VICTORIA, British Columbia — The U.S. is threatening to pull the F-35 from Canada’s fighter jet competition if the ally to the north doesn’t change requirements for the winning bidder to stipulate specific industrial benefits for domestic firms.

The U.S. government is arguing that since Canada is a partner in the F-35 program it cannot request guaranteed industrial benefits for its companies.

Canada has pre-qualified four aircraft for its fighter jet project worth up to 19 billion Canadian dollars (U.S. $14 billion): the Lockheed Martin F-35, Boeing Super Hornet, Eurofighter Typhoon and the Saab Gripen.

The Canadian government plans to purchase 88 new jets to replace its aging CF-18 fighter aircraft fleet. Canada will require that a robust package of guaranteed industrial benefits or offsets be provided by the winning bidder, government officials have said.

But the U.S. government has objected to that, as Canada is still a partner in the F-35 program, which does not guarantee participating nations a set number of contracts. Work on the F-35 program is based on best value and price.

U.S. Navy Vice Adm. Mathias Winter, program executive officer for the Joint Strike Fighter, wrote Canadian procurement officials Dec. 18, 2018, pointing out that the F-35 agreement prohibits partners from imposing requirements for industrial benefits.

“We cannot participate in an offer of the F-35 weapon system where requirements do not align with the F-35 Partnership," he noted in his letter.

Winter’s letter was leaked this week to defense analysts and the Canadian journalists.

The letter has prompted ongoing discussions between Canadian and U.S. procurement officials in an effort to work out some kind of solution, multiple industry and government sources told Defense News.

But the Canadian government will also respect any decision by the U.S. to not bid the F-35 if an agreement can’t be reached, sources added.

The Canadian government is putting the final touches on the bid requirements for new fighter jet project. That bid package is expected to be issued sometime this year.

Asked about the U.S. ultimatum, Ashley Michnowski, spokeswoman for Procurement Minister Carla Qualtrough, said feedback from aircraft suppliers is continuing to be collected by the Canadian government. That process has yet to be finished and a final request for bids is expected to be released soon, she added.

Michnowski said Canada continues to be a member of the Joint Strike Fighter program, giving the country “the option to buy aircraft through the program, should the F-35 be successful in the competitive process for the future fleet.”

Lockheed Martin Canada noted in a statement that Canadian firms have earned more than $1.2 billion in work on the program, resulting in hundreds of domestic jobs.

“We continue to provide our feedback to the U.S. government, which leads all government-to-government discussions related to the Canadian fighter replacement competition,” the statement added.

David Pugliese is the Canada correspondent for Defense News.

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