OTTAWA — F-35 manufacturer Lockheed Martin is warning that Canadian companies will lose out if the Conservative government decides not to purchase the stealth fighter.

"Right now we will honour all existing contracts that we have," Lockheed Martin vice-president Steve O'Bryan told Postmedia News on Thursday. "After that, all F-35 work will be directed into countries that are buying the airplane."

But O'Bryan also said his company has not received any indication Canada won't buy the aircraft.

"What we have is the official statement out of the government and we're working with the government," he said. "They're committed to the F-35, they've selected it, and we haven't had any change in that official position."

That will likely come as a surprise to many Canadians as the Conservative government has said since last month that it has not committed to purchasing the F-35 and that all options are still on the table when it comes to replacing Canada's aging fleet of CF-18 fighters.

O'Bryan said Lockheed Martin is working on the understanding that it will begin producing Canada's first F-35s in 2014, with delivery by 2017. To do that, the company is looking to increase production capabilities now so it is ready to start work in time.

While O'Bryan acknowledged Canada's 65 F-35s will represent a fraction of the total number of stealth fighters produced in the coming years, he indicated Canada-specific investments are being made.

"We've received a commitment from the Canadian government," he said.

Defence companies from around the world will gather in Ottawa next week to show off their latest wares, and among them will be a number of Canadian firms that have benefitted the country's involvement in the F-35 program.

A total of $435 million in contracts have been awarded to 66 Canadian companies since 1997, and Defence Department officials have estimated Canada's defence and aerospace industry could reap upwards of $12 billion through the program.

Some business representatives, however, have expressed concern that the government's softening commitment to the F-35 could cost them, and O'Bryan assertion that only countries buying the stealth fighter will win contracts will likely lead to more pressure from industry to move ahead on the purchase.

Despite reports in past months about delays and cost overruns plaguing the F-35 project, O'Bryan said testing so far this year is proceeding ahead of schedule and that per unit costs are under control.

The F-35 has been in the political spotlight since Auditor General Michael Ferguson released a scathing report on April 3 that was highly critical of the way the F-35 file had been handled. He took particular issue with the Defence Department's failure to reveal that the fighter would cost Canada at least $25 billion — $10 billion more than it was reporting to Parliament.

The Conservative government responded by saying it is taking the project out of the Defence Department's hands and giving it to Public Works, with a committee of senior bureaucrats from different departments providing oversight.

It also pledged to commission an independent review of the F-35 project while ensuring full compliance with government purchasing rules before approving any purchase, and to provide regular updates on costs and schedules. The government also said it would continue to evaluate other options for replacing the country's CF-18s.

lberthiaume@postmedia.com

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