Gates regrets Northrop Grumman’s pull-out

U.S. Defense Secretary Robert Gates says he regrets that a major defense contractor has pulled out of the contest to build a badly needed new Air Force plane.

And he warns that the lone surviving bidder shouldn’t expect to be able to pad the check.

Gates told a military audience today 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.

Gates says the Pentagon will be “sharpening our pencils” when it comes to negotiating a deal with the surviving bidder, Chicago-based Boeing. He says the lack of a head-to-head competition shouldn’t further delay the program.