by Deb Cupples | 'Talk about a galling sense of entitlement. The contractors involved in this case include General Dynamics and McDonnell Douglas. The Justice Department reports:
"In 1988, the Navy awarded the $4 billion fixed-price contract for development of the A-12, which was to be a stealthy, carrier-based attack aircraft. The program encountered serious technical difficulties, and in 1991, after the Department of Defense refused to approve additional funding for the program, the Navy terminated the contract because it was substantially over budget and behind schedule.
"The contractors challenged the termination, resulting in 18 years of litigation. On appeal for the third time on June 2, 2009, the court of appeals affirmed the 2007 judgment of Court of Federal Claims Judge Robert B. Hodges Jr., holding that the Navy had properly terminated the contract for default.
"In a 29-page opinion, the court of appeals explained that the termination decision was justified under the parties’ contract because the contractors’ performance history demonstrated that 'the government was justifiably insecure about the contract’s timely completion' and there was no excuse for the contractors’ failure to make progress toward completion of the contract." (DoJ)
The judge's reasoning makes sense to us ordinary folks: you take gobs of money to timely do a job -- and if you fail, you're in breach of contract and you're not entitled to collect the gobs of money.
Apparently, some defense contractors think they're entitled to redistribute our tax dollars to themselves even when they fail to perform under contract.
The Justice Department said that the contractors have to pay us taxpayers the initial funds we advanced to them ($1.35 billion) and interest of about $1.4 billion. I hope the contractors got whacked with 18 years of legal fees, too.
Despite those General Dynamics' and McDonnell Douglas's questionable conduct, those two contractors have remained among our nation's top contractors.
In the year 2007 alone, for example, General Dynamics was #4 on the Top-200 contractors list, having received about $14.2 billion in defense and civilian contracts that year.
In 1997, McDonnell Douglas merged with Boeing, which was #2 on the Top-200 contractors list in 2007, having received about $25.6 billion that year.
Boeing's status is pretty amazing, given the problems Boeing has had in performing under government contract. In 2000, for example, Boeing settled a Justice Department fraud suit for $54 million after allegedly putting defective gears in Chinook helicopters sold to the Army. One Chinook crashed during a 1988 mission in Honduras, killing five service men. Another crashed in Saudi Arabia during Operation Dessert Shield, injuring 2 people. In 2000, the Chinook fleet was partially grounded.
Back to the current story (McDonnell Douglas and General Dynamics): it reminds me of the Navy's handling of the Advance Seal Delivery System (ASDS), which was (supposed to be) a hybrid submarine for use by Navy Seals. The program started in the '90s with a $70 million contract: by May 2007, it had cost us taxpayers $885 million. (GAO)
The kicker: in May 2007, we taxpayers still didn't have a working vehicle, but the Navy had accepted the product "as is" -- meaning that we taxpayers can't sue the contractor (Northup Grumman) for even a partial refund.
And then there was that more recent story about the 22-year-old kid whose father formed a corporation (AEY), which got a government contract to supply ammunition for our nation's war in Afghanistan. The company got a bunch of old, obsolete (read "bad") ammo that was meant to be destroyed -- and supplied it back to our government. I suspect that bad ammo is bad for the war effort. (NY Times)
Even after the story broke, the Pentagon agreed to let AEY furnish our soldiers with (potentially bad) ammo that had already been ordered.
Then there's the story of the contractor that got millions to build offices and barracks at Iraqi military compounds. Even after the project was abandoned (the Iraqis couldn't secure the land), U.S. military folks paid the contractor $31.9 million of the $34.2 million contract price. (USA Today/Army Times) As of December 2007, the contractor had not paid back the money -- though nothing had ever been built.
As usual with contractor stories, I could go on and on and on with examples. Instead, I'll leave you to click on any of the links below.
Other Buck Naked Politics Posts:
* Blackwater et. al.: High Cost of Private Contractors
* Contractor Gets $30+ Million but Built Nothing
* Contractor Supplies Bad Ammo, Gets Hundreds of Millions
* Blackwater & Others: the High Cost of Private Contractors
* Justice Dept. Official Turned Blind Eye to Contractor Fraud?
* Inspector General Blocked Investigations re: Waste & Fraud?
* Contractors Offering Bribes & Kickbacks to Army Personnel?
* "Billions over Baghdad": Poor Accounting Enabled Waste & Fraud
* DoD Rewarded Bad Contractor Performance?
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