South Korea plans to form an inter-agency team to handle the country's largest-ever acquisition project aimed at developing an indigenous fighter jet, officials here said Wednesday, which is already facing daunting challenges on the budget and technology transfer fronts.

Seoul's arms procurement agency is trying to speed up the 8.67 trillion won ($7.84 billion) project, more than 10 years behind schedule. On Tuesday, it selected Korea Aerospace Industries, the country's sole aircraft maker, as the preferred bidder.

Codenamed KF-X (Korean Fighter Experimental), the project calls for Seoul to develop its own fighter jet of the F-16 class to replace the aging fleet of F-4s and F-5s.

Some 120 jets are to be put into service starting around 2025, with the additional production cost estimated at 9.3 trillion won, according to the Defense Acquisition Program Administration.

"It is highly necessary to set up an around 70-member task force involving officials from the DAPA and relevant ministries, air force officers, and experts from home and abroad," a senior DAPA official said, requesting anonymity, stressing the need for a massive budget and transfer of cutting-edge technology. The team is tentatively named "Boramae (hawk) Task Force."

"We expect the task force to be launched in June after signing a final deal with the contractor that will oversee not only the whole development process but secure international cooperation," he added.

The DAPA aims to wrap up negotiations with KAI over price and technology-related issues by May for a final decision within the first half of this year. KAI joined the project in partnership with the U.S. defense firm Lockheed Martin, as the DAPA required bidders to have foreign technical assistance.

While the procurement agency is optimistic about securing "most of the key technologies," concerns have grown over whether the U.S.

will provide South Korea with sensitive and sophisticated technologies, partly because the aircraft will be developed jointly with Indonesia.

In September last year, South Korea signed an agreement with the U.S. to receive key fighter technologies from 17 sectors in return for buying 40 Lockheed Martin F-35 fighters. The approval process by the U.S. government is under way.

South Korea is seeking key technologies including how to integrate the aircraft system with equipment such as radar and radio frequency jammers, according to officials.

"It would be far from easy for the U.S. to make a decision on the issue, as its technology would also be transferred to the Islamic state," an industry source said. Jakarta agreed with Seoul to cover 20 percent of the development cost.

In case the U.S. "refuses to share part of the key technologies we want, we are reviewing alternatives including seeking separate contracts with foreign assistance firms other than Lockheed in third countries," another DAPA official said. "Seoul and Washington have been in close government-level consultations on the matter." (Yonhap)