Air resources within the Canadian Forces had suffered from a long period of neglect and downsizing during the late 1960s and early 1970s that led to the aging of much of their military equipment.

This period came to an end in November 1975 after the governing Liberal Party of Canada's tenth National Convention saw a policy reversing defence budget cutbacks in the early 1970s and the beginning of a modernization process across the entire Canadian Forces structure; this followed a decision in September 1975 that saw all air resources within the Canadian Forces merged into a new entity called Air Command (AIRCOM).

In order to lower fiscal spending for the ambitious program, a series of individual procurement projects were proposed to be spread out over the five-year period from 1977 to 1982.

During the 1970s, the Canadian Forces was tasked with four primary military duties; air defence of North America as part of NORAD, anti-submarine and related duties in the North Atlantic as part of NATO, a small role within the overall land-force structure of NATO in Western Europe, and the specialist role of reinforcing Norway with one brigade and all required air, sea and other support that might be needed for that mission (collectively known as "CAST").

[4] A breakdown in communications between the various departments led to the budget request being $300 million smaller than was needed in startup costs, delaying service entry.

Adding to the LRPA project's woes, the procurement procedure resulted in the addition of various "required features" that led to the aircraft's sensor suite being modified at considerable expense, a problem known in military circles as "gold plating".

[5] In order to avoid these possibilities, DND put into place a number of new policies for the NFA project aimed at ensuring the established budget would be followed.

For one, the NFA project demanded that whatever aircraft was selected would have to be completely "off the shelf", in order to avoid "gold plating" problems that had driven up the price of the LRPA.

None of its primary systems - missiles, radar or engines - were still being used in other operational aircraft in the Canadian Forces or its allies, and spares had to be taken from mothballed units.

The goal of the NFA project was to select a single multi-purpose aircraft that could fill all of the roles of the existing fleet, while also reducing operational costs and improving availability and capability.

In the fifteen years since the CF-104s had been procured, there had been significant advancements in engines, aerodynamics and especially mission electronics to permit all of these roles to be combined in a single multi-role aircraft.

"[7] In September 1977 the NFA project office published a four-volume request for proposals (RFP), each volume outlining one area of interest.

Accordingly, the U.S. Navy asked for proposals for versions of the two aircraft with various carrier-based features, including arrestor hooks, catapult bars, folding wings and dramatically strengthened landing gear and fuselage.

Should the aircraft miss the arrestor wires as it attempts to land on a carrier, there is no way that it can stop in time and must immediately add power for a go-around.

When the two companies joined forces for the F/A-18, part of the agreement was that Northrop would develop a land-based version of the F/A-18 that removed the naval equipment and lightened the airframe.

From a strict technical point of view the F-18L (the Northrop version) was the better aircraft for the NFA project, with performance roughly equal to the F-16, Sparrow capability, and the twin-engine design that the Canadian Forces favored.

The F-18L was also offered with a lucrative industrial program; Northrop agreed to move major portions of the F-18L project to Canada, including investing in carbon composite construction techniques to build the wings and tail sections.

[5] If accepted, Canada would become the primary construction site for all of these components, which meant that any additional orders for the F-18L from other countries would result in major export contracts for Canadian companies.

Likewise, DSS's primary interest was iron-clad contracts with predictable delivery time frames and budgets, and strongly supported the "off the shelf" requirement.

Therefore, in October 1978 the NFA project office overrode DITC's concerns and reduced the list to only the F-16 and the F/A-18A, a decision that the federal cabinet accepted on 23 November 1978.

[13] This eventually led to a lawsuit between the companies, which was settled in 1985 with McDonnell Douglas agreeing to pay Northrop $50 million for complete rights to the design without admitting wrongdoing.

Their concern was based on existing Defence Production Sharing Agreement (DPSA) between the United States and Canada that was put in place to balance the amount of trade in military goods between the countries.

A program like Northop's F-18L was purely military in nature, so any production in Canada would be counted against this balance, but the McDonnell Douglas offer was mostly in civilian goods, which had to be accounted separately.

In late March René Lévesque of the governing Parti Québécois publicly announced that the F-16 should be selected because it would provide Quebec with considerably more than the competing McDonnell Douglas offer.

The next day (April 11, 1980) the federal government ran a series of advertisements in national newspapers to explain their choice for the NFA project.

Reasons for the selection listed by the Canadian Forces included two engines for reliability (considered essential for conducting Arctic sovereignty and over-the-water patrols), an excellent radar set, and a lower cost than the F-14 or F-15.

Additionally, the F-14 almost ended up being purchased from Iran, as their fleet was facing the prospect of falling into disuse due to a lack of spares in the aftermath of the Iranian Revolution.