South Korean Arms Agency Countersues Raytheon, BAE Systems For KF-16 Deal Failure

The Korean arms procurement agency has filed a counter suit against US defense contractor Raytheon and the UK's BAE Systems demanding to pay $60 million for their failure to implement a KF-16 upgrade deal.

The Defense Acquisition Program Administration (DAPA) was quoted as saying by Korean Times today that the lawsuit was filed with Seoul Central District Court last month to ask BAE pay $43.25 million and Raytheon $17.99 million.

"We took action in accordance with the contract, which stipulates that if the companies do not implement plans as agreed then DAPA takes a legal action," said an official on the condition of anonymity.

The action came after BAE filed a lawsuit in a US court in November last year to block DAPA's demand that the London-headquartered company cover the costs from a cancelled contract for KF-16 upgrades.

The company at the time stated that it does not owe any money in connection with the upgrade program because as it was unable to force the US government to withdraw its proposed price increase.

At the center of contention is a $1.6 billion deal BAE signed two years ago to upgrade the South Korean Air Force's 134 KF-16s.

Under the deal, BAE was supposed to upgrade the avionics system, communications display and cockpit interface, while Raytheon was to provide active electronically scanned array radar for the fleet.

At the time, the US government agreed to provide a foreign military sale (FMS) guarantee. However, the project was cancelled after DAPA requested to pay an additional $70 million to the US government and BAE.

BAE stated that the demand for the price increase was unilaterally decided by the US government, so it is not responsible.