Tanker Competition Could Resume This Spring

WASHINGTON (Reuters) - U.S. Defense Secretary Robert Gates said he intended to proceed early this spring with a competitive process in the military's $40 billion program to begin replacing its aging fleet of aerial refueling tankers.

Northrop Grumman Corp and European partner EADS beat out Boeing Co to win the contract last February. But the Pentagon decided in September to start over after government auditors found problems with the process, and the competition became very politicized.

"I am firmly committed to a competitive process," Gates told the Senate Armed Services Committee on Tuesday.

He said he would meet top Air Force and Pentagon officials to map out next steps in the delayed competition once a new deputy defense secretary and chief arms buyer were confirmed.

The competition should resume in early spring 2009, with a contract award expected in early 2010, Gates said.

"I would hope that we get this process going by early spring," Gates told a later House Armed Services Committee hearing.

He said a contract award could follow "soon after the first of the new year."

Sen. Carl Levin, a Michigan Democrat who chairs the committee, said at the outset of Tuesday's hearing that the panel would take quick action on the nomination of William Lynn to become deputy secretary, once the Obama administration answered questions about his work for Raytheon Co.

President Barack Obama has not yet nominated anyone to replace current chief weapons buyer John Young.

Gates said picking people for high level jobs had become increasingly difficult, given ethics concerns and the small number of individuals with the needed experience.

He said the tanker competition clearly aroused "strong feelings around the country," but the department needed to ensure that the aircraft were picked in a competitive process.

Republican Sen. Jeff Sessions, a strong supporter of Northrop's bid, given that it would have led to creation of many jobs in his home state of Alabama, reminded Gates than an earlier Air Force proposal to award a non-competitive contract to Boeing had collapsed after various watchdog groups concluded it would have cost billions of dollars more than necessary.