WASHINGTON -- Congressional investigators have upheld Boeing's protest of a $35 billion Air Force tanker contract awarded to Northrop Grumman Corp. and Airbus parent European Aeronautic Defence and Space Co., and recommended that the service hold a new competition.

The Government Accountability Office said Wednesday that it found "a number of significant errors that could have affected the outcome of what was a close competition between Boeing and Northrop Grumman."

Boeing workers tell KIRO 7 North Sound Bureau Chief reporter Kristi Paulus that they’re thrilled with the GAO ruling.

Union leaders said the moral is up among engineers and machinists and that it’s a very happy day in Everett.

“There are people who thought they might lose their jobs. We knew it might create more jobs, like 500 more jobs throughout the plant, but people have been shifted. They had to be reassigned and some had to leave this plant and go from this point,” said Alan Rice, spokesman for the Society of Professional Engineering Employees in Aerospace.

The unions said they are ready to make the Air Force tankers and that Boeing has the facility and trained workers to do the job.

Boeing wants the deal to be up for a rebid and for the U.S. Air Force to be very clear about what it wants so Boeing can create the best possible product.

The Air Force had no immediate reaction to the GAO findings, saying only that it is aware of the report and will review it.

While the GAO decision is not binding, it puts tremendous pressure on the Air Force to reopen the contract and could help Boeing capture part or all of the award. It also gives ammunition to Boeing supporters in Congress who have been seeking to block funding for the deal or force a new competition.

"Boeing and the American people are the big winners in this decision," said Sen. Maria Cantwell, D-Wash. "The GAO criticisms were a scathing indictment of the Air Force's process. The Air Force will have no choice but to rebid this project."

The contract for 179 aerial refueling tankers is the first of three deals worth up to $100 billion to replace the Air Force's entire tanker fleet over the next 30 years.

The award has become a flashpoint in a heated debate over the military's use of foreign contractors. It has triggered a fierce backlash on Capitol Hill among lawmakers from Washington, Kansas and other states that stand to gain jobs if Chicago-based Boeing succeeds in capturing the deal. Backed by union officials representing Boeing workers and "Buy-American" proponents in Congress, they have painted the competition as a fight between an American company and its European rival.

Sen. Patty Murray, D-Wash., stressed that Congress needs to examine more than just the narrow technical issues raised by the GAO review, including the impact of defense contracts on American jobs.