Korean F-X Ph 3 Competition

GTX

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All 3 bidders fail to meet budget
Second bidding starts Tuesday

By Kang Seung-woo

All three companies vying for the supply of F-X III fighters to Korea have reportedly placed bids that exceed Korea’s procurement price.

Lockheed Martin with its F-35 Lightning II, Boeing with the under-development F-15 Silent Eagle and the European Aeronautic Defense and Space Company (EADS) with its Eurofighter Tranche 3 Typhoon are in the competition.

The budget for 60 aircraft is 8.3 trillion won, but according to Yonhap News an official involved in the final bid stage said all three have quoted prices beyond Defense Acquisition Program Administration (DAPA)’s budget.

DAPA declined to confirm the report.

The delayed bidding for the fighter replacement program started Tuesday. DAPA is scheduled choose a winner at the end of June should it receive an affordable offer.

DAPA is standing firm on its available budget.

The Typhoo and the Silent Eagle will be purchased through direct commercial sale (DCS), while the F-35 will be sold on the foreign military sale (FMS) program, in which Washington would broker a contract between Seoul and Lockheed Martin. Currently, the U.S. Air Department is participating in the bidding instead of Lockheed Martin.

As the F-35 is being manufactured and simultaneously tested, the U.S. government has turned down DAPA’s calls to offer a fixed price and if the F-35 is selected to replace the aging fleet of F-4s and F-5s, its price will be decided each year according to the supply price to the U.S. Air Force.

Meanwhile, the Naeil Shinmun, a local evening daily, said the Finance Ministry rejected a request for more money to finance the project.

If the contract exceeds the entire program budget, DAPA can ask the ministry to increase the budget up to 20 percent.

The F-35 stealth jet is seen as the front-runner in the three-way race, but the Defense Security Cooperation Agency expected in April that a potential FMS of 60 F-35s would cost an estimated $10.8 billion, although Lockheed Martin said the final cost of an F-35 program for Korea will go down.

Korea plans to start bringing in the new fighter jets from August 2017.

Source
 

Arjen

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Second round of bidding for Korean jet project fails over price
By Kim Eun-jung

SEOUL, June 28 (Yonhap) -- The second round of bidding for South Korea's multibillion dollar fighter jet project ended on Friday, with none offering a price below the 8.3 trillion (US$7.3 million) budget, the state defense procurement agency said.

The next bidding session begins next Tuesday, said the Defense Acquisition Program Administration (DAPA).

South Korea is pushing to buy 60 jets to replace South Korean Air Force's aging fleet of F-4 and F-5 jets starting from 2017. Competing are Boeing's F-15 Silent Eagle; Lockheed Martin's F-35 stealth jet; and the Eurofighter Tranche 3 Typhoon from the European Aerospace Defense and Space Company (EADS).

The DAPA opened the bidding on June 18 and has since carried out about 30 bidding sessions, but none of their proposals were accepted as they were over the budget, according to officials.

"The bidding ended, and an additional bidding will resume on July 2," DAPA spokesman Baek Yoon-hyeong said.

The drawn-out bidding session illustrated the fiercely contested competition by the world's biggest defense groups as they seek to overcome drastic cutbacks in military spending in the U.S. and Europe. The state procurement agency has officially said they are looking for affordable yet highly capable aircraft, but it was widely expected that the potential suppliers would propose prices that exceed Seoul's budget and adopt a wait-and-see approach during the sessions. If prices proposed by the three firms exceed the budget approved by the parliament last year, the acquisition plan needs to be re-examined by the finance ministry which handles state budget allocations.

Unlike the two other companies that offer aircraft through direct commercial sales, Lockheed Martin, which sells the F-35 through the foreign military sales program by the U.S. government, did not submit either a fixed price or a maximum price during the bidding, said a DAPA official with knowledge of the bidding process.

