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The Canadian government will allow a “flexible approach” in determining industrial benefits for the new fighter jet program, making way for Lockheed Martin and the U.S. government to bid on the project.

Suppliers are being informed of the new approach that comes in the wake of a threat from the Trump administration to pull the F-35 from the competition to replace the Royal Canadian Air Force’s CF-18 jets. If Canada insisted that industrial and technological benefits must be linked to the outlay of $19 billion for a new fighter jet fleet then Lockheed Martin’s F-35 stealth jet was out of the race, the U.S. government noted in letters sent to Canadian procurement officials.

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The U.S. argument is that because Canada is a partner in the F-35 program it cannot ask Lockheed Martin to meet specific industrial benefits for a Canadian competition if the F-35 is selected. Under the F-35 agreement, partner nations are prohibited from imposing requirements for industrial benefits as the work is determined on the best value basis. In other words, Canadian firms compete and if they are good enough they get work on the F-35 program. Over the last 12 years, Canadian firms have earned $1.3 billion U.S. for their work on building F-35 parts.

The U.S. stated it cannot offer the F-35 for the Canadian competition if there are requirements to meet for set industrial benefits.

The new change by the Canadian government would allow the F-35 to be bid, said industry sources. But there is a caveat – those aircraft suppliers who do guarantee industrial benefits would receive maximum scores in the competition.

If Lockheed Martin doesn’t provide guaranteed industrial benefits then the firm could find its bid will suffer as a result, sources said.