WASHINGTON — Defense Secretary Robert M. Gates on Wednesday canceled a bitter competition to build a new fleet of Air Force refueling tankers, saying the contest had become so acrimonious that picking a winner was impossible before President Bush leaves office.
The unexpected action is the latest setback for the star-crossed $35-billion program, which now has had its selection process started and stopped three times over the last five years.
The move will leave a decision on how to restart the 179-plane program to a new presidential administration, delaying delivery of the much-needed new tanker as much as another year. The Air Force first awarded a contract to build the replacements shortly after the Sept. 11 terrorist attacks.
The decision to scrap the competition is a particularly tough blow for Century City-based Northrop Grumman Corp., which beat Boeing Co. in the most recent contest and was widely expected to have that victory confirmed in the follow-up competition that Gates canceled.
"We are extremely disappointed at the decision to terminate the current tanker competition, especially on behalf of our men and women in uniform who will now be denied a critically needed new tanker for years," Northrop spokesman Randy Belote said.
Northrop has said the contract award would create more than 7,500 jobs for California's struggling aerospace industry, even though the planes would be assembled in Alabama.
Boeing had been pushing for a four-month delay to completely overhaul its bid, and it said in a statement that it welcomed Gates' decision, which would allow for a "thorough and open competition" in the future.
The move gives Boeing new life in one of the last remaining large-scale weapons contracts of its generation, said Richard Aboulafia, an aircraft expert at Teal Group Corp., an aerospace and defense analysis firm. "It sure beats the sudden death they were facing with the existing plan."
The cancellation comes after two months of disarray following a July ruling by government auditors that the Air Force mishandled the selection process that chose Northrop, which was proposing to build its tanker from an Airbus A330 commercial airliner.
In the wake of the Government Accountability Office ruling, Gates took responsibility for the competition away from the Air Force and vowed to run it out of his own office, saying he believed it could be completed by the end of the year.
