The Auditor-General has both National Defence and Public Works in his sights when it comes to the troubled F-35 stealth fighter program, senior government sources say.
A draft copy of the scathing review, circulating in Ottawa for weeks, suggests the air force didn't do its pricing homework and government officials failed to follow procurement rules, those who've read it say.
It's not clear whether the language will be toned down in the final report, Michael Ferguson's first as Auditor-General, when it's released April 3.
But federal officials familiar with the document note no final decision on purchasing the multi-role fighter has been made, and may take a year or two.
"It's bad, [but]how can the Auditor-General be auditing a purchase that hasn't taken place?" said one senior official, who asked not to be identified.
"The process to select you can look at. They are pre-supposing a decision to acquire has taken place and it hasn't."
Associate Defence Minister Julian Fantino, who is in charge of procurement, gave a similar message to the House of Commons defence committee last week, and went further by saying that Ottawa reserves the right to bail on the multibillion-dollar program.
Senior officials say the Auditor-General's harsh review is behind the Harper government's change in posture over the last few weeks, where a hard-line message of commitment has softened into skepticism about the international program, which is billions of dollars off target and years behind schedule.
The Conservative government's plan has been to buy 65 of the radar-evading jets.
The sources said the Harper government was warned last year not to be so absolute in its public support, especially in the aftermath of Parliamentary Budget Officer Kevin Page's criticism of the air force's cost estimates.
Politicians were apparently counselled to say they'll "have a look at it" and a formal contract signing was still "three years away from now."
But the advice was ignored, coming on the eve of an election where the Liberals attempted to make the F-35 purchase one of their campaign planks.
Instead, the Conservatives dug in and insisted their July 2010 commitment to the Lockheed-Martin fighter as a replacement for the CF-18s was final.
They held to that position even in the face of mounting worries about further delays and possible cost increases as the U.S. government pushed off some of its initial aircraft orders to future years.
Within the military, there is apparently growing frustration that it is going "wear" the criticisms of the auditor's report.
One senior official noted the air force didn't have to make a decision on replacing the 1980s vintage CF-18s for a few years and that the 2010 announcement was all about positioning business and the aerospace sector for F-35 contracts.
Liberal defence critic John McKay said he finds the potential criticism of Public Works to be most troubling.
"They are, in effect, the watchdog of the procurement process," Mr. McKay said Tuesday. "Just because you haven't signed a contract doesn't mean that you're not in a procurement process. So, I don't know if that is a valid reason."
The Conservatives, he said, have no one to blame but themselves for the political back-peddling.
"The poor taxpayer has every right to question what the heck is going on here," he said. "The government's strident [tone]and scorn for opposition from any source, whether it's MPs or whether it's from the [Parliamentary Budget Officer]or whatever, essentially precludes any kind of reasoned dialogue."
Much of the debate around the program centred on the cost.
The Conservatives have insisted the entire purchase and support costs will be between $14-billion and $16-billion, making the jets the largest defence purchase in Canadian history. But the budget officer and critics have challenged that, delivering estimates of up to $29.5-billion.