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Tanker Decision "Grounded" For Now By Pentagon

The Wall Street Journal reports the Pentagon is canceling the $35 billion tanker competition because it can't pick a winner by New Year's.

Why cancel? Why not just extend the deadline? The Journal indicates the Pentagon is waiting for a new administration to see what that President's funding priorities may be.

We are calling for more details, but any way you look at this, it is a victory for Boeingand a loss for Northrop Grumman. It buys Boeing time to reconfigure its offering to be a bigger plane the next time bids are sought.

What a wild twist in a story filled with them. What does it say about our defense procurement capabilities when the Air Force's top priority--to replace tankers flying, in some cases, a half century--cannot be resolved?

Update: we are being told that with just four months left in the administration, the Air Force didn't have time to get this finished, and it didn't want to hand off a half-done deal to the next administration.

Here's a quote from Defense Secretary Robert Gates: "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. 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."

    • Pentagon delays $35B Air Force tanker decision

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  • Based in Los Angeles, Jane Wells is a CNBC business news reporter and also writes the Funny Business blog for CNBC.com.

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