Gates says Pentagon will reopen $35B tanker bid

Defense Secretary Robert Gates said Wednesday that his office--not the Air Force--will oversee the competition between Boeing and the team of Northrop and Airbus parent European Aeronautic Defence and Space Co.

The plan, which hands control to Pentagon acquisition chief John Young and sets up a dedicated source-selection committee, is the latest illustration of senior Defense Department civilians lack of confidence in the Air Force's ability to manage the contract.

Many lawmakers embraced the action, but analysts questioned the Pentagon's aggressive timetable.

The Government Accountability Office last month detailed "significant errors" the Air Force made in the original award to the Northrop team. The GAO said Chicago-based Boeing, which protested the deal, might have won had the service not made mistakes in evaluating the bids.

The Pentagon now will conduct a limited rebid that looks only at eight issues where government auditors found problems in the initial process, Gates said.

Sen. Richard Shelby, a Republican from Alabama, where the Northrop team would assemble its plane, called it "the best of all options" that would address the "minor procedural flaws" the GAO cited.

Presumptive Republican presidential nominee Sen. John McCain of Arizona said Gates' plan reflected "careful consideration of the GAO's decision." McCain helped block an earlier scandal-marred tanker contract with Boeing and later pressed the Pentagon to change proposed bidding procedures opposed by Northrop and Airbus.

Nick Shapiro, a campaign spokesman for Sen. Barack Obama of Illinois, said the presumptive Democratic presidential nominee commended the Pentagon's decision and called for a "fair and transparent" process in awarding the contract.

Northrop spokesman Randy Belote said the company will review the latest Pentagon decision to make sure the re-competition provides a fair opportunity to present its proposal. EADS Chief Executive Louis Gallois and said the company is prepared to do its part in addressing the Pentagon's requirements.