South Korea began the official process Wednesday of changing the contractor for its project to upgrade the country's aging fleet of F-16 fighter jets amid controversy over the contractor's demands for a higher price, Seoul's arms procurement agency said.
   
The Defense Acquisition Program Administration (DAPA) said it presented its plan to change the contractor from London-based BAE Systems to American defense firm Lockheed Martin at its monthly defense project committee meeting presided over by Defense Minister Han Min-koo.
  
Under the 1.75 trillion won (US$1.62 billion) contract, DAPA and the U.S. defense department agreed in July 2011 to have BAE Systems upgrade 134 KF-16 variants C and D Block 52 to improve their electronic warfare capabilities. 
   
Lockheed Martin, the F-16's manufacturer, lost to BAE in its bid for the project.
   
But the Seoul government halted the deal with the British company in October, after the U.S. asked for a maximum of 500 billion won more and BAE Systems for an additional 300 billion won, which South Korea views as excessive.
   
BAE Systems was awarded the contract via foreign military sales, known as FMS, which requires the U.S. government to run the procurement of a contract after negotiating an agreement with a foreign government.
   
"The final decision on the contractor change will be made after checking a letter of agreement from the U.S. expected to be delivered early next year," DAPA official Baek Yoon-hyung said.
   
BAE executives have insisted that they were willing to perform the work under the terms of the fixed-price contract initially proposed, claiming that their request for a higher price was "inevitable" as the U.S. government asked for additional funds. (Yonhap)