If the F-35A is selected, experts say the South Korean government will have to pay prices equivalent to those offered to the U.S. Air Force each year from 2017 to 2021, sparking speculation that the price for the stealth jet, which has been plagued with cost overruns, may rise. Once the process is completed, the DAPA will assess the three jets before making its final decision in a meeting slated for early next month, according to officials.
source
 

Arjen

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Not much progress here.
Global Post: S. Korea temporarily suspends bidding for next-generation fighter jet program

SEOUL, July 5 (Yonhap) -- South Korea has temporarily suspended bidding for its next-generation fighter jet project, mainly due to none of the contenders meeting the preset budget limit, the state arms procurer said Friday.
South Korea is pushing to buy 60 fighter jets to replace its aging fleet of F-4 and F-5 jets starting from 2017. Vying for the project are Boeing's F-15 Silent Eagle; Lockheed Martin's F-35 stealth jet; and the Eurofighter Tranche 3 Typhoon from the European Aerospace Defense and Space Company (EADS).
The Defense Acquisition Program Administration (DAPA) said that it has received 55 separate price bids from the three manufacturers from June 18 onwards, but none have met the 8.3 trillion (US$7.3 billion) budget limit.
"There is a need to carefully check the bids placed so far before making a decision to move forward," said a DAPA official who declined to be identified.
He said Seoul will soon decide whether to stop the price bidding altogether or accept additional bids.
There have been speculations that South Korea may alter the program in light of the steep prices for the jets being offered.
Any changes expected may include reducing the number of planes to be bought or purchasing the planes over a longer period of time to reduce the financial burden.
 

TaiidanTomcat

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Mixed signals on budget and air force’s preference for F-35 mean companies all making maximum price bids

http://english.hani.co.kr/arti/english_edition/e_international/594377.html

Backfire
 

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From The Diplomat: South Korea’s F-X Project and Structural Disarmament

South Korea’s F-X Project and Structural Disarmament

July 19, 2013 / By Soon Ho Lee

The ROK’s plans for next-generation fighters could prove very costly indeed.

The F-X project in South Korea was initially proposed in the early 1990s, to ultimately replace the country’s F-4 and F-5 fleet and gain air supremacy over North Korea. Following the financial crisis of 1997, however, the project was scaled back from an initial plan for 120 fighters to just 40, with 40 F-15Ks being purchased in 2002 (phase 1). Then, in the second phase of the project, another 20 F-15Ks were purchased in 2007.

To reach its original target, the Republic of Korea Air Force (ROKAF) still needed another 60 next-generation fighters. Thus, the F-X Phase 3 (F-X III) project was launched, with the aim of procuring those 60 additional air fighters to supersede the aging F-4 and F-5 fleet. The plan is to introduce them between 2017 and 2021 at a cost of 8.3 trillion won ($7.3 billion).

But even though the ROK economy has grown steadily over the years and the country has continuously modernized its armed forces, such a rapid increase in military spending on its air force looks to be an almost impossible task, particularly given the major role that ground forces plan in ROK military and the need to prepare for the wartime command takeover in 2015. For this reason alone, the entire F-X III project cost, involving initial procurement and future maintenance, needs to be examined more closely.

Should the project proceed, then given the initial procurement budget and the astronomical maintenance costs, the F-X III could well lead to the structural disarmament of ROKAF. Structural disarmament – a concept first suggested by Thomas Callahan – has its roots in the increased technological sophistication of weapons systems. Technological improvements cost money, making each new generation of weapon system much more expensive. With higher unit costs, fewer systems can be produced and purchased.
[...]
More at the link.
Soon Ho Lee argues all three F-X competitors - F-35, Eurofighter, F-15SE - are unaffordable, citing procurement as well as maintenance.
 

Arjen

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If at first you don't succeed, try, try again.
Reuters: South Korea reopens bidding for stalled fighter jet competition

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."
More at the link.
 

Arjen

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29/7/2013 Korea Times: F-35 to be first to bow out
[...]
The Defense Acquisition Program Administration (DAPA), the arm of the Ministry of National Defense, has told the three candidates to meet the required price of 8.3 trillion won ($7.45 billion) or face an early exit. The bidding is scheduled to resume on Aug. 12 through 16.
[...]
“When any of three bidders meets the procurement price, DAPA will evaluate all three fighter jets,” DAPA Spokesman Baek Youn-hyeong said at a briefing.

