Lockheed Martin was excluded because its bid did not meet the budget, 8.3 trillion won ($7.4 billion), but has not given up, saying it “has not to date received an official notification from the Republic of Korea regarding the results of the price bidding for the F-X Program. The F-X source selection process has multiple phases, and we will continue to work closely with the U.S. government as they offer the F-35 to [South] Korea.”
If the South Korean government does not overturn the DAPA decision outright, an alternative would be to relaunch the competition. However, the aircraft that F-X Phase 3 is intended to replace—F-4 Phantoms and F-5 Tigers, delivered in the 1970s—are obsolete and close to the end of their service lives.
The F-15SE will not go into production without the South Korean order.Compared to its immediate predecessor, Saudi Arabia's F-15SA, it differs mainly in that it incorporates a suite of features to reduce its radar cross section (RCS), the most important being conformal weapons bays, accommodating either four AIM-120 missiles or two AIM-120s and two 1,000-lb.-class bombs, that replace the F-15's normal conformal fuel tanks (CFT).
Without F-X Phase 3, F-15 production may end in 2019—and earlier for long-lead items—when the last of 84 new-build F-15SAs is due to be delivered. F-X Phase 3 would prolong production until 2021, 49 years after the type's first flight.
Boeing's fighter has had several advantages in the program. Already in South Korean service, it has probably been the cheapest contender—a key advantage, since South Korea's parliament has forbidden DAPA to consider above-budget bids. Last month, DAPA rejected all offers because they exceeded the budget and called for new proposals from the competing companies.
Lockheed Martin not only had to deal with the high cost of the F-35; it also had to offer the aircraft through the U.S. government's foreign military sales (FMS) process, which stipulates that the price cannot be less than the U.S. military pays. Boeing could and did choose to offer the F-15SE as a direct commercial sale, with only weapons and some equipment being supplied through FMS channels.
Another advantage for the F-15 is that Korea Aerospace Industries is already a major subcontractor on the F-15, so it was easier for Boeing to meet DAPA's requirements for local content.
The F-15 almost certainly offered the best weapons capacity and range performance of the three aircraft, because of its size and CFTs. The Typhoon was also politically disadvantaged against competitors from the U.S., which underwrites South Korean security.
If South Korea's government sustains DAPA's decision, it will validate a Boeing strategy that looked quixotic in March 2009, when the Silent Eagle concept was unveiled. At that time, the F-35A was expected to be operational with the U.S. Air Force by 2013, with the sixth low-rate initial production batch being delivered. Contemporary U.S. budget documents predicted a flyaway cost for the F-35A of $70-75 million in South Korea's delivery years. Accordingly, the F-35 appeared very hard to beat.