South Korea to review bids on $7.3 billion fighter jet deal

SEOUL Thu Jul 11, 2013 6:34pm EDT

Workers can be seen on the moving line and forward fuselage assembly areas for the F-35 Joint Strike Fighter at Lockheed Martin Corp's factory located in Fort Worth, Texas. REUTERS/Lockheed Martin/Randy A. Crites/Handout

Workers can be seen on the moving line and forward fuselage assembly areas for the F-35 Joint Strike Fighter at Lockheed Martin Corp's factory located in Fort Worth, Texas.

Credit: Reuters/Lockheed Martin/Randy A. Crites/Handout

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SEOUL (Reuters) - South Korea is set to decide next week whether to proceed with an auction on supplying 60 next generation fighter jets worth 8.3 trillion won ($7.31 billion) after rounds of failed bidding, a defense official said on Thursday.

The defense minister will chair a meeting next Wednesday to review the failed bidding process so far. A range of options can be considered, include restarting the process from scratch, an official at the Defense Acquisition Program Administration (DAPA) said.

DAPA suspended bidding after none of the entries, Lockheed Martin Corp's F-35 (LMT.N), Boeing Co's F-15 (BA.N) and EADS's Eurofighter Typhoon EAD.PA, submitted bids meeting the required price.

"If the auction falls apart, we will consider all possible options, possibly including splitting the purchase, and find the best solution," the official said.

Officials at Boeing and Lockheed said they were waiting for details on the way forward in the competition.

Boeing spokeswoman Amy Horton said Boeing had proposed a competitive price for its new F-15SE fighters, as well as a comprehensive program involving technology transfer and work for South Korean industry.

Lockheed spokesman Michael Rein said Lockheed remained convinced that its F-35 fighter offered a significant increase in combat capability. He said the company would continue to asset the U.S. government in their offer to the Korean government.

South Korea has been pushing to buy 60 fighters to replace its ageing jets, such as F-5s and F-4s, starting from 2017, in order to better face threats posed by North Korea's missile and nuclear programs.

Given the close military ties with the United States, experts said U.S. manufacturers are favored over Eurofighter.

However, differences over price have delayed the final selection, which DAPA previously said was planned in June.

Apart from capabilities of the individual aircraft, South Korea is also focusing on the offset value of the bids and the assistance that competitors will offer for its homegrown fighter jet development program.

($1 = 1135.7000 Korean won)

(Reporting by Ju-min Park; Editing by Ron Popeski, Bernard Orr)

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