Posted on 08/04/2006 10:58:13 AM PDT by sukhoi-30mki
IAI loses $1.5b South Korea AWACS tender
IAI unit Elta Systems was disqualified because it lacked US export licenses for key systems.
Ron Paz 3 Aug 06 17:27
Israel Aircraft Industries Ltd. (IAI) and its Elta Systems Group subsidiary have suffered a heavy blow. The South Korean Ministry of Defense has disqualified Elta’s proposal to supply four AWACS plans, worth $1.5 billion. The decision leaves Boeing (NYSE:BA) as the sole proposal in the tender, and brings to an end the year-long prestigious head-to-head confrontation.
The decision was taken during a meeting of the South Korean Defense Acquisition Program Administration (DAPA) supreme decision-making, chaired by Minister of Defense Yoon Kwang-ung. The discussions have been dogged by heavy lobbying by the parties in the tender, who hired lobbyists and invested heavily in efforts to win the tender.
A DAPA spokesman said the official selection would be announced in September, but Elta’s disqualification leaves Boeing the winner. The spokesman said Elta had a number of opportunities to submit export licenses from US for key items, but failed to do so. Boeing reportedly is asking $1.7 billion for supplying four AWACS planes based on the Boeing 737.
Elta was offering an AWACS system on the Gulfstream 550 executive jet platform. Elta’s main advantage was in its price, which was substantially less than Boeing’s offer. Elta also had the support of the South Korean government and President Roh Moo Hyun, who has been trying for several years to reduce South Korea’s dependence on US defense products. On the other hand, the US has strong political influence over its South Korean ally, and 37,000 US troops are stationed there.
The US export licenses, the lack of which were the cause of Elta’s disqualification, were essential for parts of the AWACS system developed in cooperation with the US government. These systems included data links for automatic exchange with other aircraft and satellite communications (satcom) ground stations.
The South Korean media has depicted Israel in poor light in the war in the north and Lebanon, and public opinion did not help Elta in the AWACS tender.
Elta declined to comment on the report.
Last update - 10:10 08/12/2005
U.S. looking to thwart $1 billion Israel-South Korea arms deal
By Yossi Melman, Haaretz Correspondent
The United States is trying to stop an $1 billion-plus arms deal between Israel and South Korea.
Israel Aircraft Industries (IAI) and Elta have proposed selling the Koreans four early-warning aircraft (EWA) for $1.25 billion. In efforts to thwart the deal, the Americans have argued that part of the system includes U.S.-made parts, which require an export license.
Washington is applying great pressure on South Korea to give the tender to the American firm Boeing, even though the Israeli offer is far less expensive. The South Korean Defense Ministry is expected to make a decision early next week, although it might be delayed due to American pressure. Sources in South Korea's Defense Ministry and local media say the government is leaning toward the Israeli bid due to its quality and attractive price. Boeing's initial offer was over $2.1 billion, and it lowered the amount by $500 million, still $400 million more than the Israeli bid.
The United States have argued that the country is South Korea's most important ally, many American soldiers were killed at war on its behalf 50 years ago, and thousands of soldiers are currently serving on Korean land, protecting its sovereignty and independence from North Korea.
After failing to win over Seoul with these arguments, the Americans said the Israeli EWA system consists of American-made parts, for which Israel would have to obtain a U.S. export license. They said the Pentagon and Department of Commerce would hinder such a request. As a result, the Koreans are hesitating to purchase the aircraft from Israel.
IAI has made it clear to South Korea that it is in the process of obtaining the American license, but that it would take some time. South Korea, which has already postponed the project several times for internal reasons, is not keen over another delay, since it would disrupt defense and equipment stocking plans. However, it appears that South Korea will give Israel a few-week extension to obtain the permits.
The early warning, radar and control system, produced by IAI's Elta Systems Group with the help of several American sub-contractors, already has been installed on an American Gulfstream 550 and fitted on a Russian Ilyushin. The system is more advanced than the Phalcon early-warning system, and has been chosen by the Israeli Air Force and India.
Defense establishment sources expressed concern over increasing American involvement in Israel's defense export policy. They cited several occasions in recent years in which the administration foiled, postponed or tried to obstruct Israeli arms export deals including the Phalcon deal with China, the Harpy assault UAV deal with China, arms sales to India, and defense and arms sales to Venezuela.IAI management refused to comment.
IAI, at this point, is probably *never* going to get that license thanks to their unauthorized tech transfers to China.
IAI made severe blunders with unauthorized high technology transfers to China.
Well, try to remember that Israel wasn't in any condition to help out with the Korean War in 1950. Israel didn't exist until 1948, and she was surrounded by enemies and the Mediteranian Sea on all sides. Plus, don't forget the talk from those enemies, which eventually led to the "Six Day War," in 1956.
Mark
Israel is not "reselling" American technology (well atleast not in this case).The PHALCON is an Israeli system which has a number of American sub-systems.Which is the case with many weapon systems now.
About taking bids with from everyone,well the best way to get a good bargain is to promote competition even if it is skewed in nature.
Whatever. The US gave 50 thousand men and billions to prop up SK. The idea that they would bid anything outside of a US supplier should mark our move of SK-stationed troops to Guam immediately.
The six day war was in 1967.56 was the Suez crisis.
The Six Day War was in June 1967.
The Suez War was in 1956, and was hardly comparable
as far as Israels participation was concerned.
As for the tender, the fact that Boeing is $900M
more for a comparable system is a red flag for our
defense industries. Why is Boeing so non-competitive?
Could it be that IAI hustles and gives better on time
on budget performance?
If it takes manipulation of ITAR rules to keep Boeing
in the game, we really haven't won. Why are we overpaying
for our own needs (we should be asking).
Aren't the 30 thousand odd American troops due to move out of South Korea in a few years????
When the DPRK's magnanimously shoot over the DMZ, I heard that the SK's TREACHEROUSLY *FIRE BACK*...!
Can you believe that?
I love Israel, but GO BOEING!!!!
In any event, with the amount of US aid Israel gets, I'm not comfortable with them using their US-subsidized position to undercut US companies
Everything else aside... As long as US troops man the DMZ, S.Korea should only make defense purchases from US companies if they can't make it domesticaly.
Istael should sell weapons to friendly nations. I much preffer South Korea getting the Phalcon than, say, China.
Cry me a river.
If the US wants to give Israel acceptable guns, why should they waste their time making their own? Make something they need.
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