In a news release that cited “mistakes and missteps” by the Defense Department, Gates said he was terminating competition for the $35 billion contract to give the next administration full flexibility to decide how to handle the process.

“Over the past seven years the process has become enormously complex and emotional — in no small part because of mistakes and missteps along the way by the Department of Defense,” Gates said. “It is my judgment that in the time remaining to us, we can no longer complete a competition that would be viewed as fair and objective in this highly charged environment.”