“But despite finishing first in the evaluation, a firm whose bid exceeds the budget will not be signed for the F-X contract.”

He added that a runner-up or a third place has a chance to secure a deal if either of comes to within the given budget.
[...]
At this point, what the F-35 can do seems to just wish the bidding to be called off and DAPA to increase the budget, as the agency said if there is no entry with price within the project budget after the resumption of the bidding, it will review other options including increasing the budget.

The DAPA announcement is likely to be a major blow to the F-35, which has basked in spotlight as a shoo-in in the competition on the back of its low-observable technology, or a stealth capability, despite its highly-projected price tag.

The U.S. Defense Security Cooperation Agency said in April that a potential foreign military sale (FMS) of 60 F-35 stealth jets and associated equipment, parts, training and logistical support, would cost an estimated 12.4 trillion won.
[...]
 

GTX

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With comments such as this:

The weakest point against the latest U.S. aircraft is that its price may go up significantly because it is still in development.

that article is a joke!

At the end of the day, it may well be that the F-35 bows out first. This will only be because the South Korean's have now made themselves the butt of jokes when it comes to Defence acquisitions.
 

TaiidanTomcat

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Its basically looking like LM knows the whole thing is a joke at this point, and so they aren't going to waste anymore time trying to court them so they are bidding goodbye and waiting for the next round.
 

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GTX said:
With comments such as this:

The weakest point against the latest U.S. aircraft is that its price may go up significantly because it is still in development.

that article is a joke!

At the end of the day, it may well be that the F-35 bows out first. This will only be because the South Korean's have now made themselves the butt of jokes when it comes to Defence acquisitions.

Can you say, "Brazil"?
 

GTX

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Fighter project to get additional budget
By Kang Seung-woo

The military has asked for 900 billion won in additional budget for the new fighter program or F-X project, a source said Wednesday.

The source said, “This amount comes on top of 7.5 trillion won that is currently set aside for the purchase of the aircraft.” The total FX budget is set at 8.3 trillion but only 7.5 trillion won is for aircraft purchases with the rest for, among others, armaments.

The request for an increased budget will be formally made after the new round of bidding that is expected to fail to produce a clear winner.

The Defense Acquisition Program Administration (DAPA) said that no request for additional budget has been made nor has it been considered.

All three competitors failed to meet the given budget in the previous round.

A new round of bidding midway through this month is not likely to close the price gap.

In addition, Lockheed Martin’s F-35 Lightning II, currently in development, may benefit from it, experts say.

The F-35 is vying against Boeing’s proposed F-15 Silent Eagle and the European Aeronautic Defense and Space Company (EADS)’s Eurofighter Tranche 3 Typhoon.

“Although DAPA has decided to reopen a new round of bidding, it will proceed with the same condition that resulted in a temporary halt (last month). Will there be another factor to push the costs down in companies’ sides?” said Lee Hee-woo, president of ILS Research Institute and former Air Force general.

“In addition, it hinted at increasing the budget unless it finds the final bidder, which will prevent the bidders from moving to within the budget.”

Yang Uk, a senior research fellow at Korea Defense and Security Forum (KDSF), said that the nation’s arms procurement agency set a low price ceiling.

“The DAPA budget is worth about 50 highly capable combat planes. Without lowering the number of jets to be bought, no company will satisfy the procurement price,” he said.

He added that as the budget cannot be upped at this point, the bidding will end in failure.

Starting on June 18, DAPA carried out a total of 55 bidding sessions for three weeks, but all competitors failed to satisfy the government’s budget requirements and as a result, DAPA temporarily suspended the project.

Last week’s meeting, presided over by Defense Minister Kim Kwan-jin, came up with a decision to reopen the bidding in order to avoid further delay of the project.

Meanwhile, another possible delay will help the besieged F-35 catch its breath, the watchers said. If DAPA tweaks the program, it is foreseen to take about two years.

