Boeing Top Bidder For S.Korea Jet Tender, But Delay Possible

by
Reuters
Boeing Co is frontrunner to win one of the world's biggest defence deals of the year on Tuesday when South Korea names the winner of an 8.3 trillion won ($7.7 billion) fighter jet tender, with its F-15 Silent Eagle the only candidate within budget.

Boeing Top Bidder For S.Korea Jet Tender, But Delay Possible

Boeing Co is frontrunner to win one of the world's biggest defence deals of the year on Tuesday when South Korea names the winner of an 8.3 trillion won ($7.7 billion) fighter jet tender, with its F-15 Silent Eagle the only candidate within budget.

There is, however, a possibility the decision could be postponed or re-tendered due to concerns the Boeing lacks the stealth capabilities of more modern aircraft, a source who has direct knowledge of the deliberations told Reuters.

Boeing's F-15 Silent Eagle is the only candidate within budget. According to South Korean law, only under-budget bids can be selected, leaving Boeing in the box seat unless a new tender is called.

Bids by rival Lockheed Martin Corp's F-35A and Eurofighter consortium's Typhoon were both over budget.

"It looks like a 50/50 chance (for Boeing)... There is strong opposition (for the F-15SE) from the military establishment, experts and conservatives," said the source, who declined to be named due to sensitivity of the subject.

Fifteen former air force chiefs and some lawmakers have opposed the selection of Boeing's F-15SE.

Sources say the F-35A scored highest score out the three bids in a comprehensive evaluation carried out earlier this month.

If a decision is postponed, the committee might delay deliberations on the programme until its next meeting about a month from now, the source with direct knowledge of the deliberations said.

The committee is expected to announce its decision after 4 p.m. (0700 GMT).

 

DELAY CONCERNS

Plagued by multiple delays that pushed back first delivery by three years to 2017, and a total budget fixed without wriggle room, top decision-makers are now keen to buy jets as soon as possible to partially replace ageing F-4 and F-5 fighters and maintain combat capabilities.

"Timing of the deployment is the most important factor... If (first delivery of) this project is delayed to 2019, I believe it could even be a serious matter in relation to North Korea," Air Force Chief of Staff Sung Il-hwan told a parliamentary hearing earlier this month.

If South Korea scraps the bid, the Defense Acquisition Program Administration (DAPA) estimates that by 2019 the South Korean air force could be 100 fighters short of the 430 jets deemed necessary.

And with South Korea facing a 2013 revenue shortfall of up to 8 trillion won ($7.37 billon), experts say there is little chance the finance ministry will change rules to increase the project's budget.

The F-35A had once been the favourite as it was the only model that met the initial stealth requirements the South Korean air force submitted. But that requirement was relaxed in 2011 to allow for more competitors and bring the bid prices down.

"High-level fighters are needed to not only check North Korea but nearby countries" as Japan acquires F-35s and China develops J-20 stealth fighters, said Shin In-kyun, president of the Korea Defence Network, an alliance of defence experts based in Seoul.

A committee chaired by the defence minister will meet on Tuesday to make a final decision on the tender.