Korea can’t find fighter jets that are affordable

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Korea can’t find fighter jets that are affordable

The bidding process for Korea’s largest-ever procurement project was halted temporarily as weeks of price negotiations failed to produce an affordable price tag for new fighter jets.

“Since June 18 to Friday, we had 55 rounds of price-bidding with three contenders,” Baek Yoon-hyeong, spokesman of the Defense Acquisition Program Administration, said Sunday. “But none of them came within our budget limit. It is meaningless to continue the bidding under these circumstances.”

Korea kicked off its next-generation fighter jet project, code-named F-X III, last year. Three global builders competed to win the 8.3 trillion won ($7.21 billion) deal, through which Korea will purchase 60 new jets.

The contenders are the F-15 Silent Eagle by Boeing, the F-35 Lightning II by Lockheed Martin and the Eurofighter Typhoon of the European Aeronautic Defense and Space Company (EADS). The Defense Acquisition Program Administration started the final stage of the project last month, asking the three builders to participate in the price bidding. They already wrapped up most of the processes last month, including submission of their offset packages.

According to a source, one of the three bidders presented a price tag close to the Korean government’s budget, but the Defense Acquisition Program Administration remained firm that it will not go over the budget under any circumstance.

“We will review the process closely and decide what we will do with the project,” Baek said.

The procurement agency is contemplating whether it will go ahead with the current competition by holding more bidding rounds with the three contenders or if it will restart the bidding with new standards.

A source from the procurement agency told Yonhap News Agency yesterday that the decision of the project’s fate will be announced later this week. If the Defense Acquisition Program Administration decides to restart the project with new standards, it will further delay Korea from replacing its aged fleet of fighter jets.

Korea initially wanted to make its selection by June and introduce the new fighter jets in 2017. Under the current criteria for the evaluation, the life cycle cost will be considered 30 percent, suitability for the role 33.61 percent and operational compatibility 17.98 percent. The offset factors would account for the remaining 18.41 percent.

If the government decides to end the bidding with no winner and restart the process with revised standards, it is possible that the importance of the life cycle cost will be increased in the evaluation criteria to pressure the bidders to lower the prices, observers said.

BY SER MYO-JA [myoja@joongang.co.kr]
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