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The Department of Defense terminated the contract after the contractors failed to deliver a single airplane after receiving more than $2 billion in payments. Instead, the contractors refused to continue with the contract unless they received extraordinary relief in the form of relaxed terms and extra funds. At the same time, they would or could not assure delivery of an aircraft by a time certain, specify the aircraft's performance capabilities, or commit to a specific price for the aircraft.

Were the A-12 Program’s cost overruns exceptional when compared to other major acquisitions? Prior research indicated that most major programs experience some degree of cost variance. To determine if the A-12’s overruns were exceptional, in a 1996 Master of Science in Management thesis compared the A-12 Program to 58 other contracts for developmental work. The conclusion of the research was that the A-12’s overruns were exceptional. The cost overruns in the A-12 Program, at termination, exceeded 97 percent of other programs examined. To complete the Program may have cost between $9 and $11 billion. The required budget adjustment to complete the A-12 Program was greater than 91 percent of other programs. The research found no difference between cost variances of fixed-price contracts and cost-type contracts. The assertion that the use of a fixed-price contract contributed to the failure of the program was not proven. There was also no statistical difference between the cost overruns of aircraft programs and other types of programs. The Government’s decision to terminate the A-12 Program for cost overruns was justified, based on the sample of programs examined.

Litigation on the A-12 program termination was in progress for a decade since 1991. As a consequence of the termination for default, the Navy demanded that the contractors repay $1,352 in unliquidated progress payments, but agreed to defer collection of the amount pending a decision by the U.S. Court of Federal Claims on the contractors’ challenge to the termination for default, or a negotiated settlement. The A-12 contractor team filed a legal action to contest the Navy's default termination, to assert its rights to convert the termination to one for "the convenience of the Government," and to obtain payment for work done and costs incurred on the A-12 contract but not paid to date.

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http://www.globalsecurity.org/military/systems/aircraft/a-12.htm