WATERVILLE – Despite word last week that C.F. Hathaway Co. failed to win a key military contract, the head of the Made in USA Foundation says the nonprofit group is still committed to buying the Maine shirt making firm.

“We’re still working on it,” said the pro-American products foundation’s Joel Joseph, who is heading an effort by private investors to buy Hathaway.

“The plant’s still operating and hopefully everything will go smoothly,” he said.

Prospects that Hathaway’s 165-year-old Waterville factory could remain in operation were set back last week when it was announced that a five-year contract worth up to $20 million to make long-sleeved dress shirts for the U.S. Air Force had been awarded to a Kentucky company.

Workers said they will run out of work sometime in October without an 11th-hour deal to make more shirts. The plant is owned by Windsong Alliance Group, which bought it last fall but planned to shut it down this June. The closing was postponed by a contract extension with Wal-Mart.

Joseph said that if the foundation can buy Hathaway, more than 300 jobs will be spared. That could lead to the opening of up to 10 retail outlet stores that would sell Hathaway merchandise, he said.

A Made In the USA Foundation-backed group has already opened a retail outlet in Freeport and in Washington, D.C., selling Hathaway shirts and other U.S.-made products.

Joseph said he met last week with former U.S. Sens. George Mitchell and William Hathaway to seek their financial support for the purchase, but so far the foundation had failed to attract any Maine investors.

Hathaway, famous for the eyepatch-wearing model that was long its trademark, may be the last shirt manufacturer of any size left in the United States.