...The main issue centers on the extent of Canada’s continued obligations under what is known as the JSF Production, Sustainment, and Follow-on Development Memorandum of Understanding.
...
But documents that various Canadian media outlets and think tanks have now obtained, show that the country’s membership in the F-35 program could actually upend any possibility of purchasing those aircraft. The U.S. military has apparently been adamant that it can’t allow the JSF to take part in Canada’s latest fighter jet tender, at least in its present form, which lays out a specific requirement for the winner to pledge to arrange a certain amount of industrial cooperation with Canadian firms.
“Fundamentally, the F-35 program is different from Foreign Military Sales or Direct Commercial Sales procurements,” U.S. Navy Vice Admiral Mathias Winter, the head of the F-35 JPO, wrote to the head of Canada’s Future Fighter Capability Project (FFCP) in December 2018. “The F-35 Partnership includes Canada as an integral member of a global enterprise containing multiple Partners, with both shared and unique strategic, operational, and tactical requirements and investment opportunities.”
“This [partnership agreement] includes that Partners are prohibited from imposing requirements for work share or other industrial or commercial compensation,” Winter continued. “Instead, IP [industrial participation] is determined on a competitive, best value basis to maximize affordability across the F-35 enterprise.”
...
In short, Lockheed Martin can’t meet the Canadian requirement for a certain level of industrial cooperation because the way the F-35 program is already structured, something that Canada is already benefiting from, that prohibits these kinds of firm allocations in favor of open competition. Giving Canada any leeway in this regard is a non-starter since it would open the door to other JSF partners demanding specific industrial offsets, rather than bidding among each other for them as they do now.