By Lee Tae-hoon
The government has raised its budget to purchase 20 fighter jets from U.S. aerospace giant Boeing by 26.6 percent, or 614.2 billion won ($535 million), National Assembly audit reports showed Monday.
A 2012 Annual Report and Settlement of Accounts that The Korea Times obtained reveals that the state-run Defense Acquisition Program Administration (DAPA) has allocated $2.924 trillion won for the recent jet acquisition program, codenamed FX-II.
It contradicts DAPA’s earlier announcement that it awarded Boeing a 2.3 trillion won contract for the supply of its F-15K jets from 2010 through 2012 and it would review the project should the cost rise more than 20 percent above the original budget.
A DAPA spokesman said the flyaway cost of the F-15K, which only includes the mainframe and engines, ended up at 105.7 billion won.
He added that the program cost of the F-15K which includes other supporting costs, such as the pilot training system and ammunition, was roughly 146 billion won.
The official stressed that an increase in exchanges rates is largely blamed for the increase in the acquisition cost.
An industry insider said that Korea lost its leverage to negotiate with Boeing as no other companies, except Boeing, showed interest in participating in the FX-II competition.
“Boeing was able to offer a very lucrative deal for the FX-II race because no other defense company showed any interest to compete with it for the multibillion dollar project at that time,” an industry insider said.
He argued that France’s Dassault Aviation and European Aeronautic Defence and Space Company (EADS) which entered the FX-I race which Boeing won to supply 40 of its F-15Ks walked away from the FX-II deal because of Korea’s clear preference to pick a U.S. firm.
A senior Air Force official disclosed that he and other evaluators in the FX-I race were forced to manipulate data to help Boeing win despite the fact that the Rafale performed better and came with a lower price tag and a more generous technology transfer package than the F-15K.
Another industry insider claimed that the price of the F-15K was relatively higher for FX-II because of the small number ordered.
“There are many factors you must figure in when talking about the cost of a fighter jet,” he said.
Many fear that DAPA will also end up spending at least 20 percent more than the budget for the FX-III program and again escape detection by the government.
Korea has set aside only 5.947 trillion won, or 99.1 billion won, for the purchase of the airframes and engines.
Of the 8.29 trillion won budget, 28.3 percent has been earmarked for other supporting costs, such as the pilot training system and ammunition.