November 24, 2009 / 10:09 PM / 9 years ago

UPDATE 1-Court denies defense contractors Navy-jet case appeal

*Boeing, General Dynamics to appeal to High Court

*Stealth fighter contract canceled in 1991 (Adds General Dynamics response)

ATLANTA, Nov 24 (Reuters) - A federal appellate court refused to rehear an appeal by Boeing Co and General Dynamics of a long-running lawsuit over the U.S. Navy’s 1991 termination of a contract to develop a stealth fighter jet, and the companies said they plan to appeal to the U.S. Supreme Court.

In separate statements, both defense contractors expressed disappointment after the U.S. Court of Appeals for the Federal Circuit in Washington, D.C., declined to rehear the case on Tuesday.

“The Court of Appeals’ decision is clearly wrong as a matter of law and it has broad implications for all forms of government contracting nationwide,” Boeing general counsel J. Michael Luttig said in a statement.

McDonnell Douglas, now owned by Boeing (BA.N), and General Dynamics (GD.N) were initially awarded the Navy contract to build the A-12 attack jet in the late 1980s. When the Defense Department ended the program in 1991, the companies’ challenged the termination.

Boeing said in its statement that at issue in the case was how the Pentagon ended the aircraft program, and whether it and General Dynamics were owed money for work in progress and other expenses.

A trial court originally ruled in favor of the contractors, but various appeals over the years have delayed a final decision, Boeing’s statement added.

General Dynamics said it believes the decision “provides significant grounds for appeal” in its statement.

The case is: McDonnell Douglas Corporation, et al. vs. United States, 2007-5111, -5131, before the U.S. Court of Appeals for the Federal Circuit. (Reporting by Karen Jacobs, editing by Leslie Gevirtz and Carol Bishopric) ((karen.jacobs@thomsonreuters.com + 1 404 493 3656; Reuters Messaging: karen.jacobs.reuters.com@reuters.net))

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