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BAE Sues South Korea Over F-16 Upgrade Cancellation Fees
Nov. 13, 2014 - 05:56PM | By AARON MEHTA | Comments
WASHINGTON — South Korea is claiming BAE owes it $43 million in punitive costs over a recently canceled F-16 upgrade program — and BAE is taking the Asian country¡¯s military acquisition arm to court in order to block those charges.
At the core of the lawsuit is a disagreement about who is to blame for unexpected jumps in cost for the F-16 upgrade program.
Military officials in Korea have claimed the US government added about US $470 million and BAE Systems about $280 million in costs that were not part of the original agreement. South Korea¡¯s Defense Acquisition Program Administration (DAPA) is holding BAE responsible for those costs; BAE, in turn, argues that it had no say in those cost increases, instead putting the blame at the feet of the US government.
¡°DAPA is now impermissibly seeking to require [BAE] to pay $43,250,000 under the April 2014 Letter of Guarantee,¡± the lawsuit, filed Thursday by BAE¡¯s US arm in Maryland District Court, reads.
That $43 million is a fee that was built into the F-16 contract in case BAE broke its agreement. But BAE is arguing DAPA is punishing the company for not being able to convince the US government that the extra costs created by government requirements for more testing were unnecessary. In BAE¡¯s eyes, that simply isn¡¯t fair.
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BAE Systems claims South Korea¡¯s military purchasing agency is shaking the company down for $43 million following a canceled deal to upgrade the nation¡¯s fleet of
Lockheed Martin F-16 fighters and has filed suit in US district court to avoid payment.
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BAE claims South Korea blames the company not for violation of the initial agreement, but on its ¡°inability to force the US government to withdraw its proposed price increases¡±.