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Tough negotiations ahead in copter project

Korea is likely to face tough price negotiations for its planned purchase of advanced attack helicopters, with costs currently appearing almost double the budget allocated for the project.

The Defense Acquisition Program Administration plans to select the provider for 36 advanced military copters by late November.

Boeing’s AH-64D Apache Longbow, Bell’s AH-1Z Cobra and Turkish Aerospace Industries/AgustaWestland’s T-129 choppers are competing for the deal.

The U.S. Defense Security Cooperation Agency has notified Congress that Korea has expressed its intent to purchase attack helicopters including parts and other high-tech weapon systems and options. The prices were estimated to be worth about $3.6 billion (4 trillion won), far more than the Korean government’s budget of 1.8 trillion won.

The DAPA spokesperson said that the figure reported to the U.S. Congress is the “maximum” amount with full options, not the total amount an acquirer would have to pay for such military products.

Should DAPA decide on either the Apache or Cobra, the price will be lower. The contractors need Congress’ approval before they can export military goods.

The Korean agency sent requests for proposals in January and has almost finished its comprehensive review on the three bidding models.

Attack helicopters from Boeing and Bell, which is part of Textron, are upgraded versions, while the T-129 is a joint venture helicopter between Turkey and Italy, a DAPA spokesperson noted. GE Aviation, one of the three biggest aircraft engine makers, is the provider of engines for the Boeing and Bell choppers.

“They are currently under a sophisticated review process that includes up to 500 rating categories,” the spokesperson said.

DAPA mainly is looking at four areas ― price, performance, operational efficiency and technology. It will also see whether a potential preferred bidder is willing to transfer technology to Korea or use parts made in the country as part of the acquisition deal, he added, while agreeing to the common perception of the U.S. having the world’s most developed military equipment and aircraft.

This comes as the Ministry of National Defense seeks to place the latest advanced fighter jets and attack helicopters that will be ready at all times against threats from North Korea.

The purchase of attack helicopters has been included in the 2013 defense budget totaling 34.6 trillion won approved by the Ministry of Strategy and Finance, but subjected to National Assembly consent. The defense agency plans to allocate 10.5 trillion won from the budget to improving the country’s defense system, which includes adopting the next-generation fighter jet and attack helicopter programs.

DAPA said that it will pay for the helicopters through installments normally over the standard period of five to six years, while not ruling out the possibility of re-opening a bid should a price gap widen between the acquirer and the bidders.

The “FX” fighter jet program has gone through about 20 bids over the years in part due to prices and budgetary concerns, it noted.

It takes a decade to fully prepare and establish one defense program.

By Park Hyong-ki (