South Korea will stop the current bidding for fighter jets and revise the project as high price tags have made the chance of selecting a satisfactory contractor slim, a senior official said Thursday.
The move comes after the Defense Acquisition Program Administration (DAPA) carried out 55 separate biddings with three defense groups to buy 60 advanced jets with an 8.3 trillion won ($7.2 billion) budget, but the procedure was put on hold last week due to their expensive price tags.
Boeing's F-15 Silent Eagle, Lockheed Martin's F-35 stealth jet and the Eurofighter Tranche 3 Typhoon from the European Aerospace Defense and Space Company (EADS) participated in the bidding sessions from June 18 to July 5 to win Seoul's largest arms import deal.
"The DAPA plans to stop the current bidding and re-examine the project," a senior DAPA official said, requesting anonymity.
"Whether to restart the procurement plan from scratch or make changes to requirements will be discussed."
Changes to the number of jets to be bought or increasing the state budget needs the DAPA to open a new project and get approval from the finance ministry.
The state procurement agency will formally announce its decision in a meeting presided by Defense Minister Kim Kwan-jin next week, the official said.
The DAPA has sought for affordable yet highly capable aircraft, but it had been widely expected that potential suppliers would propose prices that would exceed Seoul's budget.
Unlike two other companies that sell aircraft through direct commercial sales, the U.S. government representative placed the bid for F-35s on behalf of Lockheed Martin under the foreign military sales (FMS) program, which didn't specify a fixed price, according to multiple sources. Boeing and the EADS offered a definite amount for their jets.
The government-to-government FMS condition requires a foreign government to pay the amount specified by the U.S. government for F-35s at the time of payment, which experts cite as one of the factors that affected bidders' unbudging attitude.
As the bidding ended in failure, the plan to replace the aging fleet of F-4s and F-5s with advanced jets starting from 2017 is expected to be further delayed. The procurement agency had initially selected a contractor as early as June. (Yonhap News)