Air Force reopens $35 billion tanker contract=0ABy Christopher Hinton, Mark= etWatch=0ALast update: 3:38 p.m. EDT July 9, 2008=0AComments: 73=0ANEW YORK= (MarketWatch) - The Department of Defense said Wednesday it will reopen a = $35 billion contract to build its next generation aerial refueling tankers,= giving Boeing Co. a second chance to beat its rivals Northrop Grumman Corp= . and its partner Airbus.=0ABoeing (BA:Boeing Co.=0ANews, chart, profile, m= ore=0A=A0Last: 65.57-0.35-0.53%=0A3:54pm 07/09/2008=0ADelayed quote data = =0AAdd to portfolio=0AAnalyst =0ACreate alert=0AInsider=0ADiscuss=0AFinanci= als =0ASponsored by:=0ABA=A065.57, -0.35, -0.5%) was furious when Northrop = (NOC:Northrop Grumman Corporation=0ANews, chart, profile, more=0A=A0Last: 6= 5.41-0.76-1.15%=0A3:54pm 07/09/2008=0ADelayed quote data =0AAdd to portfoli= o=0AAnalyst =0ACreate alert=0AInsider=0ADiscuss=0AFinancials =0ASponsored b= y:=0ANOC=A065.41, -0.76, -1.1%) won the award in February, and in a protest= with the Government Accountability Offices, said that the Air Force biddin= g process was flawed and unfair. Last month the agency said it mostly agree= d with Boeing, and it was widely believed the Air Force would follow its re= commendation to redo the bidding process. =0AIn a briefing before reporters= , Defense Secretary Robert Gates, pressured to replace the military's antiq= uated tanker fleet, said he wants new draft proposals from the companies wi= thin a month and to have a new contract awarded by the end of the year. =0A= Gates also said the military will closely follow the GAO recommendations on= how to improve the bidding process. =0AThe Air Force wants to buy 179 tank= er jets capable of hauling cargo and refueling other airplanes in the air. = =0AThe GAO ruling in favor of Boeing was another embarrassment for the Air = Force and a program racked with problems. It was widely seen as evidence th= at its procurement process was broken and in need of a major over haul. See= related story. =0ALast month, Defense Secretary Gates fired two top Air Fo= rce officials, Secretary Michael Wynne and Gen. Michael Moseley. The move r= aised some speculation that Gates knew ahead of time that the GAO report wa= s going to reopen the contract and rebuke the Air Force's decision-making p= rocess. =0AOn Wednesday, Gates said Sue Payton will remain the assistant se= cretary of the Air Force for acquisitions, but that John Young, defense und= ersecretary for acquisition, would now play a greater oversight role. =0APa= yton wasn't present at the media conference. =0AYoung also ruled out any po= ssibility that the contract might be split between the two rivals, saying i= t wouldn't yield the price benefits of using just one manufacturer. =0ABoei= ng had submitted a converted 767 commercial airliner as the platform for th= e new military tanker. The KC-767 is smaller than the converted A330 aircra= ft offered by Northrop and built by the Airbus unit of EADS (FR:005730: new= s, chart, profile) , the acronym for the European Aeronautic Defence and Sp= ace Co. =0AThe stakes are high. In addition to the $35 billion over the nex= t 10 to 15 years, aftermarket revenue for parts and maintenance could easil= y come to another $60 billion, making it one of the largest military contra= cts in history. The contract could even expand further as the Air Force has= more than 500 Stratotankers that are well north of 40 years in age. =0ACh= ristopher Hinton is a reporter for MarketWatch based in New York.=0A <<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> If you wish to unsubscribe from the AIRLINE List, please send an E-mail to: "listserv@xxxxxxxxxxxxxxxxx". Within the body of the text, only write the following:"SIGNOFF AIRLINE".