General Dynamics Corp. v. United States | |
---|---|
![]() | |
Argued January 18, 2011 Decided May 23, 2011 | |
Full case name | General Dynamics Corporation, Petitioner v. United States |
Docket no. | 09–1298 |
Citations | 563 U.S. 478 ( more ) 73 S.Ct. 528; 97 L. Ed. 727; 2011 U.S. LEXIS 3830 |
Case history | |
Prior | McDonnell Douglas Corp. v. United States, 76 Fed. Cl. 385 (2007); affirmed, 567 F.3d 1340 (Fed. Cir. 2009); cert. granted, 561 U.S. 1057(2010). |
Court membership | |
| |
Case opinion | |
Majority | Scalia, joined by unanimous |
General Dynamics Corp. v. United States, 563 U.S. 478 (2011), is a U.S. Supreme Court case in which the State Secrets Privilege prevented the plaintiff from using the evidence it needed to protect itself from an expensive judgement. [1]
In 1988 the U.S. Navy ordered a new stealth aircraft, the A-12 Avenger, to be built by contractors General Dynamics and McDonnell Douglas. The parties agreed to what would be the main problem with the contract: instead of a "cost-reimbursable" contract (which would have limited the contractors' liability to the funding provided by the Government, and is the most commonly used when dealing with new weapons systems, especially with new technology), they agreed to a "fixed-price" contract (which required the contractors to complete the work regardless of final cost) of around US$4.8 billion (the competing industry team, composed of contractors Northrop, Grumman, and Vought, somewhat surprisingly never submitted a final bid and dropped out of the competition, possibly due to the intended contract type).
Not unexpectedly (given the nature of the program) the contract encountered difficulty in meeting the technical requirements, which resulted in huge cost overruns, but in this case the overruns (combined with the contract type) threatened the existence of both companies, two of the largest United States defense contractors. The contractors' requested that the fixed-price contract be converted to a cost-reimbursable contract, agreeing to absorb $150 million in cost overruns as consideration. Instead, in 1991 the Navy gave up and cancelled the contract, saying too little progress had been made. Yet the cancellation would cause another problem: instead of cancelling the contract as a "termination for convenience" (where the Government decides it no longer wants an item; this may require the Government to spend additional funds to make a contractor whole), it instead chose to cancel it as a "termination for default" (where the Government cancels a contract upon belief that the contractor is not performing in accordance with contract terms, and often demands repayment of funds provided), and asked the contractors to return roughly US$1.35 billion of "progress payments" (payments based upon work performed) already made. The contractors refused, saying the government had kept too much information secret under the "state secrets privilege" for there to be adequate progress, and therefore a default termination was not justified. [2]
The manner in which the program was canceled led to years of litigation between the contractors and the Department of Defense over breach of contract:
In September 2010, the U.S. Supreme Court said it would hear the arguments of the two companies that the government canceled the project improperly and that the use of a state secrets claim by the U.S. prevented them from mounting an effective defense. [4]
In May 2011, the Supreme Court set aside the Appeals Court decision and returned the case to it "for proceedings consistent with this opinion". [5] The Court unanimously held that "when litigation would end up disclosing state secrets, courts may not try the claims and may not award relief to either party." [6] Thus it neither granted the contractors the US$1.2 billion awarded in the earlier termination for convenience, nor the Navy the roughly US$1.35 billion in prior payments made.
In January 2014, the case was settled with Boeing and General Dynamics agreeing to pay US$400 million to the Navy, equally divided between them. [7]
General Dynamics Corporation (GD) is an American publicly traded aerospace and defense corporation headquartered in Reston, Virginia. As of 2020, it was the fifth-largest defense contractor in the world by arms sales, and fifth largest in the United States by total sales. The company is a Fortune 100 company, and was ranked No. 94 in 2022.
The McDonnell Douglas/General Dynamics A-12 Avenger II was a proposed American attack aircraft from McDonnell Douglas and General Dynamics. It was to be an all-weather, carrier-based stealth bomber replacement for the Grumman A-6 Intruder in the United States Navy and Marine Corps. Its Avenger II name was taken from the Grumman TBF Avenger of World War II.
The United States Court of Appeals for the Federal Circuit is a United States court of appeals that has special appellate jurisdiction over certain types of specialized cases in the U.S. federal court system. It has exclusive appellate jurisdiction over all U.S. federal cases involving patents, trademarks, government contracts, veterans' benefits, public safety officers' benefits, Federal employees' benefits, and various other categories. Unlike other federal courts, the Federal Circuit has no jurisdiction over cases involving criminal, bankruptcy, immigration, or U.S. state law.
The United States Court of Federal Claims is a United States federal court that hears monetary claims against the U.S. government. It was established by statute in 1982 as the United States Claims Court, and took its current name in 1992. The court is the successor to trial division of the United States Court of Claims, which was established in 1855.
United States v. Reynolds, 345 U.S. 1 (1953), is a landmark legal case decided in 1953, which saw the formal recognition of the state secrets privilege, a judicially recognized extension of presidential power. The US Supreme Court confirmed that "the privilege against revealing military secrets ... is well established in the law of evidence".
