Navy to Seek Rescue of A-12 Jet Program : Defense: Officials will urge the government to absorb cost overruns for the troubled attack plane. The $50-billion weapons system could be canceled.

The Navy will urge Defense Secretary Dick Cheney to rescue the troubled A-12 Stealth aircraft program by partially bailing out the contractors, a Navy official said Thursday.

The official, who discussed the matter on condition he not be identified, said the recommendation will be submitted to Cheney today, the deadline that he gave the Navy to “show cause” why the $50-billion program should not be canceled.

Cheney was expected to decide as soon as today whether to continue the program. If dropped, it would be one of the biggest weapons systems ever canceled, and the Navy says American strategic capabilities would be badly hurt.

The contractors, McDonnell Douglas Corp. and General Dynamics Corp., have said they would be compelled to lay off about 8,000 workers at plants in St. Louis and Ft. Worth if the A-12 program is canceled.

The Navy calls the A-12 attack jet its top priority in weapons development. The aircraft, which is still under development, is supposed to replace the Navy’s aging fleet of A-6 Intruders, a carrier-based aircraft now deployed in the Persian Gulf.

The Navy wants to begin replacing the Intruders within a few years, but the A-12 contractors have fallen at least 18 months behind schedule in building the first six prototypes. They also are running at least $1 billion over budget and are demanding that the Pentagon absorb some of the extra expense, even though their contract calls for delivery of the prototypes at a fixed price of $4.8 billion.

The Navy official said Cheney will be asked to agree to a restructuring of the contract so that the government, in effect, would absorb some of the cost overruns. He said he could not estimate how big the bailout might be, but presumably it would run into the hundreds of millions of dollars.

Until recently, little was known about the project because it is classified secret.

Government auditors last month disclosed that the contractors and senior Pentagon and Navy officials worked together to paper over large financial and engineering problems with the A-12. That led to the forced resignation of the top Navy admiral in charge of aviation programs and figured in the abrupt resignation of John A. Betti, the Pentagon procurement chief who was the No. 3 defense official.

On Dec. 17, the Navy formally notified General Dynamics and McDonnell Douglas that they were in default on the contract, in part because they had failed to meet technical standards for the plane, such as its weight. The Navy said it might cancel the contract unless the contractors “cured” the problems by Jan. 2.

Lt. Dave Wray, a Navy spokesman at the Pentagon, said he could not comment on the contractors’ response to the default notice. The response was given on Wednesday. Spokesmen for General Dynamics and McDonnell Douglas also declined to comment.

Pete Williams, a Defense Department spokesman, said senior Pentagon and Navy officials were holding “very intensive” talks Thursday with contractor officials, who included John McDonnell, the chairman of McDonnell Douglas, and William A. Anders, the General Dynamics chairman. He declined to provide any details.