Government Avenged for Canceling the A-12 Avenger

One of the significant impediments to restoring fiscal accountability in the Department of Defense (DoD) is the (largely accurate) perception that once a weapons program is far enough into production, political engineering and consequences for the industrial base make it nearly impossible to cancel. And if those political and economic forces aren't enough to continue to propel production forward, DoD's experience trying to cancel the A-12 Avenger Navy fighter-bomber (a.k.a. the "Flying Dorito") has also served as a kind of procurement boogieman story of how challenging it can be to cancel a program for cause, even when a program cannot meet schedule, price, or technical requirements. As former POGO Defense Program Coordinator Marcus Corbin wrote in 1997:

"If the Pentagon's plan of eliminating specifications is to work, it must replace the protections provided by specifications with some other method of ensuring that products work. The most obvious method - not buying any more products from contractors who build shoddy weapons or waste money - is currently not practiced seriously. The case of the A-12 Navy fighter-bomber fiasco is illustrative.

The Pentagon paid $3 billion for the A-12 but was forced to cancel the program in 1991 for technical failure and massive cost overruns. The prime contractors, McDonnell Douglas and General Dynamics, had the gall to sue the government for canceling the program, asking for an additional $1.5 billion in damages - for a program that never produced a single aircraft. Rather than cut off corporations that showed such lack of responsibility, remorse, and concern over their failure to produce acceptable products, the Defense Department has continued sending a steady diet of new contracts to them. If the Department couldn't exert the pressure required to get these corporations to back off in this egregious case, it is hard to imagine that contractors face much incentive to produce quality products out of fear of losing future business."

There remain concerns about whether the government considers contractor responsibility and past performance as much as they should, but after 18 years, the United States Court of Appeals for the Federal Circuit has decided that "the overall evidence of record supports a conclusion that the government was justified in terminating the contract for default."

-- Mandy Smithberger

UPDATE: According to DOJ, McDonnell Douglas and General Dynamics are required to repay the government a total sum of $2.8 billion

Comments

[Posted on: Jun 03, 2009 at 11:07 AM]

I want to take a moment to comment on one of the articles you referenced in your article about the A-12 funding.
http://federaltimes.com/index.php?S=4114556

One facet that is not mentioned which I believe to be important in the realm of contract officers making decisions is the fact that past performance in dollar terms is factored into proposals submitted by contractors since estimates have to be derived from past performance of similar contracts required by the Truth in Negotiations Act. Where this gets dicey is the fact that while DCAA & DCMA provide oversight through this whole estimating process, each company uses different methodologies that are acceptable to the government's statistics driven metrics. Each company games this system based on how their businesses are structured as well as what their actual past performance is, making procurement personnel compare apples to oranges between competiting proposals when they start to get into the weeds. While the estimates are rooted in historical data, it is upto the contract officer to make the judgement on whether the estimates look reasonable given the scope and scale of the contract. The more experienced officers will challenge estimates much more frequently than less experiences ones.

While the A-12 program was a strange beast of it's own, I would comment that the brain drain of seasoned procurement personnel of the 90s had a substancial part in the troubles we see in multiple development contracts we see today. As you are well aware of, government shifted responsibility and duty historically assigned to the DOD to industry through LSIs and clearly it was a mistake. I applaud Gates for pushing towards significantly increasing the Pentagon's procurement personnel, but I suspect with only a handful of major contracts down the pipe the issue may have minimized itself even without this notable effort.