[Yang Nak-gyu's Defence Club] Will Lockheed Martin's F-35, Which Betrayed Us, Be Purchased Additionaly?

[Image source=Yonhap News]

[Asia Economy Yang Nak-gyu, Military Specialist Reporter] Concerns are rising that the U.S. defense contractor Lockheed Martin might once again betray South Korea as the project to procure an additional 20 advanced stealth fighter jets F-35A is being promoted. This is because suspicions persist that during the first procurement phase, Lockheed Martin unilaterally terminated the contract despite agreeing to support the development of military communication satellites.

On the 9th of last month, the Defense Acquisition Program Administration Committee (DAPAC) Defense Project Planning and Management Subcommittee reviewed and approved the basic strategy plan for the F-X (next-generation fighter) second phase project. Once the basic strategy plan is finalized by DAPAC this month, approximately KRW 3.9 trillion will be invested from 2023 through the mid-to-late 2020s to procure about 20 F-35A aircraft.

However, both inside and outside the military, there are concerns that, as in the first phase, the South Korean government will fail to secure leadership while purchasing expensive fighter jets and end up being betrayed by the U.S.

The Ministry of National Defense selected the U.S. F-35A fighter jet for the first phase of the next-generation fighter (F-X) project. As part of the offset trade (where the exporter provides benefits such as technology transfer to the importer), the Ministry agreed to receive support from Lockheed Martin for the development of five military communication satellites.

According to the contract, Lockheed Martin was supposed to support South Korea’s satellite launch project by providing about KRW 400 billion to Airbus, which is developing the launch vehicle. However, Lockheed Martin unilaterally notified the suspension of the project, claiming it could not bear the satellite project costs alone, and the related project was eventually halted in August 2015.

There are suspicions that at that time, the Defense Acquisition Program Administration decided to relaunch the military communication satellite project, which was on the verge of suspension, and signed a third amended Memorandum of Agreement (MOA) with Lockheed Martin. The problem lies in the contents of the MOA. It is known that the MOA waived a delay penalty of KRW 30 billion for non-fulfillment of offset trade and stipulated that the price reduction of the F-35 airframe, decided in 2020, would be used to cover the communication satellite production costs. Ultimately, this means that not only was the delay penalty waived in violation of regulations, but the military communication satellites, which should have been received free of charge, were effectively purchased at a cost.

A government official pointed out, "The Defense Acquisition Program Administration’s waiver of the delay penalty amounting to KRW 30 billion is a clear violation of regulations," and added, "The settlement price resulting from the F-35 airframe price reduction should be fully credited to the state."