SEOUL — Boeing is set to inch closer to clinching a multibillion-dollar deal to sell 60 F-15 Silent Eagle jets to South Korea, as its competitors have effectively been priced out of the contest.

Lockheed Martin and Eurofighter, which vied for the US $7.4 billion fighter contract, failed to submit proposals below the budget.

“The bottom line is that we can’t sign a final contract with any bidder offering a proposal over the budget,” Oh Tae-shik, head of the Defense Acquisition Program Administration’s (DAPA’s) program management bureau, said Aug. 28 in a meeting with local reporters.

“A bidder that offered a proposal under the budget is now only qualified for final evaluations,” Tae-shik said.

The DAPA will hold an executive committee presided over by Defense Minister Kim Kwan-jin in mid-September to pick a final bidder.

The US government failed to submit a proposal below the budget for the sale of 60 F-35 joint strike fighters built by Lockheed Martin.

The Eurofighter consortium’s Typhoon was once thought to be competitive in a contest with Boeing, but the DAPA announced later that the European company was also priced out. The consortium includes Alenia Aermacchi, BAE Systems and EADS.

“Reviewing EADS’ final proposal in a careful manner, we found that some terms and conditions agreed upon by both sides in previous negotiations were modified arbitrarily,” a DAPA spokesman said Aug. 18. “We can’t accept such a proposal breaching bilateral agreements.”

According to the spokesman, for example, Eurofighter promised that it would modify 15 of 60 Typhoon jets into twin-seat aircraft at the request of the DAPA. In the final proposal, however, the European firm changed the number of twin-seat modification work to only six, apparently in order to lower the total price under $7.4 billion.

EADS also changed conditions regarding the costs of weapons integration, the spokesman argued, without specifying what armament integration it was.

Eurofighter officials rebut DAPA claims.

“We have repeatedly explained to DAPA why there was no operational rationale to opt for the number of twin-seaters requested to Eurofighter,” said Christian Scherer, Eurofighter’s chief sales officer. “Thanks to the present state of the art of the Eurofighter simulators, the twin-seater need is minimal, if any, as already proven by the Eurofighter operating in air forces.”

“We do not see any promises made but only different scenarios with preferences, which have been discussed respectfully by the parties all along the negotiation process,” he added.

Despite Eurofighter’s appeal, DAPA has reconfirmed that the Typhoon is not qualified for final evaluations.

Meanwhile, Lockheed spokesman Eric Schnaible said “The situation is DAPA and DAPA Executive Committee’s concern and we’re not going to speculate or intervene in their sovereign decision-making process.”

If a final contract is signed with Boeing, this will be the aerospace giant’s third consecutive win for South Korea’s F-X fighter jet acquisition project. The F-X aims to acquire 120 new high-end warplanes to replace the older fleet of F-4s and F-5s flown by the Republic of Korea Air Force.

Boeing won the two previous F-X deals to supply the Air Force with 60 F-15Ks.

Howard Berry, Boeing’s campaign director for the Korea competition, remains confident that the Silent Eagle is the right choice for Korea in terms of performance and cost aspects.

“Silent Eagle builds on a continuous evolution of capability in the combat-proven F-15 family of aircraft and with a bundle of additional advancements that allows Boeing to offer a ‘2-aircraft-in-1-platform’s solution that brings an unprecedented balance of survivability and lethality,” he said.

But skepticism remains high here about the F-15SE’s performances since the aircraft is still in development.

“The F-15SE is not the best choice. There is not even a prototype of the aircraft,” Lee Hee-woo, head of a logistics support research institute at Chungnam National University. “Stealth functions are not featured only by painting the aircraft and fitting the jet with an internal weapons bay. It is much better to buy more F-15Ks, not the F-15SE, which critics call a paper aircraft.”

The DAPA has been criticized for its zigzag stance on the F-X requirements.

This third phase of F-X, in fact, was launched to procure the so-called fifth-generation stealth aircraft. To promote competition, however, DAPA eased the required operational capability, including the level of radar cross section. As a result, the Silent Eagle and the Typhoon were invited to the contest.

“The [competition] has lost its original purpose to buy stealth fighters,” said Shin In-kyun, head of the Korea Defense Network, a civic group for defense affairs. “It seems like a boxer in the ring was knocked out by his sparring partner.”

Han Sung-joo, a former commander of the Air Force Logistics Command, is worried F-15SEs would lose an air superiority battle against neighboring countries.

“Japan will introduce 42 F-35 stealth aircraft and is expected to get more up to 200 eventually. China’s J-20 stealth jet is likely to enter service by 2016,” the retired three-star general said. “Then why do we have to choose fighter aircraft falling behind those of the neighboring countries?”

DAPA’s stringent cost evaluation is also at the heart of debate here.

The aircraft acquisition cost only accounts for about 15 percent of the total evaluation. Mission capability takes up the largest portion with 35 percent, while compatibility accounts for nearly 18 percent, operational costs, 15 percent. The remainder is about technology transfer and offset programs.

DAPA had sought to increase the third F-X budget by 20 percent this year, but the budget authorities rejected the request, according to DAPA officials.

Critics say DAPA was easygoing about the budget issue. Rejected by the Finance Ministry, DAPA was upset and offered the 15-percent acquisition cost as an absolute condition to sway all other evaluation results.

“Certainly, it’s not reasonable that the whole evaluation is swayed by a 15-percent element,” said Kim Dae-young, a researcher at the Korea Defense & Security Forum, a Seoul-based private defense think tank. “In terms of regulations, there is no fault with the DAPA, but the acquisition process is too stringent to shop the best-performance product.”

Andrew Chuter in London and Aaron Mehta in Washington contributed to this report.

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