Advertisement

You will be redirected to the page you want to view in  seconds.

S. Korea's $7.3B Fighter Contest Enters Final Phase

Jun. 22, 2013 - 03:45AM   |  
By JUNG SUNG-KI   |   Comments
Replacements: The winner of the F-X competition will take the place of South Korea's F-4 Phantom aircraft.
Replacements: The winner of the F-X competition will take the place of South Korea's F-4 Phantom aircraft. (US Air Force)
  • Filed Under

SEOUL — Bidding on South Korea’s US $7.3 billion program to buy 60 new combat jets will end June 28 after 10 days of maneuvering among three competitors.

This is the third and final phase of the Asian country’s decadelong “F-X” plan to acquire 120 advanced aircraft before 2020 to replace older F-4 Phantoms.

The three bidders are Lockheed Martin with the F-35A, Boeing with its F-15 Silent Eagle and EADS for the Eurofighter Typhoon.

They are required to submit the prices of their aircraft and other spare parts to South Korea’s Defense Acquisition Program Administration (DAPA). The bidding lasts through June 28, and participants will be required to rebid multiple times per day, said DAPA spokesman Baek Yoon-hyung.

“The bottom line is if the bidders propose affordable prices that go under the allocated budget of $7.4 billion,” Baek said. “Even if a bidder offers a price within the budget scope, the DAPA could request the bidders to tender prices again and again so as to encourage competition.”

The price proposals are expected to sway the race since the three bidders have run neck and neck in the evaluations of operational requirements and offset proposals, according to industry observers.

“The F-35 is believed to have had high scores on stealth requirements, whereas the F-15SE has strength in bomb-trucking capacity and compatibility with the existing fleet of the F-15Ks,” said Kim Dae-young, a researcher at the Korea Defense & Security Forum, a Seoul-based private defense think tank.

“The Typhoon has a well-known air-to-air capability, and its developer, EADS, offers attractive proposals to help South Korea’s fighter development plan,” he continued. “All in all, the game has since been nip and tuck, and that’s why the price bidding is so important for deciding the game.”

The price evaluation includes the assessment of operation and management costs and the purchase price. This category accounts for 30 percent of the total evaluations.

For the US government and Lockheed Martin, the price bidding is an uphill battle since the F-35 Joint Strike Fighter program has been troubled by schedule delays and subsequent cost overruns.

Sixty conventional takeoff and landing versions of the F-35 are estimated to cost $10.8 billion, up 30 percent of the DAPA budget, according to the US Defense Security Cooperation Agency (DSCA).

DSCA administers the Foreign Military Sales (FMS) program for the US Defense Department.

In particular, South Koreans are worried about possible price fluctuations of the immature F-35 under FMS.

“We’ve been asking the US government to come up with plans to guarantee a fixed per-plane price because the F-35 price tag could skyrocket amid US mandatory budget cuts and possible cancellations of orders by customer nations,” a senior DAPA official said. “We’re still in a tug-of-war with the US government over this issue.”

Lockheed officials downplay the concern over price.

“At this time, it’s premature to speculate on the final price,” David Scott, director of F-35 International Customer Engagement, said. He added that most of the final prices regarding previous FMS deals with South Korea were below the initial price tags.

Boeing appears to have an advantage in the price contest. South Korea has the support infrastructure for F-15 planes, which could lower the operation and maintenance costs to an extent.

“We recognize the importance of the affordability, and we’re very confident that we put a very affordable and attractive offer to South Korea,” said Howard Berry, Boeing vice president for sales.

Critics say, however, the Silent Eagle could turn out to be a rather costly jet.

“The Silent Eagle requires lots of modifications and upgrades of the existing platform. That means more budget is required to transform the F-15 to a new stealthy jet,” said Lee Hee-woo, head of Integrated Logistics Support Research Institute of the Chungnam National University.

“A bigger problem is that there are few countries that show interest in the F-15SE program that may require international investments,” Lee, a former one-star South Korean Air Force general, added.

Lee, on the other hand, gives a higher mark on Typhoon’s price competitiveness.

“Eurofighter is the only one in production among the three competitor fighter jets and has been exported to other countries, which means its price is more stable than others,” he said.

Still, questions remain about Eurofighter’s logistics support costs given the South Korean Air Force has seldom operated European planes.

At the Paris Air Show, Eurofighter CEO Alberto Gutierrez listed the South Korean competition among the companies primary targets.

Offset Proposals

Bidders offered competitive offset packages to sweeten the pot, according to the DAPA.

Lockheed proposed to support South Korea’s efforts to develop and launch a military communications satellite. It also suggested it could build a live virtual constructive (LVC), a state-of-the-art battlefield training simulation system for airmen.

Eric Schnaible, manager of international communications at Lockheed Martin Aeronautics, called his firm’s proposal “a strategic partnership program.”

“Collectively, these programs and the others not mentioned here will substantially improve South Korea’s national defense and security, enable significant industrial involvement and transfer high technology to the South Korean government agencies,” Schnaible noted.

Boeing also pledged that it would provide an LVC for the South Korean military.

The company offered more than $1.2 billion in parts manufacturing and design and development, direct to Silent Eagle, as well as export work for other defense and commercial programs, according to Amy Horton of Boeing Defense, Space & Security.

In addition, Boeing will establish an avionics maintenance, repair and overhaul facility in Yeongcheon of North Gyeongsang Province. The facility will service avionics components for South Korea’s fleet of F-15Ks.

EADS promised to invest $2 billion in the KF-X effort, which is aimed at developing an F-16 class indigenous fighter jet. The European group also proposed that South Korea assemble 53 of the 60 planes locally to help boost the nation’s aerospace industry.

EADS additionally offered to transfer fighter jet technologies, including MBDA’s air-to-air Meteor missiles, to South Korea.

More In World News

Start your day with a roundup of top defense news.

Subscribe!

Subscribe!

Login to This Week's Digital Edition

Subscribe for Print or Digital delivery today!

Exclusive Events Coverage

In-depth news and multimedia coverage of industry trade shows and conferences.

TRADE SHOWS:

CONFERENCES:

Defensenews TV

  • Sign-up to receive weekly email updates about Vago's guests and the topics they will discuss.