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South Korea faces selection scrutiny

South Korea’s air force has tentatively selected the Gulfstream G550 with Israel Aircraft Industries’ (IAI) Elta Phalcon radar for its airborne early warning and control (AEW&C) requirement, on the condition that a US export licence can be secured for its DRS Technologies-supplied communications suite.

Seoul’s defence ministry has yet to approve the selection, however, and industry sources warn that the choice could be rejected if it is found that the decision resulted from an unfair competition between IAI and its US rival Boeing. South Korea’s Joint Chiefs of Staff could also block the conditional recommendation, along with several governmental layers and the findings of a potential audit, the sources add.

South Korea had planned to award a contract by year-end for four AEW&C aircraft, but this deadline is likely to slip as the US government will not be able to respond to DRS’s recently-submitted application for an export licence until at least early 2006.

Boeing and the US ambassador to South Korea are trying to persuade the defence ministry that the contest was unfair because Boeing already has all the required export approvals and provided full information on its product. The IAI solution was evaluated without technical information on its communications suite as the required export licence has not yet been secured, they add. Current lobbying efforts are believed to be seeking a delayed decision from Seoul until the proper export licence is secured for the DRS-sourced equipment. The Joint Chiefs of Staff are meanwhile also questioning whether the AEW&C contract can be awarded on a conditional basis.

The IAI solution has over 50% US content and is believed to be favoured by the South Korean air force because it is cheaper than Boeing’s 737-based offering, which includes Northrop Grumman’s Mesa radar. The Israeli company was previously teamed with L-3 Communications, but switched to DRS for the latest round of bidding after its earlier proposal failed a test and evaluation phase. L-3 sources say the company dropped out because it had difficulty in securing an export licence.

Boeing appeared poised to win the South Korean competition earlier this year after the IAI solution was eliminated, but Seoul determined that its acquisition guidelines mandated a restart of the contest rather than support a sole source award to Boeing.

BRENDAN SOBIE/SINGAPORE

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