Boeing undercuts rivals in South Korea fighter contest: sources

Mon Aug 19, 2013 11:14am EDT
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By Joyce Lee

SEOUL (Reuters) - Boeing's (BA.N: Quote) bid in the 8.3 trillion won ($7.4 billion) tender to supply South Korea with 60 fighter aircraft was the only one below the price ceiling set by the country's arms procurement agency, sources close to the process said on Monday.

A final decision was not expected until mid-September, the sources said, but the price submitted by the U.S. company appears to be a significant step toward winning the contract.

Boeing is pitching the latest variant of its F-15 fighter, dubbed the F-15 Silent Eagle, against the Eurofighter consortium's Typhoon and Lockheed Martin's (LMT.N: Quote) F-35 stealth jet.

South Korea's Defense Acquisition Program Administration (DAPA), which led the assessment of the fighters, said on Friday that at least one bid, which it did not identify, came within its overall budget.

The decision on one of the world's most closely watched military tenders will be made by a committee chaired by South Korea's defense minister after DAPA submits its final evaluation of the three fighters next month.

DAPA will score the bids on a fixed set of criteria, although Korean law prevents the government from signing a contract that exceeds the allotted budget.

"We will conduct a comprehensive evaluation on all three models," DAPA spokesman Baek Youn-hyeong said. "But ... only parties with under-budget bids will be subject for final selection."

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The Boeing logo is seen at their headquarters in Chicago, April 24, 2013. REUTERS/Jim Young