South Korean firm named sole bidder with Lockheed for big fighter jet deal

South Korea chose a state-run aircraft maker Monday as the sole preferred bidder for a contract to develop a midlevel fighter jet with the help of Lockheed Martin in the country’s biggest-ever weapons development project.

The deal worth $7.8 billion is only for system development and the production of prototype jets by 2025. South Korea eventually plans to introduce 120 such fighter jets to replace its aging fleets of F-4 and F-5 fighter jets, according to Seoul’s Defense Acquisition Program Administration.

The procurement agency said in a statement that Korea Aerospace Industries beat Korean Air Lines to become the preferred bidder. The statement said it will negotiate with the KAI about detailed terms for the contract with the hopes of launching the development in the first half of this year.

Lockheed Martin, which last year won a multibillion-dollar deal to provide 40 F-35A fighter jets to South Korea, is to provide technology transfer and other help for the jet development project, agency officials said. Lockheed Martin Aeronautics is based in Fort Worth.

South Korea has traditionally favored importing fighter jets and other weapons from the U.S., a key ally that stations about 28,500 troops in the South as deterrence against potential aggression from North Korea.

“South Korea needs 270 fresh aircraft, and building its own is more cost-effective than buying” from abroad, said Kim Jong Dae, a former South Korean defense official who publishes the Defense 21+ security monthly. “South Korea’s own fighters would play supporting roles to the elite fleet of 40 F-35s.”

Lockheed is also trying to sell South Korea a missile-defense system to protect against the threat of North Korean nuclear attack. A group of ruling party lawmakers currently is pushing President Park Geun Hye to buy the system from Lockheed.

The Korean Peninsula remains in a technical state of war because the 1950-53 Korean War ended with an armistice, not a peace treaty.

This article includes material from The Associated Press and Bloomberg News.

This story was originally published March 31, 2015 at 11:43 AM with the headline "South Korean firm named sole bidder with Lockheed for big fighter jet deal."