The Pentagon has notified Congress and Boeing and Northrop Grumman (NOC, Fortune 500), the competing contractors, that the "solicitation and award" can't be done by January.
Defense Secretary Robert Gates -- who made the decision in consultation with Defense and Air Force officials -- said it would be better to have a "cooling-off" period rather than come up with "an incomplete and possibly contested process."
"Over the past seven years the process has become enormously complex and emotional -- in no small part because of mistakes and missteps along the way by the Department of Defense," Gates said.
"It is my judgment 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."
Officials say the present "KC-135 fleet can be adequately maintained to satisfy Air Force missions for the near future" and funding will be recommended for maintenance.
