via http://english.yonhapnews.co.kr
By Kim Eun-jungA few things...
SEOUL, Aug. 16 (Yonhap) -- In a last-ditch effort to win South Korea's fighter jet project, two of the three bidders -- Boeing and EADS -- offered proposals below the state budget of 8.3 trillion won (US$7.2 billion) during the final bidding on Friday, government officials and industry sources said.
The third company, Lockheed Martin, selling its F-35 stealth jets through the foreign military sales (FMS) program, offered a price higher than Seoul's budget, according to sources, effectively being eliminated from the race to win the country's largest arms procurement deal.
As the bidding process ended, the Defense Acquisition Program Administration (DAPA) will conduct a comprehensive assessment of the jets and officially announce the winner next month.
"As there were companies that offered price within the program budget, we will proceed to the next step," DAPA spokesman Baek Yoon-hyung said in a press briefing, without elaborating the names citing the ongoing procedure.
"Although all jets will be evaluated, aircraft exceeding the budget will not be qualified for the contract," Baek said.
This week's final rounds of biddings were held following a six-week suspension due to all previous sessions ending in a failure when all three aerospace giants offered prices above the 8.3 trillion won budget approved by parliament.
The bidding war illustrated the heightened competition among the world's biggest defense groups as they seek to overcome drastic cutbacks in military spending in the U.S. and Europe.
The cheaper proposals by the two companies came after the DAPA announced that another failure in the bidding may lead to restarting the project from the beginning.
It had said that all options will be considered, such as reducing the number of jets to be bought, buying the jets in installments and increasing the state budget, which could be more beneficial to F-35s, whose biggest hindrance is their high cost.
Initially, Lockheed Martin's F-35s, which are in development for the U.S. military, were seen as a favorite given South Korean Air Force's long pursuit of stealth fighter jets that can pass through North Korea's complex web of radars and given the close relations between the two allies.
However, there was less room for price negotiations as F-35s are sold through the foreign military sales (FMS) program by the U.S. government.
* Price is turning into a beast of a problem for the F-35. It rears its ugly head as my primary opposition to the airplane. For the Marine Corps it rings all the bells as a replacement for the AV-8B (for the USAF and USN, I'm not so sure...not sure at all). The price is a killer though. Seems like the S. Koreans are the first to acknowledge that fact.
* Projections appear to be a major part of how they're arriving at the cost of this airplane. I hope they didn't count sales to S. Korea as a done deal.
* Is this how the death spiral begins? When one country pulls out and does it without hesitation will that give others that are waivering the courage to follow?
Now for the good news for the F-35 in this article.
* All aircraft will be evaluated. That's what supporters will hang their hats on. The airplane being magnitudes better than the competition which should explain its "slightly" (according to them) higher price.
* FMS is the real villain, and if Lockheed was free to sell the plane, it would come in at a lower price point.
This is going to be good. I just wish I could be a fly on the wall of the sales dept at LM.
