The U.S. Department of Defense announced this morning that it is terminating the U.S. Air Force refueling tanker competition, and has notified Congress and the competing industry teams of the move.

Halting the current competition can be viewed as a win for Boeing, which complained that the quick pace of the recompete didn't give it enough time to substantively change its proposal. The deferment would allow the company to rebuild its proposal strategy around a larger aircraft like the 777.

According to a DOD statement, Defense Secretary Robert Gates, in consultation with senior Pentagon and Air Force leaders, "has determined that the solicitation and award cannot be accomplished by January. Rather than hand the next administration an incomplete and possibly contested process, Secretary Gates decided that the best course of action is to provide the next administration with full flexibility regarding the requirements, evaluation criteria and the appropriate allocation of defense budget to this mission."

Northrop Grumman partnered with EADS to offer a tanker based on the A330 for the so-called KC-X program, while Boeing proposed the 767-200LRF for the $35 billion effort. Boeing protested Northrop Grumman's upset win of the award, and DOD and the Air Force had been planning to rapidly turn around a new competition.

This marks the second aborted attempt to replace the Air Force's aging fleet of KC-135 refueling tankers, after an ill-fated effort to lease tankers from Boeing.

"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. "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. 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 says the current KC-135 fleet can be "adequately maintained" to satisfy requirements for the near future, and funding in fiscal 2009 and afterward will be allocated to maintain the fleet "at high-mission capable rates."

DOD will make recommendations to Congress on what to do with the pending FY '09 tanker replacement funding, and plans to continue funding the KC-X effort in the FY'10-15 budget plan presently being crafted in the Pentagon.

Story updated after original file

KC45 photo: Northrop Grumman