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Lockheed hangs in for Seoul's 60-fighter aircraft deal

Aug. 22, 2013 at 6:07 AM   |   Comments

SEOUL, Aug. 22 (UPI) -- South Korea appears to be leaning toward the Boeing Co.'s F-15 Silent Eagle jet-fighter for a 60-aircraft contract, Yonhap news agency reported.

Lockheed Martin said it will persist in its bid to offer F-35 Stealth fighters to South Korea, despite reports Seoul is leaning toward Boeing's Silent Eagle.

South Korea's Defense Acquisition Procurement Agency announced Sunday only one of three shortlisted aerospace companies is qualified for the $7.2 billion contract, Yonhap reported.

Boeing's F-15 Silent Eagle, Lockheed Martin's F-35 stealth fighter and the Eurofighter Tranche 3 Typhoon from EADS -- European Aerospace Defense and Space Co. -- are the shortlisted aircraft.

Yonhap reported that DAPA considered the EADS' proposal had "procedural problems," leaving only Boeing's F-15 SE as a valid candidate for the 60-aircraft deal -- 45 one-seater aircraft and 15 two-seaters.

Lockheed's Stealth aircraft are being offered through a government-to-government sales process, meaning there is less room to negotiate on price.

Boeing and EADS are direct sales.

"Lockheed Martin has not received an official notification from the Republic of Korea regarding the results of the price bidding for the F-X Program," the company said in a statement. "The F-X source selection process has multiple phases and we will continue to work closely with the U.S. Government as they offer the F-35 to Korea.

"Lockheed Martin is honored that Republic of Korea is considering the F-35A to meet its national defense requirements."

DAPA has said it will make a decision in mid September.

Negotiations have been extremely price-sensitive for what likely will be South Korea's largest import deal, Yonhap has reported.

South Korea needs to replace its aging fleet of McDonnell Douglas tandem, two-seat, twin-engine F-4 Phantoms and the single-seat, twin-engine Northrop F-5 Freedom Fighter and Tiger variants starting in 2017.

There were 55 bidding sessions in June and July, but DAPA suspended bidding in mid-July over concerns that manufacturers' bids were higher than the budgeted $7.2 billion. DAPA announced the decision to restart bidding in mid-August, reiterating that its budget limit is the most important requirement for a successful bid.

The price of the aircraft accounts for 30 percent of the total score for a comprehensive evaluation, Yonhap reported. Procurement cost, excluding life-cycle maintenance and operation costs, occupies a smaller proportion of the selection process.

Yonhap said the contract has been noted for its extreme bidding war, suggesting competition among the world's biggest defense groups is heightened as they seek to overcome drastic cutbacks in military spending in the United States and Europe.

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