[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.

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.

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.

[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.

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.