Not good news. Saw this just now:

Pentagon cancels tanker competition: Gates

The Pentagon has cancelled a 35 billion dollar competition for a new air refueling tanker, leaving the politically charged decision to a new administration, US Defense Secretary Robert Gates announced Wednesday.

"It is my judgement 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," Gates said in a statement.

"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," he said.

The decision was a blow to Northrop Grumman and its European partner EADS, which won a Pentagon contract to build a new air refueling tanker only to have it successfully challenged by rival Boeing.

Boeing had insisted that it needed at least six more months to respond to a revised request for proposal.

Gates said the seven year process to find a replacement for its ageing fleet of KC-135 tankers had become "enormously complex and emotional - in no small part because of mistakes and missteps along the way by the Department of Defense."

The Pentagon said Gates made the decision to terminate the competition in consultation with the air force, and said the current KC-135 fleet can be adequately maintained to satisfy air force missions in the near future.

"Rather than hand the next administration an incomplete and possibly contested process, Secretary Gates decided that the best course of action is to provide the next administration with full flexibility regarding the requirements, evaluation criteria and the appropriate allocation of defense budget to this mission," the statement said.