South Korea's reversal on stealthy F-15 dampens Boeing's hope of extending its fighter work
South Korea has injected uncertainty into an already chaotic combat aircraft market by reversing its own procurement authority's choice of the Silent Eagle for its 60-aircraft F-X Phase 3 project. The government says it preferred a â€śfifth-generationâ€ť fighter: the , which the Defense Acquisition Program Administration (DAPA) had rejected because it was too expensive (AW&ST Aug. 26, p. 18). Seoul still plans to select a new fighter within a year, for initial operational capability in 2017.
The flip-flop is good news for the F-35 program, which needs international orders to support its planned production ramp-up, and is bad news for's ambition to sustain F-15 production. But there may be a real competition ahead, since sees a new contest as a second chance for Typhoon, which DAPA had disqualified from F-X3. Moreover, the rejection of DAPA's decision raises questions about the agency's independence and authority, and hence, the integrity of South Korea's procurement process.
In the latest contest pitting the F-15SE against the F-35 and the, DAPA disqualified the Typhoon due to a bidding irregularity, and selected the F-15SE because it was the only remaining proposal to meet the budget of 8.3 trillion won ($7.7 billion) that had been agreed by the finance ministry. The decision was subject to approval by the cross-government Defense Acquisition Program Executive Committee (Dapec), which could accept or reject DAPA's recommendation, but not change it.
However, in announcing the Dapec decision, defense ministry spokesman Kim Min-seok all but confirmed an F-35 selection. â€śThere is a consensus that South Korea needs the fifth-generation fighter jet to deter the growing threat posed by North Korea,â€ť Yonhap news agency quoted him as saying.
The move followed an aggressive lobbying campaign that included an open letter to South Korean President Park Geun-Hye from all 15 living former air force chiefs. They invoked the specter of a right-wing resurgence in Japan, with its planned F-35 force, and the memory of Park's father, Park Chung-Hee, who made the country the world's third F-4 Phantom operator in 1969.
Unnamed acting air force officers were quoted in the press saying that, with the selection of the F-15, the program was â€śveering on to a wrong course, contrary to original aims,â€ť presumably the F-35. The retired leaders alleged in their letter to President Park that the air force's original stealth requirement was dropped in order to avoid a sole-source procurement.
So far, it is not known whether the cost ceiling will be raised or the requirement be rewritten to include mandatory radar cross-section specifications (as Canada's Department of National Defense attempted to do in 2010, to be overruled later). South Korea could also opt to buy fewer than the 60 aircraft to stay within budget. This month, the Netherlands did just that, opting to commit to F-35, but only purchasing 37 of the 85 F-35As planned when it signed on as a partner in 2002. Under pressure from the Dutch parliament, the government emphasized a need to stay within a tight â‚¬4.5 billion ($6.1 billion) budget set aside forreplacements.
If South Korea selects the F-35, it will be the third non-partner country, after Japan, to order the aircraft despite its still-uncertain cost and schedule. Israel, which was a target for the Silent Eagle, also chose the F-35 in 2011. F-35 Program Office Director Lt. Gen. Christopher Bogdan noted in Washington on Sept. 17 that â€śmore than 50 percentâ€ť of the planned production ramp-up between 2014-20 is accounted for by anticipated orders from non-U.S. customers.
Eurofighter executives say they will take part in a reopened competition despite the South Korean defense ministry's stated preference for a â€śfifth-generationâ€ť fighter. â€śWe welcome the decision to reconsider the F-X program,â€ť the company announced in a statement. â€śWe are convinced that Typhoon is the perfect answer to Korea's requirements.â€ť
Boeing states it is â€śdeeply disappointedâ€ť by the decision. â€śBoeing has rigorously followed the Defense Acquisition Program Administration's instructions throughout the entire process. We await details from DAPA on its basis for the delay while evaluating our next options.â€ť
A key decision for Boeing will be whether to continue funding development work on the F-15SE's new stealth features, including conformal weapon bays and the use of radar-absorbent materials. Other improvements to the F-15, including a redesigned cockpit, a new electronic warfare system and all-digital fly-by-wire flight controls, are already funded under the F-15SA program for Saudi Arabia.
Boeing is under contract to deliver 84 new-build F-15SAs. The manufacturing of them is set to be completed in 2018, with the last due for delivery in 2019. Long-lead items would be ordered about two years before aircraft delivery, so Boeing appears to have about three years in which to drum up new F-15 business before facing a decision on whether to underwrite work on the line, as the company did for years to keep theprogram alive.
Existing Typhoon contracts take production for the Eurofighter consortium through to late 2017.
The delay favors the F-35 by offering more time to reduce costs.'s losing F-X3 bid was based on low-rate initial production (LRIP) 5 pricing. By law, a U.S. company cannot offer defense hardware to a foreign country at a lower figure than offered to the . A one-year delay will allow Lockheed Martin to base its proposals on LRIP 6 and 7 pricing; the contract amount for the F-35A, without engines, is slated for the first time to be under $100 million in LRIP 7.
Brad Jones, who led Boeing's Silent Eagle effort in 2009, says the target cost for the modified F-15 was under $100 million; the company has not confirmed that they reached that target. The F-15SE proposal submitted to South Korea was a direct commercial sale, not limited by Pentagon pricing since the U.S. is not a current F-15 customer.
Another consideration in the competition is that, for the second time in 11 years, Seoul's fighter selection appears to have been predetermined, suggesting that bidders may be wasting money in competitions where they are stalking horses. After Boeing won the F-X Phase 1 competition for 40 fighters with the F-15K in 2002, losing contendersaid it would stay out of future South Korean fighter competitions.
Quite apart from the South Korean air force's preference for the F-35, the country is always under pressure to award major defense contracts to the U.S., whose armed forces guarantee its security. For the F-X Phase 2 requirement for 20 fighters, no competing manufacturers took the newly formed DAPA seriously when it called for alternatives to the F-15. Boeing was the only bidder and won a contract for 21 F-15Ks in 2008.
The defense ministry explains the overturning of the F-15 selection for F-X Phase 3 partly in terms of needing to counter threats from North Korean nuclear arms and â€śasymmetric weapons.â€ť But bellicose noise from the North is hardly new, and South Korean officials have previously said that the threat on the Korean peninsula was not a major issue in the requirement.
The ministry also cites advances in aeronautical technology. The biggest new regional threat has been China's J-20 stealth fighter prototypeâ€”but that was more than two years ago, during which time there was no move to halt the F-X Phase 3. A further difficulty for South Korea is that the F-4 Phantom and F-5 Tiger fighter aircraft that F-X Phase 3 is to replace have a diminished combat value. The replacements had been scheduled to arrive between 2017-21.
With Bill Sweetman in Washington.
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