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The report forced immediate changes with the Conservative government promising a complete and public review of the stealth fighter program and opening the door to potential competitors.

“Funding will remain frozen and Canada will not purchase new aircraft until further due diligence, oversight, and transparency is applied to the process of replacing the Canadian Forces’ aging CF-18 fleet,” Public Works Minister Rona Ambrose said.

The Auditor-General’s report says the F-35 was “clearly the fighter jet of choice” as early as 2006, and that officials intentionally played up the F-35’s stealth capabilities to sidestep established purchasing guidelines.

“National Defence did not exercise the diligence that would be expected in managing a $25-billion commitment,” Ferguson said. “It is important that a purchase of this size be managed rigorously and transparently.”

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Ferguson’s report says Canada initially joined the F-35 program in 1997 not with the intention of purchasing the stealth fighter, but to ensure Canadian industry could win contracts associated with developing and producing the fighter.

That changed in 2006 when a memorandum of understanding was signed by Canada and eight other partner nations committing them to long-term participation in the project. By then, the military was knee-deep in the program.

“By the end of 2006, the (Defence) Department was actively involved in developing the F-35, and a number of activities had put in motion its eventual procurement,” the audit report says.