WASHINGTON -- The Boeing Co., as expected, said Monday that it would offer an updated military version of its 767 passenger jet to compete for a $40 billion contract for the next generation of aerial refueling tankers for the Air Force.

The KC-767, which would be built in Everett and modified in Wichita, Kan., is largely the same design Boeing offered five years ago when the tanker-replacement program began. Just as then, independent analysts consider Chicago-based Boeing the front-runner for a contract that could eventually exceed $100 billion and run for decades.

Boeing officials said the plane the company would build for the Air Force is a souped-up version of a KC-767 tanker it is building for Italy and Japan. The first of those planes is scheduled to be delivered this year.

With Boeing deciding on its design, the Air Force will be forced to choose between the KC-767 or a larger plane proposed by Northrop Grumman Corp. and Airbus. Whoever wins will claim a huge prize -- the right to build 179 planes to begin replacing the aging fleet of KC-135 tankers. The average age of a KC-135 is 48 years old.

The Northrop proposal, based on an Airbus A330 platform, would allow the Air Force to carry a large amount of cargo and passengers in addition to fuel. Boeing officials discounted that ability, saying the Air Force has decided it prefers a plane that is primarily a tanker.

If the Air Force wanted a larger plane, Boeing's vice president for Air Force programs John Sams said the company would have offered a tanker version of its 777 passenger plane.

While smaller than its sister plane or a competing bid from the Northrop-Airbus team, the 767 best fits the Air Force's requirements, Sams and other Boeing officials said at a news conference in a hotel near the Pentagon.

"It can truly be said that in terms of aerial refueling, bigger is not necessarily better," Sams said.

Smaller planes can use shorter runways, meaning they can use airfields closer to combat. Sams said the KC-767 will be able to use runways of 8,000 feet compared with 12,000 feet for the less efficient, less powerful KC-135. Being closer to the fighting means the tankers burn less fuel in transit. With more planes in the air, more combat aircraft can be refueled at the same time.

Boeing executives declined to say how much the 767 tanker would cost. However, commercial versions of the plane average $120 million.

Boeing's announcement and the possibility that the KC-767 would be selected would mark a major reversal for the 767 program. Commercial orders for the aging plane had been declining as airlines opted for the bigger 777 or planes made by Airbus.

But this month UPS ordered 27 of the planes, and if the Air Force selects the Boeing tanker, it would ensure continued operation of the line in Everett for years.

Boeing officials said the program would support thousands of jobs but would not speculate whether new jobs would be created in Everett to support the KC-767 program.

"This KC-767 advanced tanker will support more than 44,000 American jobs and 300 suppliers," said Mark McGraw, a vice president of Boeing's tanker division.

The Air Force is expected to announce in October which of the two proposals it prefers.

A win for Boeing also would help remove the stench from a major corruption scandal that submerged the tanker program in its early years. In 2004, a potential $23 billion award to Boeing was terminated after the Air Force's No. 2 procurement official and Boeing's former chief financial officer were convicted of violating conflict-of-interest laws.

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