Having now read the transcript of today's oral argument in General Dynamics v. United States/Boeing v. United States, I hold strong to my opinion that this is an important case for government contracting law but not an important case from the point of view of the post-9/11 debate regarding the state secrets privilege (see here, for example). The justices gave no reason to believe they intended to make significant changes to existing state secrets doctrine, and in particular said nothing to suggest that they might be interested in adopting a rule precluding invocation of the privilege as a basis for dismissal of claims. It just wasn't even discussed. And certainly no one so much as hinted that the information at issue here was not properly the subject of a privilege invocation. Rather, the entire thrust of the argument was whether to (1) treat this as a situation in which the government should be treated as the defending or non-moving party (and hence able to simultaneously invoke the privilege and get the benefit of having the case dismissed while keeping certain funds it had claimed under the contract), (2) treat this as a situation in which the government is a de facto moving party or claimant (and hence barred even under Reynolds from both invoking the privilege and reaping the benefits of its impact), or (3) split the difference by assuming that in a breach-of-contract scenario neither party can be said to be the movant/claimant and that, in such a case, the court should simply wash its hands of the litigation (those this still requires a decision as to who then gets to keep certain funds under the contract).
In short, pay close attention if you are involved in government contracting. If you are reading this because you wonder about the privilege's invocation in surveillance, interrogation, and other such cases, you should probably turn you attention elsewhere.