Pentagon Cancels Tanker Competition for Now

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

The decision would provide the next administration with fullflexibility regarding the requirements, evaluation criteria and budgetdecisions involved in the competition, the Pentagon said in a statement.

"It is my judgment that in the time remaining to us, we can nolonger complete a competition that would be viewed as fair andobjective in this highly charged environment," Gates said. "Theresulting ‘cooling off’ period will allow the next administration toreview objectively the military requirements and craft a newacquisition 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 complexand emotional – in no small part because of mistakes and missteps alongthe way by the Department of Defense," Gates said.

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

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

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