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Price negotiations between U.S. aerospace giant Boeing and the government over four AWACS planes have ground to a halt. Boeing was the last remaining bidder for the epically delayed E-X Project to supply the airborne early warning systems, whose introduction between 2009 and 2012 is a pivotal part of Korea¡¯s drive to bolster its independent intelligence gathering abilities. Yet another delay could be a serious setback in the government¡¯s plan to take over wartime operational control of Korean forces from the U.S.
¡°We have been conducting price negotiations with Boeing since last month, but Boeing is asking for far more money than we expected,¡± a military source said Friday. ¡°The deadline for our negotiations comes at the end of September and the Defense Acquisition Program Administration (DAPA)¡¯s decision-making committee chaired by Defense Minister Yoon Kwang-ung will determine next week whether we will resume negotiations or conduct a complete review of and delay the project.¡± Another source said officials will closely analyze why Boeing bumped up its price far in excess of the target price and report the result to DAPA¡¯s decision-making committee.
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The Boeing B-737 AWACS plane selected for Korea¡¯s E-X Project.
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Boeing increased its bid price from US$1.71 billion to $1.9billion citing additional demands from Korea, then reduced it again to the US$1.7 billion level, which still significantly exceeds the nation¡¯s target price for the project. The E-X Project¡¯s budget stands at W1.5878 trillion (US$1.6 billion), and Korea hopes to pay less than that, though its exact price target is a closely guarded secret.
Some in the military say Boeing is taking a rather high-handed approach in price negotiations after remaining as the sole bidder for the project. Boeing reportedly explained additional demands including for supplies such as engines make a price hike inevitable.
Boeing and IAI Elta of Israel had been the last two in competition to secure the contract, but Elta's planes made use of certain U.S. technologies it could not obtain export permission for, so it was dropped from the bidding last month, leaving Boeing as the sole contender. AWACS planes are capable of tracking and monitoring the movement of planes and war vessels within a radius of up to 700 km and carrying out missions such as intercepting telecommunication messages and collecting electronic intelligence, playing a pivotal role in waging so-called ¡°network-centric warfare¡± (NCW).
(englishnews@chosun.com )
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