OTTAWA - No decisions made, no planes bought, but interim Liberal Leader Bob Rae is calling for the prime minister and defence minister to resign over "a massive fraud" after the auditor general slammed the process National Defence followed for replacing the aging CF-18 fighter jets.

"(Stephen Harper) cannot now pretend that he was just the piano player in the brothel who didn't have a clue as to what was really going on upstairs," said Rae.

In a report released Tuesday, Auditor General Michael Ferguson found National Defence officials didn't adequately inform ministers about problems with the F-35 fighter program, underestimated expected costs and bent the procurement rules.

Ferguson also pointed out defence officials had an internal estimate of $25 billion to buy and operate 65 F-35 jets over 20 years, but only presented a $16-billion figure publicly.

That the government relied on National Defence's public figures was enough for Rae to compare the Conservatives to a company that would "sack its chief executive officer" and "replace the board of directors" after misleading shareholders.

NDP Leader Thomas Mulcair accused Defence Minister Peter MacKay of failing to keep track of the F-35 file.

"The minister of national defence had the responsibility to know, the duty to find out and the obligation to tell the truth in Parliament," said Mulcair.

Harper stood by MacKay, adding that the government has changed its approach to the F-35.

"The auditor general has given a recommendation on re-examining cost estimates," said Harper. "The government will do that. The government will also improve the process for cost estimates before moving forward."

MacKay came out of stealth mode Wednesday and answered opposition attacks for the first time since the auditor's report, repeating the government's line.

The government said it will take the F-35 file way from National Defence and give it to a special secretariat from the Public Works Department.

It's also frozen the budget for jets to replace the CF-18s at $9 billion, while officials examine alternatives to the F-35 stealth fighters.