U.S., Canada eye option for four F-35 deliveries in 2017: sources

By Randall Palmer and Andrea Shalal OTTAWA/WASHINGTON (Reuters) - Canada could take delivery of an initial four F-35 fighter jets built by Lockheed Martin Corp in 2017 under an agreement with the U.S. military, although no final decision has been made, sources familiar with the matter said on Friday. An Oct. 27 briefing chart prepared by the Pentagon's F-35 Joint Program Office maps out plans for the U.S. Air Force to defer four of 26 F-35A purchases in a ninth batch of low-rate production jets, which would allow Canada to take those slots, said the sources, who were not authorized to speak publicly. Canada is one of eight international partners who helped the U.S. military fund development of the advanced warplane, and it announced a sole-source contract to buy 65 planes in 2010. But Canada's plans were put on hold in 2012 after a parliamentary watchdog faulted the government's process. Sources familiar with the issue have told Reuters that a comprehensive review that ended this spring put the jet ahead of the competition and that European bidders were effectively ruled out. They said a decision still had to be made. The latest news, first reported by Canadian media, rekindled controversy in Parliament, where an opposition lawmaker immediately criticized the Conservative government for appearing to plow ahead with the F-35 purchases and not permitting a more transparent bidding process. Canada announced in September that it would extend the life of its existing CF-18 fighters built by Boeing Co to 2025, instead of retiring them in 2020 as initially planned. Critics suspect the government could delay its decision about new fighters until after a federal election in October 2015. The swap outlined in the Oct. 27 briefing chart would preserve Canada's option to proceed quickly with F-35 orders once that decision is made and announced, said the sources. They said Canada could also begin training F-35 pilots as early as 2016. Lockheed earlier this year received nearly $700 million in funding for long-lead procurement items for the ninth batch of 57 jets, or Low-Rate Initial Production 9 (LRIP-9). The Pentagon is due to start negotiating the terms of that order and the 10th batch early next year. Air Force Lieutenant General Chris Bogdan, the Pentagon's F-35 program chief, last month said he also plans to negotiate a block buy with foreign buyers to benefit from larger economies of scale instead of contracting for one year at a time. F-35 program spokesman Joe DellaVedova confirmed that a briefing had been prepared for the Air Force but declined to discuss its content. He said the U.S. government was still awaiting a decision by Canada. Marcel Poulin, spokesman for Canadian Public Works Minister Diane Finley, said on Friday the issue was not yet decided. "No decision has been made on the replacement of Canada's CF-18 fleet. The CF-18s are being life-extended to maintain a fighter capability through 2025,” he said. (Reporting by Andrea Shalal and Randall Palmer; Editing by Alan Crosby)