The Government Accountability Office in June recommended bidding be reopened after reviewing the contract process resulting in a consortium led by Northrop-Grumman winning the $35 billion contract in February. Boeing Co. protested the decision.
"I've concluded that the contract cannot be awarded at present because of significant issues pointed out by the Government Accountability Office," Gates said in a news briefing.
Rather than go back to square one, "given the amount of work that has been done, we believe that we can complete all of this and award a contract by December," he said.
Acting Air Force Secretary Mike Donley said amending and clarifying the request for the proposal and reopening the bidding process "offer the most direct route to complete the competition, achieve a final decision and field the tanker that represents the best value for the warfighter and the taxpayer."
"This is no small matter, and it's not just an Air Force issue," Donley said.
Gates said industry, Congress and the public "must have confidence in the integrity of this acquisition process."