South Korea’s arms procurement agency said Thursday it will resume accepting bids from three aircraft makers in August to supply 60 fighter jets at a cost of 8.3 trillion won ($7.2 billion), a decision aimed at avoiding further delay of the project.
The Defense Acquisition Program Administration announced the decision in a meeting presided over by Defense Minister Kim Kwan-jin, three weeks after it temporarily stopped the bidding due to the competitors’ 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 55 bidding sessions from June 18 to July 5 to win Seoul’s largest arms import deal, but the procedure was put on hold due to the offers beyond Seoul’s budget.
“DAPA decided to resume the bidding after taking all alternatives into consideration,” DAPA spokesman Baek Yoon-hyeong said in a briefing. “There was a consensus that resuming the bidding under the same condition as the last one is the best option for national interest at this point.”
The procurement agency plans to resume the bidding in mid-August, but no specific date has been determined, he said.
If the extended bidding session doesn’t produce a satisfactory outcome, DAPA said it will reexamine the project and make alterations to the plan.
“If no company offers a proposal within the budget, even after the bidding resumes, (DAPA) will restart the project from the beginning by revising the number of jets or increasing the budget,” Baek said.
DAPA has sought to purchase 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.
The latest decision comes after military officials have expressed concern over further delay of the project to replace the aging fleet of F-4s and F-5s with advanced jets starting from 2017.
Changes to the number of jets to be bought or increasing the state budget needs DAPA to open a new project and get approval from the finance ministry, a process that could take several months. (Yonhap News)