July 9 (Bloomberg) -- U.S. Senator Daniel Inouye, chairman of the Appropriations Committee, said he now opposes directing the Pentagon to split its purchase of aerial refueling tankers between Boeing Co. and Northrop Grumman Corp.

Inouye’s panel is one of two that appropriate money for defense, and his decision signals an end to congressional debate over how to proceed with the often-delayed Air Force program, worth as much as $35 billion over at least 10 years, to replace a fleet of tankers that has been in use since 1956.

Inouye’s counterpart in the House, Pennsylvania Democrat John Murtha, favors splitting the contract yet told Defense Secretary Robert Gates in June that the fiscal 2010 defense budget would give the Pentagon the option to conduct a winner- take-all competition.

Inouye, a Democrat from Hawaii, said in an interview today that his view has evolved since last month when he hadn’t ruled out splitting the program and needed more data from the Pentagon before making a decision.

“Hiring two contractors for the program “may be much more expensive,” Inouye said today, providing no specific figures. “It appears that most who are concerned or interested in this matter prefer one contract.”

‘Bad Public Policy’

Gates opposes dividing the contract. “It’s bad public policy and bad acquisition policy,” he told a press conference March 18.

Splitting the contract “would require the Air Force to maintain two different logistics facilities, two different logistics trains, two different kinds of training,” Gates said. “Everything would have to be duplicated,” and “I just think it’s a bad deal for taxpayers.”

Murtha’s panel is scheduled to complete its work on the defense bill next week. Inouye’s panel hasn’t scheduled its mark-up of the measure.

Chicago-based Boeing in February 2008 lost the original $35 billion tanker program to Los Angeles-based Northrop and teammate Airbus SAS parent European Aeronautic, Defence & Space Co. Boeing successfully protested, and Gates in September postponed a re-bid until the new administration took office.

To contact the reporters on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net;

Last Updated: July 9, 2009 16:35 EDT