Development of the stealth jet has been delayed due to technical glitches and it is often the competitor’s punch line because critics say it is questionable if the aircraft will be delivered at a time Korea needs them.

“If the bidding is declared a failure, it will work to the F-35’s advantage because they will be given time to solve what critics attack,” Yang said.
 

JFC Fuller

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GTX said:
After 50+ rounds of bidding it does!

No it doesn't, South Korea is the customer, it is their prerogative to hold as many rounds of bidding as they like until they reach a price they feel is appropriate.
 

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//taking screenshots of all these references to Korea's process being a "joke", for use if they go JSF after all...
 

bring_it_on

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Don't think its a joke, but DAPA and Korea definitely underestimated the cost of the program, given that not a single weapons system fits their bill. The Saga that is their procurement process, has dragged on because of this. While their acquisition is fairly straight forward (Cheapest fighter that meets the capability) they did underestimate (by quite a bit) the cost/capability equation.
 

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LowObservable said:
//taking screenshots of all these references to Korea's process being a "joke", for use if they go JSF after all...

That'll teach us.
 

GTX

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LowObservable said:
//taking screenshots of all these references to Korea's process being a "joke", for use if they go JSF after all...


Unlike you Bill, some of us here believe it is a joke regardless of which platform, if any, are selected. You on the other hand seem to believe it will only be a joke if the F-35 wins...
 

GTX

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JFC Fuller said:
GTX said:
After 50+ rounds of bidding it does!

No it doesn't, South Korea is the customer, it is their prerogative to hold as many rounds of bidding as they like until they reach a price they feel is appropriate.


and if they don't get any closer ?
 

Arjen

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Final round. Honestly.
Korea Times:
Final round of fighter jet bidding runs Aug. 13-16 By Kang Seung-woo

The new date for the “final” bidding in an 8.3 trillion won ($7.5 billion) fighter jet deal will be next week, the nation’s arms procurement agency said Monday.

Should there be no winner, the stalled program seeking 60 next-generation combat planes will be called off and adjustments made from scratch.

“The final round of bidding will be carried out from Aug. 13 to 16,” said an official at the Defense Acquisition Program Administration (DAPA). The bidding will be on hold for Liberation Day on Aug. 15, a national holiday.

“If no one satisfies the procurement price, DAPA will reconsider the project from the beginning,” the official said.

Three fighter jets _ Boeing’s F-15 Silent Eagle, Lockheed Martin’s F-35 Lightning II and the European Aeronautic Defense and Space Company (EADS)’s Eurofighter Tranche 3 Typhoon _ are in contention to become a replacement for the Air Force’s aging fleet of F-4s and F-5s.

Starting on June 18, DAPA held a total of 55 bidding sessions for three weeks, but all competitors failed to satisfy the budget requirements and as a result, DAPA temporarily suspended the project on July 5.

During the six-week hiatus, the agency has been mulling options to reach a deal including lowering the number of planes to be bought; purchasing the planes over a longer period of time to reduce the financial burden; or increasing the procurement price; but concerns that the change will delay the delivery timeline have forced DAPA to re-launch bidding.

It is, however, expecting to see a company who will bid within the budget.

“I think the competitors are aware that this is the last chance, and a re-examination of the project will change the business plan and delay the purchase of the jets,” the official said.

Despite this expectation, military analysts predict the bidding will fall through after failing to close the price gap.

“Although DAPA has decided to reopen a new round of bidding, it will proceed with the same conditions that resulted in the temporary halt. What other factor will push the cost down from the companies’ side?” said Lee Hee-woo, president of ILS Research Institute and a former Air Force general.

Critics also say that as DAPA already hinted at increasing the budget if it does not find a winner, no one will lower their bid to meet the current requirements.
 

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Yonhap: S. Korea's fighter jet project becomes two-way race
By Kim Eun-jung
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.

More at the link.
 

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Interesting summary of the KFX including timeline, diagrams as well as the latest version/concept C-103-IA

http://slide.mil.news.sina.com.cn/slide_8_210_25394.html

Deino
 

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LowObservable

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Quite logical, given DAPA's insistence on fixed price, the US-Korea relationship and the Saudi F-15 deal, which made Boeing's offer cheaper and less risky.
 

