UPDATE 1-Gates to meet US senator on arms chief, tanker

(adds Northrop quotes, debate over dual procurement, byline)

By Andrea Shalal-Esa

WASHINGTON, April 22 (Reuters) - U.S. Defense Secretary Robert Gates and Senator Richard Shelby are due to meet on Thursday to discuss Shelby's concerns about a long-delayed aerial refueling plane competition, which prompted him to put a hold on the nomination of a new chief Pentagon weapons buyer.

Shelby's spokesman Jonathan Graffeo said the two men would meet at Shelby's congressional office on Thursday, following Shelby's meeting on Monday with Ashton Carter, President Barack Obama's nominee for defense undersecretary for acquisitions.

Shelby on Monday said he was encouraged by his meeting with Carter, but would maintain a hold on his nomination until after he met with Gates. He said Carter assured him that he wanted to buy the best value tanker and cost was not the only criteria.

Shelby and fellow Republican Senator Jeff Sessions, both of Alabama, are holding up Carter's confirmation by the Senate.

They are worried that a new competition for aerial refueling tanker could result in a price "shoot out" that would work against the larger plane proposed by Northrop Grumman Corp (NOC.N) and its European partner, EADS (EAD.PA).

Northrop was awarded a $35 billion tanker contract in February 2008, and planned to build that plane in Alabama, but the Pentagon canceled the deal after government auditors upheld a protest filed by losing bidder Boeing Co (BA.N).

Northrop officials have said an Air Force debriefing given to Boeing after the contract award may have included pricing data that could give it an advantage in the new competition.

Northrop also wants to ensure that the new competition includes a mechanism to weigh the greater capability offered by its larger A330-based tanker versus that of the smaller 767-based tanker offered by Boeing.

"These planes are very different. In our view, the plane that offers greater capability needs to get credit in the selection process," Belote said.

Gates told reporters last week that he expected movement on the nomination soon, and that the Pentagon would let lawmakers review the new criteria for the tanker competition and get their input before proceeding with any contract award.

The Senate Armed Services Committee approved Carter's nomination earlier this month, but it cannot be voted on by the full Senate until Shelby and Sessions lift their hold.

The Pentagon plans to launch a new tanker competition this summer, and hopes to award a contract next year.

It will be the Air Force's third bid to replace its aging fleet of KC-135 refueling planes, which are nearly 50 years old on average. The Air Force's first plan to lease and buy 100 Boeing 767s died in 2004 amid a major procurement scandal.

Gates scrapped the subsequent revamped competition, initially won by Northrop, after congressional auditors found problems in the Air Force's handling of the competition.