Judge Rejects General Dynamics-Boeing Case

A federal judge concluded the Pentagon was justified in canceling a contract for the A-12 stealth attack aircraft a decade ago, throwing out a claim by General Dynamics Corp. and Boeing Co. for as much as $2 billion.

U.S. Claims Court Judge Robert H. Hodges Jr. said the companies fell hopelessly behind schedule for delivering the first aircraft, giving the Defense Department a “legitimate basis” to declare them in default and terminate the $4.4-billion contract.

If the decision stands, it could force Boeing and General Dynamics to pay back more than $1.3 billion, plus interest, they have already received as so-called progress payments.

Justice Department and Pentagon officials applauded the decision, which was released after the markets closed. General Dynamics shares closed up 54 cents to $78.96, while Boeing rose 70 cents to $51.20, both on the New York Stock Exchange.