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Silent Eagle wasn't dead after all. Any thoughts about the rumours that Boeing was offering F-15Ks instead?
 

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And it looks, moreover, as if Slowman (roundly abused here and elsewhere by the fans of non-F-15 products) was right all along.


I doubt that Boeing will revert to the F-15K since the more capable SA is already under development. The SE approach does offer options, including delivering only some aircraft with the full stealth kit, but we'll see about that.


Also, note that if the JSF team's predictions of cost and schedule has been close to accurate in 2009 (by which time F-X Phase III was well under way) they would have won easily.
 

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LowObservable said:
And it looks, moreover, as if Slowman (roundly abused here and elsewhere by the fans of non-F-15 products) was right all along.
Mind you, residing in Korea handed Slowman an unfair advantage in the matter.
 

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LowObservable said:
And it looks, moreover, as if Slowman (roundly abused here and elsewhere by the fans of non-F-15 products) was right all along.


I doubt that Boeing will revert to the F-15K since the more capable SA is already under development. The SE approach does offer options, including delivering only some aircraft with the full stealth kit, but we'll see about that.


Also, note that if the JSF team's predictions of cost and schedule has been close to accurate in 2009 (by which time F-X Phase III was well under way) they would have won easily.

"full stealth" is a stretch even for a marketing team. ;D
 

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It would be wise for South Korea to fund the stealth upgrades and the internal carriage of weapons, for that can be retrofitted on the K's at a later date. I would go in for the Modern cockpit as well, just to reduce workload and ease the ROKAF into a formal 5th gen jet if and when that happens.

4wgw.jpg
 

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LowObservable said:
And it looks, moreover, as if Slowman (roundly abused here and elsewhere by the fans of non-F-15 products) was right all along.
His predictions have consistently been refuted by official press releases. He also missed the Japanese decision. Throw enough guesses against the wall and eventually something will stick.

Even a broken clock is right twice a day.


Also, note that if the JSF team's predictions of cost and schedule has been close to accurate in 2009 (by which time F-X Phase III was well under way) they would have won easily.
The JSF team did not cut the orders and the butchering of the rampup was not under their direct control.
 

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LowObservable said:
And it looks, moreover, as if Slowman (roundly abused here and elsewhere by the fans of non-F-15 products) was right all along.

He is truly a martyr, him being right on this completely changes all the times he was wrong and totally talking out his sphincter on everything else. Moreover, although he was right in the end overall, he also only said about 2 dozen times over various forums that LM and EADs were already out for whatever reason was convenient this time, when that only actually happened in the final rounds of the competition. He has never been right on the details, and he has boldly predicted that the SE winning in Korea means a domino effect of partner nations giving up on the F-35... lets see if that comes to fruition as it was a two part prediction.

If you want to send him a congrats for being wrong on almost every detail (he didn't boldly predict everyone over-bidding the first round, in fact the need for a second round of bidding at all after years of predicting that it would be a no-brainer) I'm sure you can. just make sure you send the same congrats to LM in the future "sure you wrong about nearly every major detail, hell you even lied a few times, but by golly in the end you were right, sort of" ;)

or you could go with:

And it looks, moreover, as if Lockheed Martin (roundly abused here and elsewhere by the fans of non-F-35 products) was right all along.

Slowman was "roundly abused" for a reason and even blind squirrels find nuts occasionally.

http://www.aviationweek.com/Article.aspx?id=/article-xml/AW_06_03_2013_p24-583039.xml

Even the experts at aviation week weren't going to make a call on this one. Maybe they could extend an invitation to the lad, seeing as he was right?
 

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Hold your horses.

