The Conservative government says it has not made a decision on the F-35 as a replacement for Canada's CF-18 fighter jets, but it now appears to concede that alternative fighter purchase options will be considered.
The Prime Minister's Office denied a media report Thursday that the F-35 purchase was dead, calling the report "inaccurate on a number of fronts" and promising to update the House of Commons on its seven-point plan to replace the jets before the House rises for the Christmas break at the end of next week.
That plan is now expected to follow through with a real competition.
After Auditor General Michael Ferguson questioned the military's figures last April, the Harper government promised to "hit the reset button" on the entire purchase. An "options analysis" would consider the alternative fighter jets that may meet the military's needs.
Part of that process for replacing the aircraft is an audit of the F-35's costs by accounting firm KPMG. The government said Thursday it now has the report and is reviewing it.
CBC News has learned the KPMG report is based on a longer and more realistic life cycle for the next-generation stealth fighter, which would therefore also arrive with a higher price tag than previously reported. The actual cost could be as high as $40 billion.
The cost of the F-35 project was first pegged at $9 billion for 65 planes when it was announced by the government more than two years ago, but successive reports by the parliamentary budget officer and federal auditor general put the total cost to buy and maintain the planes at $25 billion or more.
Public Works took over the process for procuring a CF-18 replacement earlier this year, exending the original deadlines for its work "to get it right."
A statement from the office of Public Works Minister Rona Ambrose on Thursday said the government will provide "a comprehensive public update" before the House rises.
"We are committed to completing the seven point plan and moving forward with our comprehensive, transparent approach to replacing Canada's aging CF-18 aircraft," the statement said.
The government has long maintained the F-35 was the only plane that met Canada's needs. But last week, Gen. Tom Lawson, chief of the defence staff, told MPs there are other planes with stealth capabilities.
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F-35 deal not cancelled, Tories insist
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