Jobs under threat as US cancels $18bn defence deal

Thousands of British jobs were under threat following the Pentagon's decision to cancel the world's biggest defence contract and allow an American company to bid.

Airbus could lose an £18bn contract to manufacture tankers for the US Air Force, resulting in more than 11,000 job cuts, The Times reported.

The project offered job security for thousands of workers at factories in Bristol and North Wales. The contract was estimated to be worth over £4bn to the UK economy.

US Defence Secretary Robert Gates reopened the aerial tanker contest after the selection process that picked Airbus over Boeing was found to be flawed.

The contest will now be overseen by John Young, the Pentagon's chief weapons buyer, not the Air Force, and Gates hoped a decision could be reached by December since the current process had already "gone on far too long."

The Air Force contract award in February for 179 new aerial refueling tankers prompted an immediate protest by Boeing and vows of congressional intervention by its backers in Congress.

Last month, the Government Accountability Office said it found "significant errors" in the Air Force selection process, and urged the service to re-do the competition.

The Air Force had been given until mid-August to announce its plans, but Gates rushed to reopen the competition given the advanced age of the current KC-135 tanker fleet, which is used to refuel warplanes in mid-air.

Boeing had been expected to win in February with its tanker based on the 767 airliner but the Air Force opted for the larger Airbus entry based on the A330 airliner that is built in Britain.

Young said he hoped to issue a new draft request for proposals in late July or early August that would give bidders time to submit fresh bids, possibly with even lower cost estimates.

He said the goal was to award a new contract by December, but he would not allow a hurried reexamination of the bids. "We will not expedite steps in the process. We have to do this methodically, fairly and without bias in any way," he said.