General Dynamics Corp. v. United States

We consider what remedy is proper when, to protect state secrets, a court dismisses a Government contractor’s prima facie valid affirmative defense to the Government’s allegations of contractual breach.

I

In 1988, the Navy awarded petitioners a $4.8 billion fixed-price contract to research and develop the A-12 Avenger carrier-based, stealth aircraft. The A-12 proved unexpectedly difficult to design and manufacture, and by De cember 1990, petitioners were almost two years behind schedule and spending $120 to $150 million each month to develop the A-12.

Petitioners informed the Government that the…