The Navy yesterday notified Lockheed Corp. that it is canceling its contract for the P-7A antisubmarine warfare aircraft, a program that has cost the California aerospace company $300 million because of miscalculations in planning and development.
Lockheed said it plans to appeal the decision.
The Navy terminated the contract for "default," which in the argot of defense contracting means that Lockheed would not be able to recover the $300 million. The Navy said Lockheed "failed to make adequate progress toward completion of all contract phases, which were to have resulted in delivery of two prototype aircraft in April and December 1992." Lockheed officials said they hope to have the decision changed to a termination "for the convenience of the government," which would enable the company to recover some development costs.
The P-7A aircraft was to be a land-based, long-range submarine hunter to replace the Navy's P-3, also built by Lockheed. Lockheed engineers had assumed that the P-7 would have much in common with the P-3 and thus estimated development costs of $600 million. Later, engineers concluded that an entirely different aircraft would be needed and announced in November that the blunder had cost the company $300 million in the fourth quarter, contributing heavily to Lockheed's poor financial performance last year.