South Korea on Wednesday formally awarded its much-coveted surveillance aircraft project to Boeing Co. of the United States after the two sides concluded price negotiations, the country's defense procurement agency said.
"The contract price will be about US$1.59 billion," said Brig. Gen. Kwon Young-woo, chief of the surveillance project at the Defense Acquisition Program Agency (DAPA). But he refused to reveal the exact amount of money for the contract, saying it had exceeded DAPA's target price. "Compared with Turkey and Australia, the price is much lower."
The defense acquisition committee, headed by Defense Minister Yoon Kwang-ung, endorsed the price deal after deliberations. Kwon said DAPA will sign a formal contract with Boeing by the end of this month, adding that Boeing was initially asking for about US$1.9 billion.
Successful price negotiations would enable Boeing to win the 2-trillion-won (US$2.1 billion) project, code-named E-X, which aims to provide four B-737 spy planes to South Korea by 2012. Both sides refused to reveal the range of prices addressed in a series of negotiations.
In August, South Korea chose Boeing as the sole bidder for its project to procure early warning aircraft, dropping Israeli aircraft manufacturer IAI ELTA from the competition.
But South Korea declined to confirm whether Boeing was the winner of the project until they completed price negotiations for the contract.
In September, South Korea extended the deadline for price negotiations with Boeing over the purchase of surveillance aircraft until the end of November because of a wide difference in the range of prices.
The surveillance plane project is aimed at strengthening the aerial surveillance capability of South Korea, which is still technically in a state of war with North Korea since the 1950-53 Korean War ended with an armistice instead of a peace treaty.
South Korea plans to deploy the first surveillance plane in 2011 and the other three in 2012. The country now depends on U.S. radar aircraft based in Okinawa, Japan, as it has no aerial warning systems of its own.
Last Friday, IAI ELTA said it has obtained U.S. approval for technical assistance related to surveillance plane exports, and it wants to be back in the competition for South Korea's big-ticket project.
South Korea gave IAI ELTA until the end of July to remove any restrictions on its U.S. export license, but it disqualified the Israeli company from the competition after the company failed to meet the deadline.
Since its elimination from the competition, IAI ELTA has questioned the fairness of the bidding for the project, claiming the country has created a favorable environment for its U.S. rival.
In June, South Korea gave a green light to two surveillance plane models vying for the project, but it asked the Israeli company to ensure it could obtain an export license on par with that of Boeing when it sets forth the terms of the contract, as well as accept a penalty clause if it fails to comply. Boeing had no conditions attached to the license.
Earlier this year, IAI ELTA and its U.S. partner DRS submitted the export license to sell Datalink equipment, which can identify other aircraft, and the Satcom ground satellite communication system. They were to be installed in its G-550 model.
But Boeing questioned whether the license is sufficiently exclusive, saying it does not cover all of the sensitive items made in the United States for exporting the Israeli model.
Boeing's 737 airborne early warning and control system encompasses both the Boeing 737-700 aircraft platform and a variety of aircraft control and advanced radar systems, according to Boeing officials Consisting of components created by Boeing and Northrop Grumman, the 737 model has an operational ceiling of 41,000 feet and a flight range that exceeds 3,500 nautical miles.
In particular, its integrated identification friend or foe (IFF) function shares the primary radar arrays to reduce weight, improve reliability and simplify target correlation. It also features advanced open-system architecture with standards-based design for cost-effective integration and add-on flexibility South Korea purchases most of its military weapons from the U.S., although their prices are comparatively high. But calls have risen among South Korean officials to diversify the sources of their weapons depending on cost and other positive factors.
In 2002, Seoul chose Boeing's F-15K as its next-generation fighter model in consideration of the long-standing military alliance with the U.S., giving a new lifeline to Boeing's then-sputtering F-15 production line in Missouri. The French-built fighter Rafale beat the F-15K by a narrow margin in the technical phase of evaluation.
About 30,000 U.S. troops are currently stationed in South Korea, a legacy of the 1950-53 Korean War.
Seoul, Nov. 8 (Yonhap News)
S. Korea formally picks Boeing as AWACS project winner |
