The Lockheed Starfighter was not really well-suited to USAF needs, being deficient in range, endurance, and offensive capability. In addition, it lacked true all-weather capability. Consequently, it quickly became surplus to USAF requirements and its service with the Air Defense Command and the Tactical Air Command was relatively brief, most examples soon being transferred over to the Air National Guard. or being exported to overseas customers in Taiwan, Pakistan, and Jordan. Out of the total of 722 Starfighters originally ordered for the USAF, only 296 were actually delivered, the remainder being cancelled.
By the late 1950s, it would appear that the Starfighter was doomed to be only a relatively minor footnote in the history of military aviation, yet another example of a combat aircraft which ended up serving only briefly and in small numbers before being quickly relegated to the boneyards. However, the Starfighter was rescued from oblivion by its unexpected win of a major multinational contract.
In the mid-1950s, the NATO air forces in Europe, apart from Britain and France, began shopping around for a new supersonic multi-role fighter capable of delivering the US-supplied B-43 tactical nuclear weapon. In particular, the new West German Luftwaffe was in need of a supersonic replacement for its Canadair Sabres and Republic F-84F Thunderstreak combat aircraft, and that service issued a request for proposals. With a potential market for more than 2000 aircraft, numerous aircraft industries became highly interested, and the requirement became known as the "sale of the century". Ten separate entries were made by aircraft manufacturers in England, France, Sweden, and the USA. These were the English Electric Lightning, the Saunders-Roe SR.177, the Dassault Mirage III, the SAAB J-35 Draken, the Convair F-102 Delta Dagger, the Convair F-106 Delta Dart, the Republic F-105 Thunderchief, the Vought F8U Crusader, the Grumman F11F-1F Tiger, and the Lockheed F-104 Starfighter.
The Lockheed entry was designated F-104G (G for Germany). It was proposed as a multi-role, all-weather aircraft. It was based on the F-104C, but was to be upgraded to have full all-weather capability, carrying an Autonetics F15A NASARR (North American Search and Ranging Radar). The fuselage, wing, and empennage were strengthened to enable the aircraft to carry an increased load and to handle the stresses of low-altitude combat missions at high speeds. Five hardpoints were to be fitted (four underneath the wings and one underneath the fuselage), enabling up to 4000 pounds of external stores to be carried. The internal fuel tankage was revised to increase the fuel load from 1624 to 1784 US gallons. The Starfighter had metamorphosed from an air-superiority day fighter into a multirole all-weather strike fighter.
The F-104G was declared the winner of the contest on November 6, 1958, in an announcement made by German Federal Defense Minister Franz Josef Strauss in Bonn. It was never made quite clear how a paper project based on a design with a poor accident record which was being rejected by the USAF could have actually won the contest. Nevertheless, an initial contract for 66 F-104Gs was awarded to Lockheed on February 6, 1959, which was later increased to 96.
Herr Strauss also indicated that the German aircraft industry would build 210 F-104Gs under license. On March 18, 1959, a consortium of German aircraft manufacturers acquired a license to manufacture the Starfighter. License production and associated technology transfers to expand the German national aircraft industry were key features of the program.
Canada was the second NATO country to select the F-104G as its next generation combat aircraft. On July 2, 1959, plans were announced for the co-production of 200 CL-90 or CF-104 (originally CF-111) versions by Canadair Ltd, plus 38 two-seat CF-104Ds to be bought separately from Lockheed. The J79 engine would be produced under license by Orenda Engines Ltd of Malton, Ontario.
Other European NATO nations quickly jumped onto the Starfighter bandwagon. The Netherlands completed a licensing agreement on April 20, 1960. On June 20, Belgium signed a similar agreement. On March 2, 1962 Italy announced that it too would participate in the Starfighter program. By now the Starfighter was the Free World's premiere fighter aircraft, and the project became known as the "aircraft deal of the century". In December of 1960, licensing agreements were concluded with Lockheed for international co-production on a major scale.