Boeing and General Dynamics were due to meet US Navy officials late last week, after receiving a demand to pay more than $2.34 billion by 30 September to settle the long-running dispute over cancellation of the A-12 attack aircraft.

The US Court of Federal Claims ruled in August last year that the navy was justified in cancelling the $4.4 billion A-12 development programme in 1991, before the first aircraft was completed. Settlement negotiations have been under way since then, but have "become protracted beyond our initial expectation", the navy says, explaining its demand for immediate payment.

General Dynamics describes the demand as an "unseemly negotiating tactic, and an apparent effort to gain advantage during settlement talks". Reports suggest the companies have proposed providing the navy with goods and services worth over $2.5 billion, including price cuts on Boeing F/A-18E/Fs as well as Gulfstream business jets and attack submarines built by General Dynamics subsidiaries.

The USN terminated the General Dynamics/McDonnell Douglas (now Boeing) A-12 programme due to the contractors' inability to develop the stealthy attack aircraft to requirements and to schedule. Both companies are appealing the August 2001 court decision upholding the default cancellation, with hearings set to begin by year-end.

Source: Flight International