Canada to evaluate fighter-jet options over next several weeks

(Adds comments from minister, lists Lockheed competitors, adds background from paragraph 4)

By Randall Palmer

OTTAWA, April 17 (Reuters) - The Canadian government will take several more weeks to evaluate its options for the much-delayed replacement of the country's CF-18 fighter jets, Public Works Minister Diane Finley said on Thursday.

The decision boils down to whether to proceed with a single-source contract to Lockheed Martin Corp for 65 F-35 stealth fighters or to go with a tender that opens up the bidding to competitors.

The Conservative government ran into a storm of criticism over its decision in 2010 to go with the F-35s without an open tender. It then froze that decision and has been talking to other aircraft makers as well.

"Over the next several weeks we will be carefully reviewing a number of reports relating to the evaluation of options, industrial benefits, costs and other factors related to the decision to replace our CF-18 fleet," Finley said in the prepared text of a speech she was giving in British Columbia.

Lockheed Martin (Dusseldorf: LOM.DU - news) and three other companies have filled out initial reports, something short of formal bids, to the government on the capabilities and costs of their aircraft:

- Boeing Co (NYSE: BA - news) , which makes the F-18 Super Hornet

- Dassault Aviation (Paris: FR0000121725 - news) , which makes the Rafale

- The Eurofighter Typhoon consortium, which includes BAE Systems , Airbus Group (Berlin: AIR.BE - news) and Italy's Finmeccanica (Other OTC: FINMF - news) .

The Royal Canadian Air Force (RCAF) evaluated the different fighters under the eye of an independent panel of experts, which Finley said ensures that the RCAF's review was "both rigorous and impartial".

Cabinet ministers including Finley and Defence Minister Rob Nicholson will now consider how to proceed.

"Let me say, first and foremost, that in our consideration of the work that has been done by the RCAF and the panel, we will ensure that the Canadian Forces have the equipment that they need to do the work that we ask of them," Finley said.

The question of what the military needs is delicate. The main reason the government had opted for the F-35s without an open competition was that the air force had determined that fifth-generation stealth capabilities were crucial and that only the F-35 had them.

That assumption is now being reexamined, and the independent review panel even asked the government to include as one of its options a further extension of the life of the CF-18s, which were brought into service in the 1980s.

Ottawa has set aside C$9 billion ($8.2 billion) to buy the new jets, and had said it would cost a further C$16 billion to operate and maintain the F-35s over 20 years. Auditor General Michael Ferguson said in a scathing report in April 2012 that officials had downplayed the full life-cycle costs of the planes.

($1=$1.10 Canadian) (Editing by Peter Galloway)