Canada launches contest to build new fighter jet, first delivery in 2025

By Steve Scherer

By Steve Scherer

OTTAWA (Reuters) - Canada on Tuesday launched a long-delayed competition to build new fighter jets and said it was confident no favouritism had been shown towards any one contender, though some in the industry have said the race is tilted towards Lockheed Martin Corp. <LMT.N>.

Ottawa wants 88 new planes in a contract worth between C$15 billion ($11.4 billion) and C$19 billion ($14.5 billion). Initial proposals are due in the spring of 2020, with a winner named early in 2022 and the first aircraft delivery to be scheduled for as early as 2025, a statement from the federal government said.

Earlier this month, sources told Reuters that Airbus SE <AIR.PA> and Boeing Co <BA.N> might pull out over fears the air force is determined to buy Lockheed Martin's F-35 plane. A fourth contender is Sweden's Saab AB <SAABb.ST>.

Andre Fillion, assistant deputy minister of Defence and Marine Procurement, said there had been "intense engagement" with all the eligible suppliers while drafting the jet requirements, and "thousands of changes" were made as a consequence.

"We're quite confident that we have a product that we'll publish today that does not have any show stoppers for any of the suppliers," Fillion said in a telephone interview.

An independent "fairness monitor" - described as an external, third-party consultant hired by the government to monitor the process - said that "decisions were made objectively and free from personal favouritism or improper influence," according to the government statement.

Boeing, Saab, Airbus and Lockheed all said they had received the so-called request for proposal from Canada and were reviewing it.

Boeing said it is "reviewing the request for proposal to determine if we'll participate." Lockheed said 110 Canadian companies had already "played a large part" in producing the F-35.

At least one firm has expressed unhappiness that the draft requirements emphasized the ability to carry out first strikes on targets abroad, a strength of Lockheed's F-35, a source told Reuters earlier this month.

No details about the final requirements were provided on Tuesday, except a confirmation that 60% of the selection will be based on a plane's capability or "technical merit," while cost and economic benefits will count for 20% each.

Canada has been trying unsuccessfully for almost a decade to buy replacements for its ageing F-18 fighters. In May, Ottawa changed the rules to allow Lockheed Martin to submit a bid, prompting Boeing to take the unusual step of announcing publicly it was surprised.

Canada is part of the international consortium that developed the F-35. The former Conservative administration said in 2010 it would buy 65 of the jets but later scrapped the decision, triggering years of delays.

Liberal Prime Minister Justin Trudeau came to power in 2015 vowing not to buy the F-35 on the grounds that it was too costly, but Ottawa has since softened its line.


(Reporting by Steve Scherer in Ottawa; Additional reporting by Kelsey Johnson in Ottawa; Editing by Bernadette Baum and Matthew Lewis)