Questions still surround Pentagon tanker redo

By Andrea Shalal-Esa

WASHINGTON (Reuters) - Lawmakers welcomed on Wednesday the Pentagon's decision to reopen a controversial $35 billion aerial tanker competition, but said they would remain vigilant to ensure the revamped process was done fairly.

Some said flaws in the handling of the initial Air Force contract, awarded to Northrop Grumman Corp (NOC.N) and Europe's EADS (EAD.PA) in February, underscored the need to reform the overall area of defense acquisitions.

The congressional Government Accountability Office last month upheld a protest filed by losing bidder, Boeing Co (BA.N), after finding "significant errors" in the process.

Pentagon chief arms buyer John Young, who will now oversee the contest instead of the Air Force, said he would answer more questions at Thursday's House Armed Services subcommittee hearing. For instance, whether the government faces a termination fee if it cancels its contract with Northrop.

The House Oversight and Government Reform Committee also plans a hearing on the issue next week.

Boeing supporters said the Pentagon decision gave the Chicago-based company another chance to win the contract, while Northrop backers expressed confidence that the Los Angeles-based company would prevail again.

Sen. Maria Cantwell, a Washington state Democrat, called for a closed-door hearing in the Senate Armed Services Committee, to "make sure the Department of Defense and Congress are fully aware of the national security issues involved."

If not, she threatened to put a hold on the nomination of Michael Donley as Air Force Secretary. "This issue is too important to have another whitewashed contracting process."