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Inappropriate decision in KF-16 upgrade project costs m

Posted June. 17, 2016 07:19,   

Updated June. 17, 2016 07:34

한국어
The Defense Acquisition Program Administration (DAPA)’s inappropriate decision during the upgrade project of KF-16 fighter jets (pictured), the main fighter jet model of the Korean air forces, has resulted in a delay of four years and 90 million U.S. dollars in damages.

According to the Board of Audit and Inspection (BAI)’s report on the "Progress of KF-16 Upgrade Project" on Thursday, the DAPA pursued upgrading the fighter jets through Foreign Military Sales (FMS), an inter-government contract whose quality is guaranteed by the U.S. government, in selecting the project partner. Therefore, the Korean government could not have any separate negotiation with other potential partners.

In July 2012, however, the DAPA made a unilateral decision to select British multinational defense firm BAE Systems who bade a low price, leading to a significant delay of the project and waste in defense budget. It turned out that the defense acquisition agency provided preferential treatment in the process of selection such as by modifying eval‎uation criteria.

The U.S. government asked to switch the partners from BAE Systems to Lockheed Martin, citing the British company’s lack of experience and inability to fulfill the project in terms of its total cost and period. However, it took more than a year to strike a deal with the U.S. government on the final price, and the Korean government agency paid 180 million dollars in initial deposit in September 2013. The move was to make sure that the budget should be used up. In November 2013, the Korean agency submitted a fake report to the Defense Acquisition Program Committee as if the agency had reached an agreement with the U.S. government on the final price at 1.7 billion dollars.

In the phase of final negotiation, the U.S. government demanded that Korea provide the U.S. with an additional 2.4 billion dollars in a secondary deposit to keep BAE Systems as partners. The DAPA had to switch the partners from BAE Systems to Lockheed Martin for lack of budget.

Following the decision to switch partners, the price went down from 2.4 billion dollars to 1.9 billion dollars, but project completion was delayed from 2011 to 2015 by four years, and the money that the agency had already spent on BAE Systems – an estimated 90 million dollars – was simply squandered. The Korean audit agency sent a notice of dismissal to the two DAPA officials in charge of the deal.



우경임기자 woohaha@donga.com