Key Air Force projects stymied by poor acquisition deals

The fighting power of Korea’s Air Force appears to have taken a blow, with one its key projects simultaneously adrift and under fire.

According to a copy of its budget expenditures, obtained exclusively by the JoongAng Ilbo, the Defense Acquisition Program Administration (DAPA) has spent just 23 million won ($20,134) - or 0.03 percent - of the 68.5 billion won budget allotted for the project to upgrade the Air Force’s KF-16 Falcons.

But what’s more is that DAPA was granted an additional 20 billion won next year for the KF-16 improvement project.

The KF-16 upgrade is aimed at improving the radars and software of the Air Force’s 134 KF-16 fighters, the branch’s primary fighter jets, by injecting 1.75 trillion won into improvements from 2011 to 2021.

South Korea finalized a contract with the United States and the London-based military company Bae Systems in 2011 for the program, though it essentially fell apart eight months later after Washington demanded another 800 billion won.

Improving the military’s KF-16 Falcon jets is one of the Air Force’s key projects, along with the F-X and KF-X programs.

The latter programs, however, designed toward developing a new generation of future fighter jets, are also struggling since Washington rejected the Korean government’s appeal to transfer four core technologies for the fighter jets’ development.

Tens of billions of won in unspent annual funds has accumulated each year, and added up to more than 162.7 billion won in 2015. Furthermore, DAPA has failed to collect any interest on its KF-16 investments - the money is currently in a zero-interest-rate account in the United States - and stands on the verge of losing the 150 billion won in tax money it gave to BAE Systems.

Lee Yong-gul, DAPA’s director at the time of the contract, said during a National Assembly inspection in October 2014 that DAPA could “retrieve about 45.5 billion won as a cancelation charge,” but that it had already paid BAE Systems 150 billion won for the project.

An international lawsuit is currently ongoing to determine which side is liable for the contract’s cancelation, though there is no guarantee that DAPA will be able retrieve the cancelation charge or the money paid to BAE Systems.

DAPA Director Jang Myeong-jin insisted last month that the agency was negotiating with the U.S. government to reduce the amount it owed to BAE Systems so that it could go ahead with forging a new contract with a different company.

Still, the National Assembly’s demand last year for an inspection into the cancelation of the contract only confounded the dilemma for the agency, which was afforded 68.59 billion won more for the KF-16 upgrade at the time. DAPA has attempted to delay the audit to buy time for a new deal, and at the same time requested an additional 65 billion won for next year.

When some lawmakers questioned the agency for refusing to go through with the inspection, DAPA submitted an unofficial report to the Assembly claiming that it had received a letter of acceptance from another contractor, Lockheed Martin, on Oct. 30.

The agency, however, has not officially announced that it received approval, while Lockheed Martin previously refused to transfer crucial technologies for the Air Force’s two other key projects.

This time, the National Assembly plans to directly request the Board of Audit and Inspection for an investigation into the stymied deal. Once the budget plan for next year is approved, the inspection would start within three months.

“DAPA has wasted 15 billion won ... and no one is taking responsibility for that,” said Rep. Jin Sung-joon, a member of the New Politics Alliance for Democracy (NPAD). “Even though we still need improvements made on those fighters jets, it’s difficult to eradicate the corruption in the defense industry without taking responsibility.”

BY KANG TAE-HWA [kim.bongmoon@joongang.co.kr]