* Canada's planned purchase of F-35 had hit problems
* F-35 on shortlist with Boeing's F-18, Eurofighter: source
* Panel to study jets, report back by early 2013
By David Ljunggren
OTTAWA, Dec 7 Canada is restarting its search
for new fighter jets but could still choose Lockheed Martin
Corp's F-35, which Ottawa had initially said it would
buy before losing enthusiasm as cost estimates soared, a
government source told Reuters on Friday.
An independent four-person panel will study the F-35, Boeing
Co's F-18 Super Hornet and the EADS Eurofighter
and report back to Ottawa by early 2013, the source said. The
panel, which could also look at other fighters, will not make a
recommendation on which jet to buy.
The decision marks a determined effort by the Conservative
government to end a series of embarrassments after announcing in
July 2010 it intended to buy 65 of the Joint Strike Fighters for
C$9 billion. The planes were supposed to replace Canada's
veteran CF-18s, which will be retired in 2020.
Canada is one of eight international partners helping to
fund development of the new radar-evading warplane, but it has
not signed a formal contract to buy the planes from Lockheed
Martin. Ottawa had decided to proceed with the purchase without
holding an open competition after military officials said the
F-35 was the only plane to meet all their needs.
The Pentagon's F-35 office declined to comment, saying it is
a Canadian issue.
U.S. officials said Canada remained part of the
international group that is funding development of the F-35 and
that status remained unchanged. Canada agreed in February 2002
to contribute $150 million to the F-35 development program.
Critics have long complained that the C$9 billion purchase
figure was unrealistically low and said the military had opted
for the F-35 without looking closely enough at alternatives.
"People said the process was unclear and they don't know how
we got to the decision (to buy the F-35s). This time everything
will be out in the open. The process will be clear," the
government source told Reuters.
"We may end up in the same place," he said, referring to the
initial decision to buy the F-35s. "The choice is not
predetermined at all."
The government, which long dismissed critics of the F-35
purchase, had to launch a formal review of the project in April
after a spending watchdog said the initial decision to buy the
jets had been based on bad data from officials who deliberately
downplayed the costs and risks.
Television network CTV, citing unnamed sources, said on
Thursday the government would next week release an independent
study showing the cost of buying and maintaining the jets was in
fact around C$40 billion ($40.4 billion), much higher than the
initial estimate of C$25 billion for purchase and maintenance.
"The government has consistently misled Canada about the
true cost of this aircraft ... all of what the government said
has been shown to be completely and totally untrue," said Bob
Rae, leader of the opposition Liberals.
The $396 billion F-35 program, the largest in Pentagon
history, is already late and well over budget. It has been
restructured three times in recent years, although U.S.
officials say it is now starting to produce results.
In April, Ottawa responded to the spending watchdog's
criticism by stripping the Defense Ministry of responsibility
for buying new jets and handing it to the Public Works Ministry.
Lockheed is developing three variants for the U.S. military
and eight partner nations: Britain, Canada, Italy, Turkey,
Australia, Denmark, Norway and the Netherlands.
In fiscal 2013, which began Oct. 1, the Pentagon expects to
buy 43 F-35 jets, including 29 for the U.S. military and 14 for
international partners, with each F-35A model slated to cost
around $127 million, according to U.S. government data.
Over the life of the program, the Pentagon estimates the
average cost of the conventional takeoff and landing (CTOL)
variant of the F-35 will be $78.7 million in 2012 dollars.
F-35 spokesman Joe DellaVedova said U.S. cost projections,
which factor in 2,443 U.S. purchases and 716 from foreign
buyers, have been shared with the international partners.
The F-35 program office is trying to drive down the
staggeringly high cost of operating and maintaining the jets
over the next decades by opening that part of the program to
more competition from U.S. and international firms.
The Canadian government source termed as accurate media
speculation that other possible choices to replace the CF-18s
were Saab AB's Gripen and Dassault Aviation SA's