By Jung Sung-ki
Staff Reporter
General Electric (GE), which is supplying engines for South Korea's F-15K fighter program and looking for more work, has been allegedly paying tens of thousands of dollars to a U.S.-based program manager for the country's arms procurement agency.
Since 2003, the U.S. firm has allegedly given about $6,000 per month to the Defense Acquisition Program Administration (DAPA) manager based in Cincinnati, where GE's aircraft engines plant is located, a reliable source told The Korea Times.
DAPA officials confirmed that GE was paying the program manager, Air Force Lieutenant Colonel Oh Sang-seop. The payments began after GE won a $440-million contract to supply 88 F110-GE-129 engines for 40 twin-engine F-15Ks in 2002, beating out Pratt & Whitney (P&W) with its F100 model, they said.
GE has been giving the manager $5,800 per month under a five-year contract, they said.
The payments are illegal as South Korean laws ban government officials from being paid by foreign governments or contractors. Such a deal would also cause ethical problems as the program manager is required to oversee fulfillment of the contract by GE, such as the production of engines, quality and deliveries.
GE and P&W are now vying to supply engines for the second phase F-X program to acquire 20 more F-15Ks.
But DAPA again required the winner to host a South Korean program manager at its facilities for three to four years and pay all expenses for the manager, said Col. Nam Seung-woo, chief of the agency's fighter acquisition bureau.
Both engine companies, negotiating prices with DAPA over the engine contract, which is worth more than $200 million, have agreed to the terms, Nam said.
Nam, however, denied suspicions that the payment deal affected the engine competition in 2002.
``In follow-up negotiations over technology transfers, the supply of spare parts and other offset programs, we asked GE if they had room to lower their prices. In response, GE offered to pay our program manager, and we agreed,'' Nam said in a phone interview. ``I think there is no big problem with the deal because it was made by mutual agreement as part of an offset contract.''
That's not how another DAPA official sees it.
``DAPA's program managers are not allowed to receive money from a foreign contractor under the agency's regulations,'' the official said, requesting anonymity.
Joh Byung-ryul, a Seoul-based public affairs official for GE, declined to comment on the details of the agreement on the F110 engine and whether or not the company had first offered to pay the Korean manager.
``We confirm that all matters of the project, including the PMO [program manager office] issue, are in compliance with Korean laws and have been mutually agreed to by DAPA and GE,'' Joh said in an e-mail reply.
P&W was not available for comment.
One industry official involved with the F-X project, said, ``I think the Korean program manager is effectively being paid by the people he is supposed to be keeping an eye on vis-a-vis things like cost overruns, quality and so forth.''
The F-X project aims to equip the Air Force with 120 advanced fighters by 2020.
In 2002, Boeing's F-15K Eagle was selected for the 40-plane, $4.2 billion first phase of the program. Deliveries of the 40 jets started in 2005. So far, 27 have been handed over, with the rest to arrive over the next 13 months.
South Korea was the first country to select GE's F110 engine to power F-15 fighters. GE assembles some of the engines, with the rest assembled by Samsung Techwin from GE-produced kits. Last year, Singapore also selected the F110 to power 12 F-15SG aircraft. The other F-15 series aircraft being flown on missions worldwide have F100 engines manufactured by P&W.
The arms acquisition agency is in price negotiations with Boeing over the $2.4 billion, 20-plane second phase fighter procurement.
The F-15K is capable of air-to-ground, air-to-air and air-to-sea missions day or night, under any weather conditions. It has a 23,000-pound payload and can fly at a maximum speed of Mach 2.3, with a combat radius of 1,800 kilometers. A single aircraft costs $100 million.