F-16 Fighting Falcon News

December 1, 2013 (by Lieven Dewitte) - The U.S. Defense Department has approved a deal under which Britain's BAE Systems would upgrade 134 older KF-16s for South Korea, the Defense Security Cooperation Agency (DSCA) notified Congress on Monday.
In phase 1, the U.S. government and principal contractor BAE Systems will develop plans for upgrading the F-16 C- and D-models, build an avionics systems integration facility and testing stations, begin acquiring long-lead items needed to conduct the upgrades, and perform similar preparatory work. The DSCA values this package of products and services at $200 million.

BAE beat out F-16 maker Lockheed Martin Corp to win the South Korean competition in 2012.

In theory, this phase 1 would later be followed by a phase 2 in which the fighters' radar systems and avionics would be upgraded with more modern technology.

Combined with this second phase, the deal could be worth around $1.1 billion, according to Korean media reports.

DSCA said the sale would provide South Korea's air force with a detailed road map for improving the capabilities of its current fleet of F-16 fighter jets in order to better deter regional threats, strengthen its homeland defense and operate together with U.S. forces more effectively.

Historically, the companies that make warplanes have also serviced them and carried out major upgrades. Given the dearth of major new acquisition programs, weapons makers are fighting hard for all new orders, including deals for upgrades of existing systems.

The BAE deal potentially sets a precedent that opens the door to similar deals in a dozen other countries. Lockheed will have to fight harder for future contracts and it puts pressure on Lockheed's pricing.

South Korea announced last week that it planned to buy 40 of Lockheed's newest fighter, the F-35 Joint Strike Fighter, with initial deliveries to begin in 2018.