EADS’ bid to sell fighter jets is thrown out

One of the two finalists in a bid to supply Korea with its next generation of advanced fighter jets was eliminated for having submitted “altered bidding documents,” the arms procurement agency said yesterday.

The elimination leaves Boeing as the sole bidder for the 8.3 trillion won ($7.45 billion) project, the nation’s largest procurement project ever. Boeing is proposing to sell 60 F-15 Silent Eagles from 2017 to 2021 to Korea.

The European Aeronautic Defense and Space Company was eliminated from the bid yesterday because it unilaterally changed the terms that were previously agreed upon with the Defense Acquisition Program Administration (DAPA), the national arms procurement agency. EADS was proposing to sell its Eurofighter Typhoon jet.

“After we analyzed bidding prices [submitted by the contenders], we discovered the concerned company arbitrarily changed the terms agreed to during negotiations conducted from July of last year to early June of this year,” said the state-run agency in a statement released yesterday.

The changes were made to the number of two-seat Eurofighter jets initially agreed by EADS to be supplied to South Korea’s Air Force, an official at the agency said yesterday speaking on the condition of anonymity.

“EADS offered to provide six two-seat fighter jets in its final bidding document to the DAPA, nine jets short of the numbers agreed during the negotiation period. So we removed the Eurofighter model from the bid.”

The contract is for 15 two-seaters and 45 single-seaters, which are cheaper than two-seaters.

The arms procurement agency added that EADS’ proposed bidding price was “based on the [unilateral] changes made to the terms,” and it was able to meet the budget limit set by the government, which was 8.3 trillion won, by reducing the number of two-seaters.

The state-run agency held a final round of bidding from Tuesday through Friday, code-named F-X III. No bids were taken Thursday because it was Liberation Day, a national holiday.

Boeing, EADS and Lockheed Martin were the three bidders.

On the last day of the final round of bidding, Lockheed Martin’s proposed price for its F-35 Lightning II model exceeded the maximum specified by the agency.

Since the government announced its plan to purchase 60 new state-of-the art fighter jets in January 2012, aerospace manufacturers have been vying for the contract.

During President Park Geun-hye’s visit to the United States in May, Boeing pledged to build an avionics maintenance, repair and overhaul center in Korea.

The defense project committee presided over by Defense Minister Kim Kwan-jin will announce its selection mid-September.

BY KANG JIN-KYU [jkkang2@joongang.co.kr]