December 12, 2016 / 7:21 PM / in a year

UPDATE 3-Canada, cool on the F-35, says Lockheed jet still an option

(Adds reaction from defense source, procurement expert)

By David Ljunggren and Leah Schnurr

OTTAWA, Dec 12 (Reuters) - Canada will still consider Lockheed Martin Inc’s F-35 in an open competition for fighter jets, Prime Minister Justin Trudeau said on Monday, despite domestic and foreign criticism about the program’s cost.

Earlier on Monday, U.S. President-elect Donald Trump said the cost of Lockheed’s F-35 program was “out of control.”

A source familiar with the fighter jet replacement effort said Canadian officials found Trump’s remark interesting but were not drawing too many conclusions.

“Because the president-elect sends a tweet, is the price a couple of years from now of an F-35 really going to be dramatically different?” said the source, who spoke on condition of anonymity because of the sensitivity of the issue.

Canada’s ruling Liberals won an election last year on a promise not to buy F-35s because the planes were too expensive. Trudeau told Parliament that the former Conservative government had “clung to a plane that does not work and is far from being able to work.”

But the Liberal government has since softened its position and said this year that all suppliers could bid to replace its aging fighter CF-18 jet fleet.

Still, Canada snubbed Lockheed last month when it unveiled plans to buy 18 Boeing Corp Super Hornets as a stop-gap measure while it started the fighter jet competition over again. Officials said the contest could take five years.

“It’s an open and transparent competition we’re going to be engaged in and the various aircraft and aircraft producers will have an opportunity to make their best case,” Trudeau told a news conference when asked whether Canada might be more likely to opt for the F-35 if the costs fell.

Pressed as to how vindicated he felt by Trump’s comments, Trudeau declined to answer directly.

Defence Minister Harjit Sajjan, asked about the potential impact of the F-35 becoming cheaper, told reporters on Monday that “we are going to be making sure that we get the right aircraft and making sure it’s the right price.”

The previous Conservative government announced in 2010 it would buy 65 F-35s but reversed itself after an official probe savaged the way the decision had been made.

Kim Richard Nossal, a Queen’s University political studies professor and author of a 2016 book on Canadian defense procurement, said it was likely Ottawa would still buy the F-35 in five years’ time because of concerns around future production of the Super Hornet.

Lockheed Martin said it understood concerns about affordability, noting its goal was to reduce the price of the F-35 by 60 percent from original estimates.

Canada is staying in the nine-nation consortium that helped fund development of the F-35. Lockheed Martin said in June it was studying whether to shift work on the plane away from Canadian firms amid uncertainty over Ottawa’s intentions.

Canadian firms will account for development and production work on the F-35 program worth about US$1 billion by the end of 2016, the company said. (Reporting by David Ljunggren and Leah Schnurr; Editing by Nick Zieminski and Grant McCool)

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