Secretary of Defense Robert Gates announced that he is returning the authority to choose the next Air Force refueling tanker back to the Air Force.
That authority was taken away from the Air Force after last year's successful challenge by Boeing of the win by Northrop Grumman and Airbus.
"The Air Force is pleased at today's announcement and the confidence Secretary Gates is placing in the Air Force," the military branch said in a statement. "Tanker recapitalization remains the Air Force's number one acquisition priority."
The Air Force said it will soon release a draft of new proposed rules for competitors who want to bid to build the new tanker, in a process that has lasted nearly a decade for a contract that could total over $100 billion. A formal set of rules is scheduled to be released later this year "with contract award slated for 2010."
The military has continued to say it wants only one winner, as pressure has mounted for a split buy.
"We're looking forward to working with the U.S. Air Force on this very critical effort to replace America's KC-135 refueling fleet," Boeing said in a statement. The aircraft giant indicated it may offer up another version of its original tanker entry, depending on the new rules.
"Whether it's the agile, wide-body 767-based tanker or a superb large tanker in the 777, Boeing's tanker options feature maximum capability at a lower cost than our Airbus competitor."
One reason the Air Force originally chose the Northrop Grumman/Airbus tanker was because of its larger size.
Northrop Grumman released a short statement saying it is "pleased that a decision has been made and we are looking forward to competing and winning the tanker contract again."
Northrop expects the proposed rules for bidding to come out by the end of the month, likening the restart of the competition to the movie "Groundhog Day".
Boeing supporters have been pressing the Pentagon to disqualify Airbus from entering the competition, after the World Trade Organization ruled preliminarily that European subsidies to Airbus are illegal.