By Robert Barnes
Washington Post Staff Writer
Tuesday, January 18, 2011; 8:09 PM
It has been more than 50 years since the Supreme Court addressed the principle of "state secrets" and when the federal government may invoke them. But the justices indicated in an oral argument Tuesday, in a case that hinges on the issue, that they are in no hurry to break their silence.
The dispute between General Dynamics and Boeing on one side and the Defense Department on the other concerns an aircraft contract canceled in the 1990s and as much as $3 billion in taxpayer money.
But the justices signaled that contract law - not whether the government was justified in withholding secret government information that the companies say was vital to completing their task - will be the key to deciding who owes whom.
Some indicated that it might be impossible for the court to assign blame and that it should find a way to split the difference.
"It's the 'go away' principle of our jurisprudence," Justice Antonin Scalia said.
The case involves the Navy's desire for the A-12 Avenger, a state-of-the-art stealth aircraft. General Dynamics and Boeing together won the $4.4 billion contract in 1988. But three years later, then-Defense Secretary Richard B. Cheney pulled the plug, saying that the companies were not delivering and that they needed to return $1.35 billion they had been advanced (with interest, the amount is now about $3 billion).
The companies said the delay was the Navy's fault, because it had not shared the stealth technology that was essential to completing the mission. Lower courts said the companies could not "safely" litigate the case, though, because of the government's claim that it could not provide needed information without endangering national security.
The more modern context for the state secrets principle has been in cases brought by former detainees suing over alleged abuse. Both the George W. Bush and Obama administrations have invoked the principle in shielding the government from civil lawsuits.
Lower courts so far have backed the government, and one appeal is at the Supreme Court awaiting consideration.
But the justices showed no interest in using the current case to look into issues of when the government is justified in invoking national security to deny information. Instead, they focused on whether a fairness principle is at stake.
Scalia and Chief Justice John G. Roberts Jr. were the most outspoken in saying the government was stacking the deck by denying information and then trying to block lawsuits.
Roberts said that was a "pretty convenient rule" for the government. He seconded Scalia's idea that the court should not decide who was at fault.
"We've gotten to this point in the dispute because you say they're at fault, they say you're at fault," Roberts told the government's lawyer, Acting Solicitor General Neal Katyal.
"Under the state secrets doctrine, we can't resolve that question. Why don't we call the whole thing off?"
Katyal said the problem with doing so is that the contract between the two sides allows the government to determine when the companies are not delivering. To allow the firms to keep the advanced $1.35 billion plus interest would pay them for a claim they have not proved.
Washington lawyer Carter G. Phillips, who argued for the companies and the U.S. Chamber of Commerce, said the money was paid "for services that were rendered, without question, pursuant to the contract, pursuant to the instructions of the United States government."
Justices Ruth Bader Ginsburg, Stephen G. Breyer and Sonia Sotomayor were the most skeptical of the companies.
"Explain to me why it's unfair, given that you're two sophisticated contracting parties, to say you entered a contract knowing the government could invoke state secrets, it has, and so you bear the risk of that?" Sotomayor asked.
In the 1953 Supreme Court case that established the state secrets principle, the court said it could not be used in criminal cases. It would be unfair, the justices said, for the government to charge someone with a crime and then deny him the information needed for his defense.
But Breyer was reluctant to extend such a ruling. To "apply it to government contracting, where sophisticated contractors are perfectly capable of negotiating their own contract, we are not just throwing a monkey wrench into the gears of government contracting; we're throwing the whole monkey," he said.
Ginsburg pointed out that the companies not only want to keep the money they were paid, but want an additional $1.2 billion more that they say they are owed because of the contract cancellation. When Phillips said that "maybe to some extent you could say we're sort of being a little greedy," Sotomayor seized on the remark.
"You are being greedy. You admitted it," she said.
She also said she did not see how to split the difference: Either the government was right, she said, or the companies were right.
The combined cases are General Dynamics v. U.S. and Boeing Company v. U.S.