December 18, 2014 11:38
Korea is set to change the contractor for a massive fighter jet upgrade project from the U.K.'s BAE Systems to American defense firm Lockheed Martin.
The Defense Acquisition Program Administration presented the plan in a meeting chaired by Defense Minister Han Min-koo on Wednesday. The W1.75 trillion (US$1=W1,097) project involves upgrading the mission computers, radars and weapon systems of the Air Force's 134 KF-16 fighter jets.
In July 2012 DAPA picked BAE's U.S. subsidiary, but recently both the U.S. government as guarantor and BAE demanded more money -- Washington cited up to W500 billion in "risk management" cost and BAE W300 billion for delays and increased scope, prompting DAPA to propose scrapping the contract.
A DAPA official said, "We plan to reach a final decision on the new contractor next year after confirming the total price of the deal and a review by the project committee."
It is uncertain whether the government will able to recover around W60 billion that has already been paid to BAE to cover the costs of the project so far. BAE has filed a lawsuit in a U.S. court claiming it is not bound to return the money, and the government here plans to countersue.
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