Price haggling around the upgrade of South Korea’s Lockheed Martin F-16 C/D fleet could have implications for other F-16 upgrade opportunities.

Numerous media reports have emerged stating that the US and South Korean governments are at loggerheads over the upgrade programme, which will see 134 aircraft receive new avionics and an active electronic scanned array (AESA) radar produce by Raytheon.

According a report by South Korean official news agency Yonhap, quoting a spokesman at South Korea’s Defense Programme Administration (DAPA), the US government wants an additional W500 billion ($473 million) and prime contractor BAE Systems W300 billion.

When contacted by Flightglobal, BAE said it has completed the first phase of the work related to the upgrade, and now awaits the intergovernmental discussions about phase two.

“We have made it clear throughout this process that we remain committed to the firm-fixed price contract for the overall scope of work defined by the U.S. government and the Republic of Korea last year,” says the company.

In a notification to congress in November 2013, the US Defense Security Cooperation Agency (DSCA) pegged the cost of the programme’s first phase at $200 million. Under this phase, the Arlington, Virginia-based BAE Systems Technology Solution & Services was to create a detailed plan with regards to the fleet’s avionics upgrade. The deal will be conducted under the auspices of the US Foreign Military Sales (FMS) programme.

The plan called for the exploration of details about computers, displays, sensors, weapons, software development, and a range of other elements involved in the upgrade. To assist with this phase, two South Korean F-16s – one single-seat C model and a twin-seat D model – were sent to a BAE Systems facility in Fort Worth, Texas during June.

Phase two of the upgrade, which appears to be the source of contention between the two governments, was to see BAE's upgrade programme implemented across the South Korean F-16 fleet, with upgrade kits developed by BAE in the United States. From 2017, either Samsung Techwin or Korea Aerospace Industries would apply the kits across the fleet.

Yonhap says that the South Korean government has a budget of W1.75 trillion for the entire programme.

BAE has made a great deal of its success in defeating Lockheed Martin to win the South Korean work. If the programme is derailed, as some media reports indicate, it will have implications for other F-16 upgrade programmes globally.

With Taiwan’s programme to upgrade 144 F-16s having gone to Lockheed Martin, perhaps the next biggest international upgrade opportunity for upgrading the venerable type is Singapore, which operates 60 F-16 C/Ds. Aside from stating that it wants to upgrade its F-16s, Singapore has been highly secretive about its plans, although it is certain to be monitoring how the upgrade programmes in Taiwan and South Korea progress.

Greece, Turkey, and Chile are other promising markets for F-16 upgrades.