Pentagon Cancels Tanker Competition for Now

By Reuters -  |  Posted 2008-09-10

WASHINGTON (Reuters) - Defense Secretary Robert Gates on Wednesday canceled a $35 billion air tanker competition between Northrop Grumman Corp and Boeing Co for now, saying the contest had become too emotional and complex to be decided before the Bush administration leaves office in January.

The decision would provide the next administration with full flexibility regarding the requirements, evaluation criteria and budget decisions involved in the competition, the Pentagon said in a statement.

"It is my judgment that in the time remaining to us, we can no longer complete a competition that would be viewed as fair and objective in this highly charged environment," Gates said. "The resulting 'cooling off' period will allow the next administration to review objectively the military requirements and craft a new acquisition strategy for the KC-X."

The Pentagon also said that any contract award would have faced possible protests by the losing bidder.

"Over the past seven years the process has become enormously complex and emotional - in no small part because of mistakes and missteps along the way by the Department of Defense," Gates said.

Pentagon officials concluded that the current fleet of KC-135 tankers, which are over 47 years old on average, could be maintained to meet Air Force needs for the near future, and would request funding in the fiscal 2009 budget and "follow-on budgets" for that purpose, the statement said.

In addition, the Pentagon would make recommendations about what to do with tanker funding already mapped out in the fiscal 2009 budget, as well as the budget for the next six years that is currently being drafted by the Defense Department.

(Reporting by Andrea Shalal-Esa, editing by Gerald E. McCormick, Dave Zimmerman)