{"id":59213,"date":"2014-10-20T19:55:20","date_gmt":"2014-10-20T19:55:20","guid":{"rendered":"https:\/\/one.sightlinemg.com\/defensenews\/uncategorized\/2014\/10\/20\/f-16-upgrade-problems-with-s-korea-bae-deal-could-open-door-to-lockheed\/"},"modified":"2026-08-08T00:18:50","modified_gmt":"2026-08-08T00:18:50","slug":"f-16-upgrade-problems-with-s-korea-bae-deal-could-open-door-to-lockheed","status":"publish","type":"post","link":"https:\/\/one.sightlinemg.com\/defensenews\/home\/2014\/10\/20\/f-16-upgrade-problems-with-s-korea-bae-deal-could-open-door-to-lockheed\/","title":{"rendered":"F-16 Upgrade: Problems With S. Korea-BAE Deal Could Open Door to Lockheed"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">source GAIA package: Sx_DefenseNews_M5201410310190013_6C2E.zip   Origin key: Sx_DefenseNews_M5201410310190013   imported at Tue Jan 12 14:58:58 2016  <p>South Korea is threatening to break an agreement with BAE Systems to upgrade its fleet of KF-16s, opening a window of opportunity for competitor Lockheed Martin to reclaim its dominance in the lucrative F-16 upgrade market.<\/p> <p>The Defense Acquisition Program Administration (DAPA) selected BAE Systems&#8217; North American subsidiary in December 2012 as prime integrator to take charge of software and hardware upgrades for 134 KF-16 aircraft. It represented the first time any company had beat Lockheed, the original producer of the F-16, for upgrades to the jet.<\/p> <p>Both BAE and Lockheed have built their upgrade packages around new avionics, including dueling sets of active electronically scanned array (AESA) radars. Lockheed&#8217;s package features Northrop Grumman&#8217;s scalable agile-beam radar, while BAE selected Raytheon&#8217;s advanced combat radar. BAE has estimated the worldwide F-16 upgrade market could be worth as much as $10 billion over the next decade, with an estimated 1,000 to 1,300 jets in play.<\/p> <p>Now BAE&#8217;s contract, which was signed under a foreign military sales deal, is in peril, something DAPA blames on both the US government and BAE Systems asking for additional funds for the work.<\/p> <p>&#8220;The US government asks for about $470 million, and BAE Systems wants about $280 million,&#8221; DAPA spokesman Baek Yoon-hyung said on Oct. 16, referring to costs beyond the $1.6 billion already paid. The US government cites &#8220;risk management&#8221; for the extra costs, Baek said, while BAE Systems calls for additional costs for a one-year delay in the project.<\/p> <p>&#8220;We&#8217;ve engaged in talks with the US side over the request of extra money since August,&#8221; he said. &#8220;We believe the US is asking too much.&#8221;<\/p> <p>If the two sides failed to bridge the differences, the deal could be nullified in the worst-case scenario, he said, adding the issue would be one of the agenda items for the upcoming South Korea-US security talks in Washington.<\/p> <p>BAE spokesman Neil Franz acknowledged that &#8220;disagreements have recently emerged between the US Air Force and the Republic of Korea about the overall price of the program,&#8221; but said the company was &#8220;hopeful that a resolution will soon be reached.&#8221;<\/p> <p>The US Air Force had no comment as of Oct. 17.<\/p> <h3>An Opening for Lockheed?<\/h3> <p>But while negotiations are ongoing, Lockheed Martin may already be moving aggressively to capitalize on what appears to be a major roadblock for BAE.<\/p> <p>One source with knowledge of discussions said Lockheed is pushing a proposal to include engineering experience for South Korea&#8217;s next-generation indigenous fighter to sweeten the pot.<\/p> <p>When the RoK agreed to procure 40 F-35A joint strike fighters from Lockheed in September, part of South Korea&#8217;s desired offsets package included significant man-years in engineering support for its future indigenous KF-X fighter development program. Under that plan, Korea will produce at least 120 twin-engine fighters by 2025 to replace its fleets of aging F-4s and F-5s.<\/p> <p>The RoK wanted around 800 man-years worth of support from Lockheed under that deal, the source said. Lockheed countered with around 300 man-years of support and threw in a new satellite as part of the offset package, due to concerns the company could invest heavily in the KF-X design only to lose all that information to a competitor if the Koreans select a different company to build the jet.