South Korea reopens bidding for stalled fighter jet competition
SEOUL (Reuters) - South Korea said on Thursday it would hold a new round of bidding next month for its 8.3 trillion won ($7.43 billion) purchase of 60 next generation fighter jets, suspended after bids exceeded the budget.
The Defence Acquisition Program Administration (DAPA), the country's arms procurement agency, suspended the auction earlier this month after 55 rounds. None of the entries, Lockheed Martin Corp's (LMT.N) F-35, Boeing Co's (BA.N) F-15 and EADS's EAD.PA Eurofighter Typhoon, submitted bids meeting the required price.
The DAPA said it would begin a new round of bidding for its biggest-ever defence import program in the third week of August. Analysts said that was unlikely to close the price gap that has scuppered previous rounds.
"We have decided at the defence project committee meeting to resume bidding for the F-X project," DAPA spokesman Baek Youn-hyeong told a briefing.
Baek hinted at the possibility of increasing the budget, but offered no further details.
"If there is no entry with price within the project budget after the resumption of bidding, we will pursue the project again through reviews or increase in overall budget," he said.
The project has been one of the world's most watched defence deals this year due to its scale and whether South Korea would become one of the few countries to purchase F-35 fighters outside the U.S. military and eight development partner nations.
Analysts expect little to change with the new round as the long-delayed deal set a low price ceiling.
The DAPA is considering various options for its purchase that include a split buy, but any such modifications to the contract require a wholesale rewrite.
"The deal faces an impasse due to the lack of budget, while time ticks away," said Yang Uk, a senior research fellow at Korea Defence and Security Forum.
"The auction should have been already concluded in order to keep the timetable for replacing old jets."
South Korea was one of the world's top five importers of conventional weapons between 2008 and 2012, at 5 percent of global procurement, following China and india, according to Stockholm International Peace Research Institute.
The next-generation air power project kicked off last year with a winner due to be selected in October 2012. The program seeks to partially replace some 150 ageing F-4 and F-5 jets that South Korea plans to retire starting in 2015.
Criticism that the government had rushed matters and last year's presidential election slowed the process. Analysts say the government is now unlikely to meet the planned first delivery date of 2017.
(Editing by Ron Popeski)
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