ANKARA—BAE Systems looks to have further cemented its future role in a strategic Turkish fighter jet contract, though the multibillion-dollar effort remains clouded by uncertainties.

In 2015 Turkey's procurement authorities ranked BAE Systems "first" in a three-way competition (with Airbus and Saab) to select a foreign partner in the TF-X program designed for the development and production of the country's first indigenous fighter jet. Political observers view the TF-X as one of the government's most high-profile "prestige" projects.

Since the selection of BAE Systems as the best bidder Turkey has been having pre-contract negotiations with the company and British government officials for an eventual government-to-government deal.

During the negotiations Turkey vehemently insisted on maximum technology transfer, full access to all source codes -- which would enable Ankara to make future modifications and upgrades on the aircraft -- as well as full assignment of Turkish engineers and scientists in aerodynamic design, body and engine production, all software, electronic, weapons, communications systems and all flight tests.

BAE Systems and Turkish Aerospace Industries (TAI), the prime contractor of TF-X, on Jan. 28 signed a $125 million "Heads of Agreement" to collaborate on the first development phase of the planned fifth-generation fighter jet. The deal was signed on the sidelines of British Prime Minister Theresa May's official visit to Ankara.

"The announcement signals an exciting next step in relations between both Turkey and the UK with the cooperation between BAE Systems and TAI paving the way for a deeper defence partnership. The agreement confirms ongoing collaborative work on the design and development of the aircraft," a BAE Systems statement said.

Program insiders expect development costs to be anywhere between $4 billion and $5 billion. The Turkish Air Force plans to buy more than 200 TF-X aircraft.

Last October, Turkey officially placed the country's order for a second batch of F-35 Lightning II multirole fighter aircraft under the multinational Joint Strike Fighter (JSF) program. Under the JSF program Turkey has committed to procure a total of 116 aircraft. Turkey placed its first JSF order in 2014.

Turkish officials hope to build a new-generation, dual-fighter jet fleet by their country's centennial, 2023, comprising the F-35 and the indigenous aircraft Ankara has been designing. Turkey hopes to receive its first F-35 in 2018 and have the TF-X's maiden flight by 2023.

But there are concerns about the future of TF-X. "At the moment this does not look like a program with robust export prospects," said one London-based Turkey specialist. "No one is certain at this stage if this, overall, is a feasible program."

A Western aerospace executive said that the scope of know-how and technology transfer has not yet been fully agreed on. "Further steps [between BAE Systems and TAI] may be exposed to major differences," he said.

But a government official said that Turkey would not give up on its demands for access to full technology. "We expect our partners [BAE Systems] to be fully aware that we would not be content with any restrictions," he said. "We made that point very clear on the first day we opened talks."

Before signing of the "Heads of Agreement" deal, pre-contract negotiations were under the jurisdiction of SSM, or the Undersecretariat for Defense Industries, the agency that runs Turkey's procurement programs. Now TAI takes over, and further talks on the first phase of the development program would be held between the Turkish and British aerospace companies.

Turkey has said it would negotiate the TF-X with Airbus if at any point during contract talks it faces a deadlock with BAE Systems.