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 And he warned that the lone surviving bidder shouldn't expect to be able to pad the check.
Gates told a military audience that he wishes Northrop Grumman had chosen to place a bid on the $35 billion contract to build refueling tankers for the Air Force.
The defense giant pulled out of the bidding Monday. Northrop Chief Executive Officer and President Wes Bush said in a statement that the Pentagon's guidelines for the program "clearly favor Boeing's smaller refueling tanker" but that the company would not file a formal protest.
EADS, the European Aeronautic Defence and Space Co., had partnered with Northrop to vie for the tanker but was not expected to be able to compete against Boeing on its own. A spokesman for French President Nicolas Sarkozy said Wednesday that Sarkozy will raise concerns that the tanker contract is anticompetitive when he visits President Barack Obama later this month.
Obama has said the Pentagon shouldn't pay large amounts of money to a major defense contractor without any competition. But the Pentagon defended the tanker program as fair and said both companies could compete effectively. Defense Department spokesman Bryan Whitman said Monday the program would not be reworked just to ensure a competition.
Gates said the Pentagon will be "sharpening our pencils" when it comes to negotiating a deal with the surviving bidder, Boeing. He also said the lack of a head-to-head competition should not further delay the program.
Boeing announced last week that it would offer a military version of its 767 passenger jet for a fleet of 179 new planes. The contract is expected to be the first of several to replace many Air Force planes that date back to the 1950s.
Boeing said it will submit its formal bid by May 10. A final contract is to be awarded in September.
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