Boeing won a round last night in its fight against its European rival Airbus after Washington’s auditor ruled that there should be another auction for a $35 billion (£17.8 billion) defence contract for the US Air Force.

The Seattle-based aerospace group secured the chance to rebid for contract to supply air tankers to the Air Force after the agency responsible for auditing the US Government sided with it.

Boeing had been trying to overturn a February decision by the Air Force to award the contract to Northrop Grumman, saying its bid for the deal had not been considered adequately.

Last night, the Government Accountability Office (GAO) recommended that the Air Force reopen the auction and allow Boeing to bid again. Any decision from the GAO is not legally binding, but its move threatens to unravel the deal and to further delay delivery to the Air Force of 179 modified A330 aircraft.

The GAO said last night that the Air Force had made a mistake in picking Northrop and that it should make another decision about the contract.

Boeing had argued that the Air Force had changed its mind in the middle of the auction process about the size of aircraft that it wanted and had not given Boeing the chance to amend its bid.

The GAO also recommended that, in the event that Boeing won the contract at its second attempt, the Air Force should pay for all legal fees incurred by Boeing to contest the initial decision.

The failure to win the contract marked a political blow to Boeing because it had hoped that the Pentagon’s endorsement would help it to win future defence auctions. While it has sold a number of refuelling tankers to the Italians and the Japanese, it has lost a number of key contracts to Airbus tankers.

A spokesman for the Air Force in Washington did not say whether the auction would be reopened but added: “We are aware of the GAO statement and will review its findings.”

Under US law, the Air Force has 60 days to respond to the GAO with its reaction to the findings.

Michael Golden, the GAO’s legal counsel for procurement law, last night said: “Our review of the record led us to conclude that the Air Force had made a number of significant errors that could have affected the outcome of what was a close competition between Boeing and Northrop Grumman. We therefore sustained Boeing’s protest.

“We also denied a number of Boeing’s challenges to the award to Northrop Grumman, because we found that the record did not provide us with a basis to conclude that the agency had violated the legal requirements with respect to those challenges.”

Boeing said: “We welcome and support today’s ruling by the GAO fully supporting the grounds of our protest. We appreciate the professionalism and diligence the GAO showed in its review of the KC-X acquisition process. We look forward to working with the Air Force on next steps in this critical procurement for our warfighters.”

However, a spokesman for the Lexington Institute, a US think tank said: “This is the most sweeping change within procurement that I have ever seen. It is nothing to do with politics. The US Air Force has very little room. They are in a straightjacket. They have failed to run a proper auction.”

Boeing, EADS, and Northrop Grumman failed to return calls.

Shares in both Northrop and Boeing were virtually unchanged on Wall Street after the decision, with Northrop stock changing hands at $70.62, while Boeing shares were $74.80.

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