The Pentagon confirmed it plans to essentially redo a $35 billion tanker contract after a government watchdog found significant flaws in the controversial bidding process.

The news amounts to a win for Boeing (BA), the defense giant that contested the process which awarded the massive contract to Northrop Grumman (NOC) and its European partner EADS. The decision does not award the tanker contract to Boeing, but it does give them a shot at winning it on the rebid.

Defense Secretary Robert Gates announced the decision Wednesday afternoon at a news conference. The move was reported first earlier in the day by FOX Business reporter Rich Edson, who cited congressional aides to Sens. Sam Brownback [R-Kan.] and Patty Murray [D-Wash.].

Gates said the rebidding process is aimed at addressing significant errors that the Government Accountability Office found when Boeing protested it. The GAO is a non-partisan congressional watchdog.  

“I believe the revised process will result in the best tanker for the Air Force at the lowest price to the American people," Gates said. He also announced that the Pentagon expects the process to be completed and the contract to be awarded again by the end of the year. 

The new process will be run by the John Young, the Pentagon's chief weapons buyer, instead of by the Air Force. 

The two companies responded to the news via statements. 

"The United States Air Force has already picked the best tanker, and we are confident that it will do so again. Our men and women in uniform deserve nothing less," said Randy Belote, a senior spokesperson with Northrop. "The Northrop Grumman KC-45 tanker is needed now and is ready now."

Boeing expressed concern that the new contract requirements will change now that the contract is being rebid.

"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.

“This is at this point overtime and a tie," Lehman Brothers analyst Joseph Campbell told FOX Business. “The real crux of the matter is how is the Air Force exactly going to decide between two unequal tankers?”

The Air Force decision in February to give Northrop Grumman and EADS the 15-year contract to build 179 aircrafts to refuel planes in the air was highly controversial. Some experts say the contract could be worth over $100 billion over 30 years including parts and maintenance. Ultimately, the Air Force hopes to replace its 600-plane fleet of tankers. 

"The situation is still a fine mess," John Robinson, managing editor of Defense Daily, told FOX Business. “It's like bringing the Giants and Patriots back on the field to play the second half of the Super Bowl. You can’t do a limited do over.”