By JUNG SUNG-KI and AARON MEHTA
SEOUL AND WASHINGTON — South Korea’s contract with BAE to upgrade its KF-16 fleet remains in danger, with officials in Seoul insisting the company must lower what defense officials claim are unexpected price hikes beyond the original agreement.
If those costs do not come down, Seoul would seek a new contract with Lockheed Martin, which lost to the US unit of BAE Systems in the 2012 competition worth 1.75 trillion won (US $1.7 billion), a top Defense Acquisition Program Administration (DAPA) official said.
Under the contract through the US foreign military sales program, BAE is responsible for software and hardware upgrades for 134 KF-16 aircraft. The contract is divided into two phases, the first of which is already underway.
The issue arose in October when DAPA publicly complained about extra costs being tacked onto the contract for phase two, claiming the US government added about $470 million and BAE Systems about $280 million in costs that were not part of the original agreement.
Brig. Gen. Baek Yoon-hyung, head of DAPA’s aircraft acquisition bureau, told Defense News that on Oct. 20, BAE informed DAPA it could lower those costs by $95 million. But Baek said that is not enough, and added that the US Air Force has shown reluctance to lowering its extra costs.
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