S. Korea kicks off bidding for US$7.3 bln fighter jet deal

SEOUL, June 18 (Yonhap) -- South Korea started the bidding process Tuesday to pick a contractor to provide 60 advanced fighter jets for 8.3 trillion won (US$7.3 billion), the Defense Acquisition Program and Administration (DAPA) said.

Seoul faces a tough decision in selecting either the Lockheed Martin's F-35 Lightning II stealth jet, Boeing's F-15 Silent Eagle or the European Aerospace Defense and Space Company (EADS)'s Eurofighter Tranche 3 Typhoon, to replace the Air Force's aging fleet of F-4 and F-5 jets.

The bidding is expected to last 11 days, and once completed DAPA will assess the three jets before making a final decision in a meeting slated for early next month, officials said.

Seoul has officially said they are looking for affordable yet highly capable aircraft, but many expect the companies will propose prices that exceed Seoul's budget and adopt a wait-and-see approach during the competitive bidding sessions.

If prices proposed by the three firms exceed the budget approved by parliament last year, the acquisition plan will need to be re-examined by the finance ministry, which handles state budget allocations.

Unlike the two other companies that offer aircraft through direct commercial sales, Lockheed Martin, which sells the F-35 through the foreign military sales program by the U.S. government, has faced suspicion that its proposed price could increase later on due to its rising operational costs.

The heated competition for South Korea's single priciest arms purchase project has led the three firms to provide competitive offset packages, including technology support for Seoul's indigenous fighter jet projects.

Lockheed Martin promised to support South Korea's effort to develop and launch military communications satellites if it wins Seoul's multi-billion dollar fighter jet deal and establish live virtual constructive (LVC) to train Korean pilots.

EADS offered an investment of $2 billion in Seoul's plan to build its own fighter aircraft and assemble 53 planes in South Korea to boost the nation's aerospace industry. It also offered to provide the source code to its fighter jets -- the key to the plane's electronic brains -- and purchase Korean-made parts.

Boeing promised to buy billions of dollars in parts from Korean companies and set up its own LVC system to train Korean pilots.

Seoul had initially been slated to pick a bidder last October with the goal of receiving the first delivery in December 2016, but it has recently decided to delay the schedule to get the first batch in August 2017 in accordance with the change in the negotiation procedure.

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