The Supreme Court of the United States handed down sixteen per curiam opinions during its 2005 term, which lasted from October 3, 2005, until October 1, 2006.
Totten v. United States, 92 U.S. 105 (1876), is a United States Supreme Court case in which the court ruled on judicial jurisdiction in espionage cases. The case was an important precursor to the court's 1953 decision in United States v. Reynolds wherein it recognized the State Secrets Privilege. The case was later referenced and its holding expanded by the Court in the 2005 case of Tenet v. Doe and then again in General Dynamics Corp. v. United States. In Tenet, which involved a contract claim against the CIA brought by Cold War era spies, Court clarified that “Totten precludes judicial review in cases. .. where success depends upon the existence of their secret espionage relationship with the government.” In General Dynamics, the Court held that the same logic applied outside the espionage context, with the limitation that “[b]oth parties—the government no less than petitioners—must have assumed the risk that state secrets would prevent the adjudication of claims of inadequate performance."
United States v. Winstar Corp., 518 U.S. 839 (1996), was a decision by the United States Supreme Court which held that the United States Government had breached its contractual obligations. The court in Winstar rejected the Government's "unmistakability defense"—that surrenders of sovereign authority, such as the promise to refrain from regulatory changes, must appear in unmistakable terms in a contract in order to be enforceable.
Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), is a United States Supreme Court case that involved issues concerning statutory standing in antitrust law.
Allison Engine Co. v. United States ex rel. Sanders, 553 U.S. 662 (2008), was a decision by the Supreme Court of the United States holding that plaintiffs under the False Claims Act must prove that the false claim was made with the specific intent of inducing the government to pay or approve payment of a false or fraudulent claim, rather than merely defrauding a contractor. Congress overruled this decision with the Fraud Enforcement and Recovery Act of 2009.
A changes clause, in government contracting, is a required clause in United States government construction contracts.
The superior knowledge doctrine is a principle in United States contract law which states that the government must disclose to a contractor any otherwise unavailable information that is vital to contract performance. It is also referred to as "the Helene Curtis doctrine of superior knowledge.
Rockwell International Corp. v. United States, 549 U.S. 457 (2007), is a United States Supreme Court case in which the Court examined the "original source" exception to the "public-disclosure" bar of the False Claims Act. The Court held that (1) the original source requirement of the FCA provision setting for the original-source exception to the public-disclosure bar on federal-court jurisdiction is jurisdictional; (2) the statutory phrase "information on which the allegations are based" refers to the relator's allegations and not the publicly disclosed allegations; the terms "allegations" is not limited to the allegations in the original complaint, but includes, at a minimum, the allegations in the original complaint as amended; (3) relator's knowledge with respect to the pondcrete fell short of the direct and independent knowledge of the information on which the allegations are based required for him to qualify as an original source; and (4) the government's intervention did not provide an independent basis of jurisdiction with respect to the relator.
The Supreme Court of the United States handed down ten per curiam opinions during its 2010 term, which began October 4, 2010 and concluded October 1, 2011.
South Carolina v. Catawba Indian Tribe, Inc., 476 U.S. 498 (1986), is an important U.S. Supreme Court precedent for aboriginal title in the United States decided in the wake of County of Oneida v. Oneida Indian Nation of New York State (1985). Distinguishing Oneida II, the Court held that federal policy did not preclude the application of a state statute of limitations to the land claim of a tribe that had been terminated, such as the Catawba tribe.
Stanford University v. Roche Molecular Systems, Inc., 563 U.S. 776 (2011), was a United States Supreme Court case in which the Court held that title in a patented invention vests first in the inventor, even if the inventor is a researcher at a federally funded lab subject to the 1980 Bayh–Dole Act. The judges affirmed the common understanding of U.S. constitutional law that inventors originally own inventions they make, and contractual obligations to assign those rights to third parties are secondary.
A fixed-price contract is a type of contract such that the payment amount does not depend on resources used or time expended by the contractor. This is opposed to a cost-plus contract, which is intended to cover the costs incurred by the contractor plus an additional amount for profit. Such a scheme is often used by military and government contractors to require vendors to incur the risk of cost overruns, and to control costs. However, historically when such contracts are used for innovative new projects with untested or undeveloped technologies, it often results in failure if costs greatly exceed the ability of the contractor to absorb unexpected cost overruns.
Salazar v. Ramah Navajo Chapter, 567 U.S. 182 (2012), was a United States Supreme Court case in which the Court held that the United States government, when it enters into a contract with a Native American Indian tribe for services, must pay contracts in full, even if Congress has not appropriated enough money to pay all tribal contractors. The case was litigated over a period of 22 years, beginning in 1990, until it was decided in 2012.
Am. Express Co. v. Italian Colors Rest., 570 U.S. 228 (2013), is a United States Supreme Court case decided in 2013.
United States v. Zubaydah, 595 U.S. ___ (2022), was a United States Supreme Court case related to the state secrets privilege.