<\/p> <p>South Korean officials accepted the satellite offer out of a desire to bolster its surveillance capabilities at a time of growing Chinese aggression in the region, but remained interested in more KF-X support.<\/p> <p>The source said Lockheed is now dangling another 400 man-years in support for KF-X if South Korea ditches BAE in favor of Lockheed for the F-16 upgrade package. That could well be enough of an incentive to get South Korean officials to abandon their contract with BAE.<\/p> <p>&#8220;My money is on Lockheed on this one,&#8221; the source added.<\/p> <p>A spokesman for Lockheed said the company would not &#8220;speculate on rumors or comment on hypotheticals,&#8221; but did not rule out a play for the contract.<\/p> <p>&#8220;What I can tell you is that Lockheed Martin values its relationships with its F-16 customers and stands ready to support their current and future needs,&#8221; the spokesman said. &#8220;We believe we are uniquely qualified as the original equipment manufacturer and design authority to provide best value to our F-16 operators around the world.&#8221;<\/p> <p>If BAE&#8217;s deal with South Korea falls apart, it would be a mirror-image of the situation in Taiwan.<\/p> <p>Officials in Taipei selected Lockheed&#8217;s offering for its F-16 upgrades as part of a joint program with the US Air Force known as the Combat Avionics Programmed Extension Suite (CAPES).<\/p> <p>However, the US canceled its portion of that program this spring, preferring to spend those funds on a service-life extension program instead, leading to frustrations with Taiwanese officials that costs may shoot up without American participation.<\/p> <p>BAE has been monitoring the situation, hoping Taiwan would abandon the CAPES program and launch a new competition. Instead, Taiwan appears to have been mollified by US promises to keep the upgrade program on track, and it is BAE which is suddenly at risk of losing a lucrative agreement.<\/p> <p>This should not influence Taiwan&#8217;s contract with Lockheed Martin to upgrade its 146 F-16 fighters, but could influence the decision whether Singapore and other potential customers of the F-16 upgrade market go with Lockheed or BAE.<\/p> <p>According to the DAPA, BAE began the first phase of KF-16 upgrades in June. A couple of KF-16 C\/D Block 52 jets have already been sent to a BAE factory in Fort Worth, Texas, to be equipped with an up-to-date mission computer, cockpit-display and other avionics systems.<\/p> <p>Phase 2 of the upgrades would involve the integration of the Raytheon AESA radars, ALR-69A all-digital radar warning receiver and weapon systems integration. \u25a0<\/p><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"640\" height=\"360\" src=\"\/wp-content\/uploads\/2026\/08\/default-defensenews.jpg.jpg\" alt=\"\" class=\"wp-image-26236\" srcset=\"https:\/\/one.sightlinemg.com\/wp-content\/uploads\/2026\/08\/default-defensenews.jpg.jpg 640w, https:\/\/one.sightlinemg.com\/wp-content\/uploads\/2026\/08\/default-defensenews.jpg.jpg?resize=300,169 300w\" sizes=\"auto, (max-width: 640px) 100vw, 640px\" \/><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>South Korea is threatening to break an agreement with BAE Systems to upgrade its fleet of KF-16s, opening a window of opportunity for competitor Lockheed Martin to reclaim its dominance in the lucrative F-16 upgrade market.<\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_yoast_wpseo_meta-robots-noindex":"","_yoast_wpseo_meta-robots-nofollow":"","_yoast_wpseo_canonical":"","_acf":"","_yoast_wpseo_primary_category":0,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","_smg_distribution_targets":[]},"categories":[33],"tags":[],"coauthors":[1929],"class_list":["post-59213","post","type-post","status-publish","format-standard","hentry","category-home"],"acf":{"subheadline":"","legacy_arc_id":"D5APYGDI5JADPMMRGCZB335GYU","arc_canonical_url":"\/\/2014\/10\/20\/f-16-upgrade-problems-with-s-korea-bae-deal-could-open-door-to-lockheed\/","remove_feature_photo":false,"is_sponsored":false,"subtype":"","redirect_url":"","disable_inline_ads":false,"native_logo_pretext":"Presented By:"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.0 (Yoast SEO v28.1) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>F-16 Upgrade: Problems With S. 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