via http://english.yonhapnews.co.kr
By Kim Eun-jungA few things...
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.
This week's final rounds of biddings were held following a six-week suspension due to all previous sessions ending in a failure when all three aerospace giants offered prices above the 8.3 trillion won budget approved by parliament.
The bidding war illustrated the heightened competition among the world's biggest defense groups as they seek to overcome drastic cutbacks in military spending in the U.S. and Europe.
The cheaper proposals by the two companies came after the DAPA announced that another failure in the bidding may lead to restarting the project from the beginning.
It had said that all options will be considered, such as reducing the number of jets to be bought, buying the jets in installments and increasing the state budget, which could be more beneficial to F-35s, whose biggest hindrance is their high cost.
Initially, Lockheed Martin's F-35s, which are in development for the U.S. military, were seen as a favorite given South Korean Air Force's long pursuit of stealth fighter jets that can pass through North Korea's complex web of radars and given the close relations between the two allies.
However, there was less room for price negotiations as F-35s are sold through the foreign military sales (FMS) program by the U.S. government.
* Price is turning into a beast of a problem for the F-35. It rears its ugly head as my primary opposition to the airplane. For the Marine Corps it rings all the bells as a replacement for the AV-8B (for the USAF and USN, I'm not so sure...not sure at all). The price is a killer though. Seems like the S. Koreans are the first to acknowledge that fact.
* Projections appear to be a major part of how they're arriving at the cost of this airplane. I hope they didn't count sales to S. Korea as a done deal.
* Is this how the death spiral begins? When one country pulls out and does it without hesitation will that give others that are waivering the courage to follow?
Now for the good news for the F-35 in this article.
* All aircraft will be evaluated. That's what supporters will hang their hats on. The airplane being magnitudes better than the competition which should explain its "slightly" (according to them) higher price.
* FMS is the real villain, and if Lockheed was free to sell the plane, it would come in at a lower price point.
This is going to be good. I just wish I could be a fly on the wall of the sales dept at LM.
From this mounth Combat airccraft monthly:«A Seymour officer who didnt want to be named told CA that many in the community are wondering whether the air staff will see the light and resume production of the Strike eagle for US users including the 4th FW.The idea cuts against official policy,wich is to throw all resources into the F-35 .Still,the fact that the idea is even being discussed is a step foward.»
ReplyDeleteEven the crews and staff of the USAF dont think the JSF is the best sollution...
The F-35 is not a replacement for the F-15. And the Air Force does not even have a long range plan for that. I suspect the Navy's Super Hornet replacement F/A-XX may take that role unless a UAV does it.
Deletethe F-35 is listed as replacing the F-15 and F-16. additionally its suppose to take over for the F-117 mission as well. the real question should be why Boeing didn't use the F/A-18 Ultra Hornet as its horse in the competition.
DeleteBoeing didn't use the Ultra Hornet in the competition because they had already tried to use it against the F-35 and the Typhoon in Japan. Japan went for the F-35. Japan also uses the F-15J and has the supply line for the F-15 series already established in their country, just like South Korea has for their F-15K.
DeleteFrom Boeing's point of view if they market a fighter for them that has a supply line already set up and training commonality with it's current F-15Ks it gives them an advantage on keep the long term price of their aircraft low. Since South Korea is looking for a budget conscious purchase in this case Boeing made a smart move.
Boeing's strategy has been to market the Silent Eagle to current F-15 operators (Japan and Korea) while offering the Super-Duper Hornet to current F/A-18 operators (Australia and Canada). I assume on the basis that ease of transition would be a major selling point.
DeleteIf you ask me, the Silent Eagle would be a much better fit for the RAAF and RCAF, better range and twin engine safety over water or permafrost.
It should be more telling that both the F-15 (not a cheap plane by any stretch of the imagination) and the Typhoon (well known and criticized for its high costs) are both considered CHEAPER than the single engined-"it's gonna be as cheap as the F-16, we swear" mass produced F-35.
ReplyDeleteIt's like having to decide between a Lamborghini and a Ferrari because that Corvette is now too damn expensive.
Just to update, the Eurofighter has been disqualified as well. It's bid offered 6 two-seat Typhoons (instead of the required 15), and prices were based on the British pound instead of the Won.
ReplyDeleteLooks like the Silent Eagle has its first buyer!
http://english.yonhapnews.co.kr/national/2013/08/18/82/0301000000AEN20130818001400315F.html
They will only be cheaper for the next few years.
ReplyDeleteAfter several cycles of 4-5% LRIP reductions and much larger FRP reductions, they will be more expensive, especially in lifetime costs.
It's pretty damn obvious what just happened here SpudmanWP. Just shut up.
Deletejust plain wow.
DeleteNot.
DeleteThe FACT of the matter is that the F-35 will continue to drop in price as it enters FRP while the rest of the pack will stay the same. There is no room for improvement on the side of 4th gen assets as they have exhausted their learning curve benefits. On this issue the F-35 is just getting started.
Sorry, SpudmanWP, I just can't take you or anything you say seriously anymore. Keep regurgitating the same LM script all you want. Korea did the math and their solution came out to be the Silent Eagle.
DeleteHardley.
DeleteThey wanted the F-35 but were unwilling to either raise the cap to pay for LRIP pricing or wait for FRP. Simple as that. If all they wanted was the F-15 , then they could have simply extended the F-15K buys.
and that brings the conversation back to affordability. the S. Koreans have an aggressive neighbor on their doorsteps and can't afford to gut their ground forces to pay for a small number of airplanes.
Deletebalanced forces like the S. Koreans...or the USMC have some serious decisions to make. the S. Koreans are focused only on national defense and chose an airplane that wouldn't bankrupt the ground side.
educational?
as far as the air side is concerned will this buy allow for a balanced force that isn't biased? i don't know but it deserves as serious look.
SpudmanWP, are you claiming to be smarter than all of the people in the South Korean government that went to working on this purchase? What they did here was pretty clear and straight forward and here you are disagreeing with them on what is best for the South Korean armed forces. Do you really think you know better than they do considering all the information they had available to them?
ReplyDeleteWhere did I say that?
DeleteThere have been plenty of reports stating their preference for the F-35. I have also said in the past that this bid was Boeing's to lose, not LM's to win.
The clues were all right there if you look:
1. The already existing F-15K program ensures massive parts, engine, and training compatability.
2. SK reducing the requirements in order to get the F-15SE in the door.
3. Boeing is a lot more willing to offer tech transfer than LM as they have no market to lose while LM does not want to eat into F-35 Sales.
4. Boeing is able to offer a offer that consists of mostly DCS sales which will enable them the best chance to underbid the rest.
On a side note, I would not put it past the South Koreans to have used this whole process in order to get the F-15SE for cheaper than market rate.
Delete