US cancels air tanker competition

Northrop Grumman and EADS's design was originally awarded the contract

The US Department of Defence has cancelled a controversial $35bn (£20bn) competition for a fleet of new air refuelling tankers.

Defence Secretary Robert Gates said the outgoing administration no longer had the time to complete a competition "viewed as fair and objective".

In February the contract had been awarded to Northrop Grumman and its European partner EADS.

But, this decision was then overturned, allowing Boeing to re-enter the fray.

'Political opposition'

The ruling to overturn the contract win by Northrop Grumman and EADS was made following an audit by the Government Accountability Office, a congressional watchdog.

It said the Pentagon had committed significant errors that had favoured Northrop.

However, some commentators said that US politicians were angry that the deal had not gone to Boeing, and that many in Washington objected to the fact Northrop's plane design was based on a jet designed by Airbus - Boeing's EADS-owned European rival.

Describing the atmosphere surrounding the competition as "highly charged", Mr Gates said the final decision would now have to be made by the next US administration, which is due to begin in the New Year.

"The resulting 'cooling off' period will allow the next administration to review objectively the military requirements and craft a new acquisition strategy," he said.

The $35bn competition is for 179 aircraft, but the value of the deal could rise to around $100bn over the next 30 years.

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