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Competitors' price tags exceed Seoul's fighter jet budget

All Headlines 14:05 June 21, 2013

By Kim Eun-jung

SEOUL, June 21 (Yonhap) -- Two American aerospace companies and one European firm vying for South Korea's fighter jet procurement have failed to propose prices below the 8.3 trillion won (US$7.3 million) budget in this week's initial bidding, officials said Friday, leading to another round of bidding.

Seoul faces a tough decision in selecting either the Lockheed Martin's F-35 Lightning II stealth jet, Boeing's F-15 Silent Eagle or the European Aerospace Defense and Space Company (EADS)'s Eurofighter Tranche 3 Typhoon, to replace the Air Force's aging fleet of F-4 and F-5 jets.

For three days from Tuesday, the Defense Acquisition Program Administration (DAPA) carried out a total of 20 bidding sessions but none of their proposals were accepted due to their proposals above the budget, officials said.

The state procurement agency has officially said they are looking for affordable yet highly-capable aircraft, but it was widely expected that the companies would propose prices that exceed Seoul's budget and adopt a wait-and-see approach during the sessions.

If prices proposed by three firms exceed the budget approved by the parliament last year, the acquisition plan needs re-examination by the finance ministry, which handles state budget allocations.

Unlike the two other companies that offer aircraft through direct commercial sales, Lockheed Martin, which sells the F-35 through the foreign military sales program by the U.S. government, did not submit either a fixed price or a maximum price during the bidding, a DAPA official with knowledge of the bidding process said.

If F-35A is selected, experts say the South Korean government will have to pay prices equivalent to those offered to the U.S. Air Force each year from 2017 to 2021, sparking speculation over a potential rise in price for the stealth jet which has been plagued with cost overruns.

Once the process is completed, DAPA will assess the three jets before making a final decision in a meeting slated for early next month, according to officials.


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