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Vern Edwards

The A-12 Decision: Jarndyce v. Jarndyce is still alive!

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By now you probably know that the Court of Appeals for the Federal Circuit upheld the Court of Federal Claims' decision that upheld the Navy's termination of the A-12 contract for default. See McDonnell Douglas Corp. and General Dynamics Corp. v. United States, 2007-5111, 5131, June 2, 2009.

Saw this in the news this morning:

(Media-Newswire.com) - Chicago, June 2, 2009 -- J. Michael Luttig, executive vice president and general counsel of The Boeing Company [NYSE:BA], today directed that an immediate appeal be made following a U.S. Court of Appeals for the Federal Circuit decision upholding the government’s position in the long-running A-12 case.

“Today's decision, which awards no amount of damages to either the contractors or the government, is but the next step in this regrettable litigation that is now in its eighteenth year. The decision is fatally flawed under what has been the law governing this case from the outset. It creates out of whole cloth a new law that essentially requires the case to be tried anew from the beginning,” Luttig said.

That could mean that Boeing will ask the Court of Appeals for a rehearing or a rehearing en banc, or that it will appeal to the U.S. Supreme Court. The case has already been in litigation for 18 years.

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This is an example where fixed-price contracts always aren't the best. I wonder if the original contract type was dictated by the government and the offerors had no choice but accept it.

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formerfed:

That is exactly what happened. The government dictated the contract type. The competing companies had no choice, except to refuse to compete, which wasn't going to happen on a program of that size and nature, as the government well understood. The companies undoubtedly assumed that the government would do what it has always done in the past--pony up for the contractor when more money was needed, contract type of no contract type. Witness what the government did under the contract with General Dynamics for radios that we discussed in this thread: Transmitting Delivers Orders via E-mail vs. U.S. Mail, Decision in ASBCA No. 54988. Witness what it did for the shipbuilders in the 1970s. That's what the Navy wanted to do in the A-12 Program, but Dick Cheney didn't go along, thereby making history.

Anyone who thinks that contract type is a reliable way to control cost risk simply does not understand acquisition.

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I agree with Vern's comment regarding use of contract type to control cost risk. It's a lesson more people need to learn.

I thought I would add this link to Herb Fenster's 1999 article on the subject, originally published in USNI's Proceedings. (The litigation hadn't even hit its first decade when the article was written.) Fenster essentially argues that the US Navy had unclean hands to the point where it fraudulently induced General Dynamics and McDonnell Douglas into bidding on the fixed-price contract. I like the title -- "It Wasn't an Airplane, It Was a Trainwreck".

Enjoy.

http://www.d-n-i.net/fcs/comments/c235.htm

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General Dynamics has announced that it, too, will appeal. Thanks to here_2_help for the link to the article, which was written by an attorney for the litigants.

There is also a book, The $5 Billion Misunderstanding: The Collapse of the Navy's A-12 Stealth Bomber Program, by James Stevenson (2001). Stevenson is a noted author on Navy acquisition programs. He also wrote The Pentagon Paradox: The Development of the F-18 Hornet (1993).

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Here 2 help,

I was pleasantly surprised to see Herb Fenster mentioned. I didn't realize that he was involved with the A-12 case.

The guy is a national resource, much like Vern.

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Here 2 help,

I was pleasantly surprised to see Herb Fenster mentioned. I didn't realize that he was involved with the A-12 case.

The guy is a national resource, much like Vern.

Well, I guess there's no school like the old school. I've met the man and he is quite impressive.

With respect to his involvement in A-12 litigation, it appears that, at some point in the past 10 years, his firm's involvement faded away. I see from a Google search, however, that he was involved in the RIM (BlackBerry) patent litigation of a few years ago -- another huge case with millions if not billions riding on the outcome.

http://www.msnbc.msn.com/id/10989832

We often tell posters that they should seek the advice of a skilled attorney who has experience and knowledge in government contracting matters. There really aren't that many; it's a fairly exclusive club. Herb is a senior member in good standing of that club, really kind of an elder statesman.

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.

I met with him once in Denver to ask about his help on a legal matter. It turned out that his client list included some folks who had conflicting interests, so he couldn't help. I learned that I couldn't have afforded him, anyway.

He tossed me some nuggets of wisdom that helped me understand the scope of the challenge I faced.

.

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