South Korea did the right thing, and eliminated Lockheed-Martin’s F-35A from its short list, to replace its aging fleet of F-15Ks.
Defense Acquisition Program Administration spokesman Baek Yoon-hyung said on Aug. 16 that the bidders had come in below the total project budget of 8.3 trillion won (US$7.5 billion), with the next selection procedures now set to begin.
“The project is still ongoing, so I can’t say who the companies were,” Baek added.
But according to sources in the Ministry of National Defense and the companies in the bidding, the two companies were EADS, which makes the Eurofighter, and Boeing, which makes the F-15SE. Both reportedly made bids that were within the budget.
This means F-35A maker Lockheed Martin, which is subject to US regulations on foreign military sales (FMS), was unable to give a definite bid.
As a result, EADS and Boeing both emerged with candidate models, while the US government, selling on behalf of Lockheed Martin, effectively ruled itself out.
Baek said provisional contracts would be drafted for the two companies, with a selection on final suitability based on a comprehensive weighted assessment in four categories.
The results are to be reported to the defense project promotion committee sometime in mid-September, he added. The committee is chaired by Minister of National Defense Kim Kwan-jin.
Baek said the committee may choose to adopt the results, reject them, or request a conditional resubmission.
It’s unclear if the F-35A is really out of the running.
The price proposals are expected to sway the race since the three bidders have run neck and neck in the evaluations of operational requirements and offset proposals, according to industry observers.
“The F-35 is believed to have had high scores on stealth requirements, whereas the F-15SE has strength in bomb-trucking capacity and compatibility with the existing fleet of the F-15Ks,” said Kim Dae-young, a researcher at the Korea Defense & Security Forum, a Seoul-based private defense think tank.
“The Typhoon has a well-known air-to-air capability, and its developer, EADS, offers attractive proposals to help South Korea’s fighter development plan,” he continued. “All in all, the game has since been nip and tuck, and that’s why the price bidding is so important for deciding the game.”
The price evaluation includes the assessment of operation and management costs and the purchase price. This category accounts for 30 percent of the total evaluations.
For the US government and Lockheed Martin, the price bidding is an uphill battle since the F-35 Joint Strike Fighter program has been troubled by schedule delays and subsequent cost overruns.
Sixty conventional takeoff and landing versions of the F-35 are estimated to cost $10.8 billion, up 30 percent of the DAPA budget, according to the US Defense Security Cooperation Agency (DSCA).
DSCA administers the Foreign Military Sales (FMS) program for the US Defense Department.
In particular, South Koreans are worried about possible price fluctuations of the immature F-35 under FMS.
“We’ve been asking the US government to come up with plans to guarantee a fixed per-plane price because the F-35 price tag could skyrocket amid US mandatory budget cuts and possible cancellations of orders by customer nations,” a senior DAPA official said. “We’re still in a tug-of-war with the US government over this issue.”
Lockheed officials downplay the concern over price.
“At this time, it’s premature to speculate on the final price,” David Scott, director of F-35 International Customer Engagement, said. He added that most of the final prices regarding previous FMS deals with South Korea were below the initial price tags.
With all the technical and financial problems plaguing Lockheed Martin and the F-35 program, it comes down to whether Seoul favors cost or loyalty to the alliance with the U.S.