South Korea's Defense Acquisition and Procurement Agency announced the deal, saying the U.S. division of BAE will do the work up to 2021, a report by South Korea's Yonhap news agency stated.
The multiyear project calls for upgrading 134 of the air force's KF-16 fighters by improving mission computers and operating systems with the latest versions and the installation of active electronically scanned array radar, known as AESA.
AESA radars allow pilots to acquire targets at much greater distances and track many more targets simultaneously than traditional mechanically scanned array systems.
BAE Systems won the $1.1 billion deal under a foreign military sales program with lower bid prices, the DAPA said.
DAPA will send a letter of request to the U.S. government and sign the contract later this year, Yonhap reported.
South Korea has had an ongoing avionics improvement program for the KF-16 aircraft for which BAE Systems has been working in partnership with other suppliers.
In February Data Link Solutions, a joint venture between Rockwell Collins and BAE Systems, won a $5.5 million contract to provide multifunctional information distribution systems for KF-16 jets.
Data Link's MIDS-low volume terminal is an advanced Link-16 command, control, communications and intelligence system. It uses high-capacity, jam-resistant digital communication links for exchange of near real-time tactical data and voice information.
"This contract enables a critical military requirement for the (South Korean) air force F-16s to meet their data link network requirements," DLS Director Mike Beltrani said.
The terminals support key theater functions such as surveillance, identification, air control, weapons engagement coordination and direction for all the services and allied forces, DLS said.
The KF-16 is a version of the multirole F-16 Fighting Falcon and built locally by Korean Aerospace Industries under license from Lockheed Martin in the 1990s.
However, the original F-16 design, development and manufacture was by General Dynamics for the U.S. Air Force. The first flight of the F-16 was 1974 with introduction in 1978.
General Dynamics sold its aircraft manufacturing business in 1993 to Lockheed Corp. which became part of Lockheed Martin after a 1995 merger with Martin Marietta.
The U.S. Air Force still operates the F-16 but the aircraft now is made for export only.
Lockheed Martin announced at the Singapore Airshow in February that it will make a new variant of the F-16 which will include AESA radar, improved mission computers and other cockpit refinements, a report by FlightGlobal news Web site said.
The F-16V -- Viper -- will be available as an upgrade for most F-16 aircraft as well as new production jets, George Standridge, vice president of business development at Lockheed Martin Aeronautics, said.
Around 4,500 F-16s have been delivered 26 countries, Lockheed Martin said.