* Says to look at all available options to replace CF-18s
* Independent panel to be given guidelines for evaluation
* Cost of F-35s, including operating them, would be C$45.8
bln
* Opposition says government misled Canadians
OTTAWA, Dec 12 (Reuters) - Canada scrapped a controversial
sole-source plan to buy F-35 jets from Lockheed Martin Corp
on Wednesday, saying it will now evaluate all available
options for acquiring new fighters.
The announcement is another challenge for the F-35, which
has been hit by cost overruns and delays and at $396 billion is
the costliest program in Pentagon procurement history.
Canada's Conservative government - stressing it could still
buy the F-35 if it turns out to be the best option - will set up
an independent panel to look at replacements for an aging fleet
of CF-18 fighters, which are due to go out of service by 2020.
"We are pressing the reset button on this acquisition in
order to ensure a balance between military needs and taxpayer
interests," Defence Minister Peter MacKay told reporters.
The move marks the government's most far-reaching attempt
yet to put an end to a scandal that has grown steadily since the
Conservatives announced in July 2010 they would buy 65 F-35
Joint Strike Fighters for C$9 billion ($9 billion) without
holding an open competition.
Ottawa said it would give the new independent panel a series
of detailed guidelines to help it evaluate the contenders.
It also released a report showing the full cost of buying,
equipping, maintaining and operating the 65 F-35 jets would be
C$45.8 billion over a 42-year operating life, far higher than
earlier estimates.
"We are demonstrating that we are serious about looking at
all available options to replace the CF-18s," Public Works
Minister Rona Ambrose said in a statement.
Critics complained from the start that the single-source
decision was wrong and that Ottawa was not being clear enough
about how much it would cost to buy and maintain the planes.
The Conservatives brushed off the criticism for almost two
years but launched a review in April after a spending watchdog
said the decision to buy the jets had been based on bad data
from officials who deliberately downplayed the costs and risks.
"The government misled Canadians ... there is not a whiff of
contrition or admission of a problem," said Bob Rae, leader of
the opposition Liberal Party.
Government sources said the main contenders now for the
Canadian fighter-jet order are the F-35, Boeing Co's F-18
Super Hornet and the EADS Eurofighter.
The Conservatives have a majority of seats in the House of
Commons and are in no immediate threat politically as a result
of the F-35 debacle, given that the next election is due in late
2015.
Reuters reported the main outlines of the government's
revised plan to acquire fighter jets last Friday.
The initial plan called for the F-35s to be delivered
between 2017 and 2023. Officials, insisting the F-35 had not
been ruled out, declined to say how long it would be before
planes would be delivered under the new plan.
Whatever jet is chosen, the cost of acquiring it will remain
at C$9 billion. As part of the overall review, the defense
ministry will also look at whether the lifespan of the CF-18s
can be extended beyond 2020.
Despite announcing in July 2010 it would buy the F-35,
Ottawa never signed a binding contract with Lockheed Martin.
Officials said the 42-year operating life used as the basis
for the C$45.8 billion cost estimate for the F-35s compares with
the 20-year period the government said it had used as a matter
of course until now for military purchases.
Lockheed is developing three F-35 variants for the U.S.
military and eight partner nations: Britain, Canada, Italy,
Turkey, Australia, Denmark, Norway and the Netherlands.
A U.S. Defense Department spokeswoman said Canada remained a
partner in the F-35 program.
She said the review Canada was now undertaking was similar
to one run by the United States in 2010, which found no
alternative fighter that could provide the necessary capability
at lower cost.