South Korea was pushing to change the contractor for its project to upgrade its aging fleet of F-16 fighters from BAE Systems to Lockheed Martin after rows over a cost hike, military sources here said Thursday. 

South Korea's Defense Acquisition Program Administration (DAPA) and the U.S. defense ministry agreed to have BAE Systems upgrade 134 aircraft of the KF-16 variants C and D Block 52 to improve their electronic warfare capabilities. 

The Seoul government, however, has halted the contract with the British company, after the U.S. asked for a maximum of 500 billion won (US$471.88 million) more and BAE Systems for an additional 300 billion won, which South Korea views as excessive.

Seoul earmarked 1.75 trillion won for the project, which includes upgrading the avionics system, communications display and cockpit interface, and the contractor's support for logistics and training.     

"The DAPA is scheduled to decide whether to choose a different contractor during the defense project committee meeting next week," said a military source, requesting anonymity.

"It has been pushing to cancel its contract with BAE Systems and to pick up the new one, which would be Lockheed Martin," he added. Lockheed Martin, the F-16's manufacturer, lost to BAE in its bid for the project back in 2012.

BAE executives have insisted that they were willing to perform the work under the terms of the firm, fixed-price contract initially proposed, claiming that their request for the cost increase was "inevitable" as the U.S. government asked for additional funds. (Yonhap)