The Pentagon announced Wednesday it will reopen the bidding on the disputed $35 billion KC-X aerial refueling tanker contract award. Northrop Grumman and Boeing will submit new proposals and the government will pick a new winner by the end of the year. Defense Secretary Robert Gates said his office will oversee the competition between Boeing and the team of Northrop and EADS. The plan hands control to Pentagon Under Secretary John Young and sets up a dedicated source-selection committee. A Government Accountability Office (GAO) report last month outlined "significant errors" made by the Air Force in the original award to Northrop Grumman. Gates said the Pentagon will conduct a limited rebid that looks only at eight issues where the GAO report identified problems in the initial process. "We are reviewing the decision to ensure the re-competition will provide both companies a fair opportunity to present the strengths of their proposals. The United States Air Force has already picked the best tanker, and we are confident that it will do so again,” Northrop Grumman said in a statement. "It’s encouraging that the Defense Department intends to take steps to ensure a fair and open competition that, among other things, fully accounts for life-cycle costs, such as fuel, to provide the most capable tanker at the best value for the American taxpayer," Boeing said in a statement. For related news