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KF-X PROCUREMENT UPDATE – SOUTH KOREA RETENDERS PROGRAMME By MPI editor

koreflag13 Feb 15. South Korea has retendered its Fighter Aircraft programme – commonly known as the KF-X – because of an insufficient number of bidders in the competition. On the bidding date of 9 February only, one company submitted their bid, yet according to the country’s procurement rules the programme cannot be carried out with a sole-bidder.

On 10 February, the Defence Acquisition Procurement Agency (DAPA) posted a new tender for the programme and the deadline has been extended to 24 February. Korean Aerospace Industries (KAI) was the only company that submitted its bid on 9 February. Based on media reports, the other contender that failed to make a submission is likely to be Korean Air, which has reportedly partnered with Airbus. KAI is partnering with Lockheed Martin for the tender. It has been speculated that the partnership between KAI and Lockheed Martin may be the preferred solution in South Korea. These speculations gained momentum following a decision in July 2014 to change the specifications of the KF-X programme. South Korea’s Joint Chiefs of Staff announced on 18 July the decision to develop a twin-engine aircraft for its “KFX” next-generation fighter jet programmes. This decision was widely seen as having raised the stakes for the programme, with the requirement bringing the KF-X closer to what the Lockheed Martin F-35 can provide. However, the KF-X programme is not designed to require a solution as advanced as the F-35. The purpose of the programme is to replace the ageing McDonnell Douglas F-4 Phantom and Northrop F-5 fleet of aircraft. For the sake of comparison, the solution sought would be somewhere in between the capabilities of the F-16 and the F-35.

What happens if there is a single bidder situation again?

Procurement laws in South Korea allow a competition to move forward with a single bidder if the bidding has reached a third round. What this really means is that Korean Air and Airbus can buy time until the second deadline to bid on the project.

Technology vs. Price

South Korea is expected to make a decision based on technological factors. This would in principle favour KAI, which is the largest manufacturer in the sector. But Aviation Technology noted, “KAL, whose manufacturing division mostly builds to foreign blueprints, can probably argue that outside support bridges the technological gap between it and KAI, says the official, who is familiar with the competition and government assessment processes. If KAL and KAI are judged technically equal, then the issue will come down to the 20 points based on price, where KAL could have a strong advantage”.

Funding for the programme

DAPA estimates that the programme would cost about KRW 8.5trn (USD 8.3bn). In October 2014, South Korea and Indonesia signed an agreement to continue the joint development of the KF-X and the Indonesian Fighter Experimental (IFX) aircraft. According to this, Indonesia will provide 20 percent of the total funding, with South Korea covering the remaining 80 percent. Under the terms of agreement, South Korea will designate the Korean industrial main contractor, which will negotiate a related cost-sharing agreement with the Indonesian defence ministry and the related workshare agreement with PT Industries Indonesia (PT. DI). The KF-X / IF-X development cooperation programme is being undertaken in three phases, including the technology development (TD), engineering and manufacturing development (EMD), as well as the production development (PD) phase. (Source: MPI – Hawk Information)

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