Senate Armed Services Committee member John McCain said the Pentagon's inspector general, Joseph Schmitz, had formally notified the panel that "sufficient credible information exists to warrant the initiation of investigation."

The Republican senator, who has been pushing for the probe for months, said Wednesday he was heartened by the decision because it was necessary to "inject much needed transparency in this bad deal."

Telephone messages with requests for comments left at the Defense Department's press office remained unanswered late Wednesday.

The controversy goes back to late 2001, when Congress authorized the Air Force to lease 100 commercial wide-body jets and convert them into refueling tanker aircraft to replace aging KC-135 planes.

Bidding for the lucrative contract were Boeing and the European Aeronautic Defence and Space Company (EADS) or, more specifically, its Airbus subsidiary that manufactures A330 aircraft, the leading competitor of the Boeing 767.

After some deliberation -- and congressional prodding -- the Pentagon opted for Boeing, arguing in one of its documents that the selection "was based on key performance parameters, the details of the financial arrangements, and size of aircraft."

But evidence that surfaced in subsequent congressional hearings suggested that insider tips might have played a significant part in the deal that the White House's Office of Management and Budget estimated would cost the US taxpayer 26 billion dollars over 10 years.

E-mail messages written by Boeing chieftains and unearthed by members of Congress suggested that Darleen Druyun, who handled acquisitions for the Air Force at the time, may have shared confidential financial details of the Airbus offer with Boeing, thus giving the US company competitive advantage in crafting its own proposal.

"Darleen repeatedly came at us on price throughout the discussion," said one e-mail written in April 2002 by Andrew Ellis, a Boeing representative in Washington. "Darleen told us several times to keep in mind that EADS proposed price on green A330 was $5-$17M (five-17 million dollars) cheaper than green

Druyun eventually left the Pentagon for the lucrative job of deputy general manager for missile defense systems at Boeing, to which she was appointed last January.

The past few months have only increased the suspicions surrounding the deal.

A report by the General Accounting Office, the investigative arm of Congress, cast doubt about the very need for new tanker planes, arguing that the current fleet of KC-135s has plenty of life left.

The Congressional Budget Office, for its part, questioned the wisdom of leasing the planes versus buying them, saying that the lease arrangement would cost the treasury 37 billion dollars, or 12 billion more than a purchase.

"This leasing proposal is a bad deal for taxpayers, a bad deal for the military and a bad deal for pretty much everyone but Boeing," commented McCain.

President George W. Bush, however, strongly disagreed. "I do support it," he told The Seattle Post-Intelligencer in an interview.

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