U.S. Defense Secretary Robert Gates has given authority for oversight to the U.S. Air Force over the KC-X aerial refueler program, potentially worth more than $35 billion.

Gates made the announcement this morning during a speech at the annual Air Force Association conference outside Washington, D.C., and it was met with applause from the audience.

Following his speech, Gates said he didn't "change his mind" on the subject, but felt confident the Air Force would best oversee the forthcoming competition. It will be between Boeing and a Northrop Grumman/EADS team to build 179 new aerial refuelers.

This is a major step in restoring the Air Force's procurement credibility, which has been marred by a series of failures, including the on-again, off-again Combat Search and Rescue-X program, military space acquisitions and the last two attempts at tanker awards. The last award last year resulted in the selection of an Airbus A-330 tanker from Northrop/EADS. The contract was terminated, however, after Boeing protested the award and government auditors subsequently discovered USAF missteps in the acquisition process.

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It was possible Gates could have retained procurement authority over the program in the Office of the Secretary of Defense, under the oversight of his new procurement czar Ashton Carter. Before his reappointment by President Barack Obama, Gates had once considered an OSD-led award effort before abandoning that effort for the new administration.

Following Gates's speech, Air Force Secretary Michael Donley released a statement indicating the long-awaited draft request for proposals "is close to release and will be presented to offerors with ample time for discussions." A formal RFP would follow, with contract award slated in 2010. The first KC-Xs are expected for delivery in 2015. "The Air Force is pleased at today's announcement and the confident Secretary Gates is placing in the Air Force," Donley says.

Photo: USAF