Aviation Week: Boeing Undercuts Rivals In South Korea Fighter Contest: Sources

Boeing’s bid in the 8.3 trillion won ($7.4 billion) tender to supply South Korea with 60 fighter aircraft was the only one below the price ceiling set by the country’s arms procurement agency, sources close to the process said on Monday.
A final decision is not expected until mid-September, the sources said, but the price submitted by the U.S. company appears to be a significant step towards winning the contract.
[...]
DAPA said on Sunday that an unnamed bidder submitted a price that fell within budget “by arbitrarily changing conditions that were previously agreed upon” on the last of the 13 rounds of bidding between August 13 and 16. This bid will be considered as having “exceeded the budget”, it added.
The sources close to the process said that this was the bid submitted by the Eurofighter consortium, in which EADS is an investor.
[...]
The sources also said that the Lockheed Martin bid was over-budget, though the company responded on Sunday by saying that it had not received any official notification regarding the latest bidding results.
One industry source said that the capabilities of the new fighters, rather than cost, would be a key factor in Seoul’s decision.
“It’s not going to be decided on cost alone,” said the source, who is not authorized to speak publicly, adding that the cost of the aircraft represents only 15 percent of the decision-making process.
 

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http://www.koreatimes.co.kr/www/news/nation/2013/08/116_141362.html

EADS refutes breach of agreement allegations

By Kang Seung-woo

A senior official of the European Aeronautic Defense and Space Company (EADS) said Monday that the four-nation consortium did not breach any agreement with the nation’s arms procurement office in Korea’s next-generation fighter jet program.

The Defense Acquisition Program Administration (DAPA) announced Sunday that EADS, touting its Eurofighter Tranche 3 Typhoon, promised to offer 15 two-seat jets and 45 single-seat jets during negotiations, but reduced the number of twin-seat aircraft to six to meet the procurement price of 8.3 trillion won ($7.5 billion).

In the “final bidding,” Boeing, hoping to sell its F-15 Silent Eagle, and EADS met the budget of the program to purchase 60 highly-capable aircraft. The other bidder is Lockheed Martin with its F-35 Lightning II.

“We have repeatedly explained to DAPA why there was no operational rationale to opt for the number of twin-seat planes requested to Eurofighter. Thanks to the present state of the art of the Eurofighter simulators, the twin-seater need is minimal, if any, as already proven by the Eurofighter operating air forces,” said Christian Scherer, chief sales officer of EADS Cassidian, in a statement.

He added that there was no agreement between the two sides on the number of the twin-seat jets.

“We do not see any promises made but only different scenarios with preferences which have been discussed respectfully by the parties all along the negotiation process,” he said.

EADS is now ineligible to secure the contract in accordance with what DAPA calls a breach of contract. According to DAPA, any bidder whose bid exceeds the budget is not eligible for signing regardless of comprehensive assessment.

In addition, the procurement agency said that the European side did not present the additional development cost related to additional capabilities requested by DAPA.

However, Scherer said that it is “inappropriate” to arbitrarily add all those possibilities to the cost of its program simply because they are possible ― although it has no issue at all with developing additional requirements.

“We propose to treat these separately from the platform decision, in the form of options the ROK Air Force has to select later. Our aircraft without these features beats the old F-15 hands down, with or without these additional capabilities,” he said.

But he left room for further negotiations with DAPA, saying it is open for any constructive discussion.

“We have shown different paths, and we are ready to discuss the applicability of any or parts thereof to help DAPA to come to the most cost-effective choice for the F-X Program,” he said.

“This is for ROK a significant investment in the future, and we want to support ROK in choosing a solution which represents a proven, reliable and sustainable cost-structure.”
 
M

Magoodotcom

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I still wonder how Boeing can come in under the DAPA's price limit unless the SE specs have been watered down somewhat.
We already know the canted tails have been ditched, but which of the other enhancements have been retained? CWBs? Enhanced cockpit? LO treatments? Radar blocker? IRST? DEWS? Should be interesting to see the final spec?
 

bring_it_on

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So Airbus/EADS is essentially saying that, we know that you wanted 15 twins but you really do not need 15 twins...Trust us, we know better about what is going to work best for you :) ..... This is the same attitude many in the USAF attributed to LMA before the recent shakeup...
 

Arjen

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I'm slightly surprised that the twin/single matter is an issue at all: the F-35 is single-seat only, that didn't stop LMA from offering it.
 

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