2nd chance for Phalcon sale to S. Korea

The decision for the lucrative arms deal for four AWACS worth well over $1 billion originally was to have been made by December 31.

phalcon biz 88 298 (photo credit: )
phalcon biz 88 298
(photo credit: )
Facing heavy US pressure to choose an American system over a cheaper, yet sophisticated, Israeli one, South Korea said over the weekend it would delay its decision regarding the planned purchase of early warning aircraft until May. The decision for the lucrative arms deal for four airborne early warning and control systems (AWACS) worth well over $1 billion originally was to have been made by December 31. South Korean defense officials said the delay was due to a failure by the bidders to submit data on key technologies. The fierce competition pits a Phalcon radar from Israel Aircraft Industries' Elta subsidiary mounted on a General Dynamics Gulfstream G550 aircraft against Boeing's 737-700 equipped with Northrop Grumman's L-band radar. "We've decided to put off the selection as both bidders failed to submit details of key communication equipment of their systems," Col. Cha Jong-hwan at the South Korean defense ministry's weapons acquisition office told reporters in Seoul. Postponing the decision was seen favoring Elta since it gives its team an additional five months to secure US export the necessary license for communication codes. Elta and General Dynamic's Gulfstream Aerospace recently teamed up with US-based DRS Technologies, which will supply the communications suite in their offer. Over 50 percent of the IAI bid contains US content. DRS is working feverishly to get export licenses for five items of critical data links that allow the aircraft to exchange information on military tactics and situations with each other and ground stations. These also include the key IFF (identification Friend or Foe) codes. Elta officials were confident the required US export licenses would be secured for the DRS equipment. Spokesperson for Boeing reportedly rejected the notion the aerospace giant had failed to meet the deadline and said the company had submitted all required technological data by last September. "Boeing has met the requirement on time to obtain the US government export licenses for sensitive equipment of US origin based on the need to share technical details of our solutions with the customer and to assure South Korea of Washington's acceptance of our plans to provide certain equipment," Maggie Kymn, communications director of Boeing Korea, was quoted as saying in the Korea Times. Boeing, meanwhile, has enlisted the US ambassador to South Korea to pressure Seoul to purchase its system. It has has cited the need for purchasing US-made equipment so they could be interoperable with American forces stationed in the region. The US and its defense industries have had a long-standing hold over Seoul, but this is beginning to break. Earlier this month, a French-German consortium that manufactures the Eurocopter knocked US firms out of the bidding for a major Korean helicopter project. Numerous reports have appeared in the Korean press that the South Korean air force has tentatively selected the Elta Phalcon radar on the Gulfstream G550 since the ministry plans to choose the lowest bidder that meets the air force's operational requirements; Elta's proposal is reportedly asking $1.1b while Boeing's price tag is $1.5b. Elta's Phalcon system and its predecessor have over 10 years of experience: It already has been installed on a Boeing 707 in Chile and will be installed on a Russian Ilyushin-76 for India's Phalcon. The India Air Force agreed last year to purchase three systems to be installed on a Russian Il-76. IAI, however, lost a competition with Boeing to sell the system to Turkey and Australia. IAI also sold the system to China, but the US torpedoed that deal. The Israel Air Force chose it for its Gulfstream 550 long-range business jet configured with Elta's Phalcon system. Korea has already purchased a number of Israeli weapons systems including IAI's Harpy anti-radar suicide drones and the EHUD debriefing system for air combat training. South Korea has also purchased the Popeye-2 standoff missile and night vision systems. South Korea currently has no air surveillance system of its own and relies on US reconnaissance aircraft based in Okinawa, Japan.