Identifier
Created
Classification
Origin
06SEOUL865
2006-03-16 09:06:00
UNCLASSIFIED
Embassy Seoul
Cable title:  

ADVOCATING BOEING'S EX BID

Tags:  ETRD PREL PARM KS 
pdf how-to read a cable
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O 160906Z MAR 06
FM AMEMBASSY SEOUL
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6659
INFO RUEKJCS/SECDEF WASHINGTON DC//OSD/ISA/EAP// PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY 1387
UNCLAS SEOUL 000865 

SIPDIS

SIPDIS

DOC FOR BIS/DEFENSE PROGRAMS DIVISION DIRECTOR WILLIAM DENK

E.O. 12958: N/A
TAGS: ETRD PREL PARM KS
SUBJECT: ADVOCATING BOEING'S EX BID

UNCLAS SEOUL 000865

SIPDIS

SIPDIS

DOC FOR BIS/DEFENSE PROGRAMS DIVISION DIRECTOR WILLIAM DENK

E.O. 12958: N/A
TAGS: ETRD PREL PARM KS
SUBJECT: ADVOCATING BOEING'S EX BID


1. In light of recent developments in the EX (Airborne Early
Warning and Control Aircraft) program competition, this
message provides Embassy Seoul's assessment and suggestions
for the way forward.


2. Since Boeing received USG advocacy, Embassy Seoul has
consistently and strenuously advocated solely on behalf of
Boeing's EX program bid, emphasizing that Boeing provides the
requisite level of interoperability to meet the security
interests of both countries. Advocacy efforts and messages
have been closely coordinated with Boeing Korea. The
Ambassador has engaged relevant senior ROKG officials,
including the Defense and Foreign Ministers, at every
appropriate opportunity. At the working level, Embassy staff
from JUSMAG, Pol/Mil and FCS have pursued strong advocacy
with their respective counterparts. JUSMAG, in particular,
has used their contacts with the Defense Acquisition Program
Administration (DAPA) to encourage the Korean military to
properly evaluate the competing bids for the EX program,
pointing out basic questions that DAPA should be asking all
bidders in order to achieve the best result from the bidding
process, especially in regard to the requisite export
licenses. At all times the Embassy message has been that the
EX competition should be transparent, fair and conducted in a
timely manner without further delay.


3. We also have emphasized that the USG is the only
organization that can issue export licenses for items
controlled by the U.S., that the license application process
is an unbiased process and must go through due process and
that the U.S. has never attempted to prevent an Israeli
company or any other consortium from selling its aircraft to
South Korea. We have noted that only the company receiving
the license is authorized to speak about their specific
license within the parameters of the instructions in the
actual export license. However, after DRS (U.S. company
participating in the Israeli Aircraft Industries (IAI)
consortia) recently obtained a DSP-5 unclassified marketing
license, the IAI representative in Korea has publicly claimed
that IAI now has all the requisite licenses as required by
the EX bid specifications. As far as post is aware, to-date
the only license DRS has been granted was the DSP-5

unclassified marketing license which makes the claims by the

SIPDIS
IAI Korean representative inaccurate. The repeated news
articles about the IAI claims have caused Boeing to be
concerned about losing ground in the bidding process.


4. DAPA appears to be gaining an understanding of what a
DSP-5 marketing license is and the kind of questions they
should be asking both IAI and Boeing in the evaluation
process for the respective project bids. However, at this
point they do not know precisely what the DSP-5 license
covers in relation to the EX program specifications. Many of
our contacts in DAPA, Ministry of National Defense (MND),and
the ROK Air Force (ROKAF) have indicated that the Korean
government is displeased by the IAI news claims and that they
believe that Boeing is currently in a strong bidding position
in terms of export licenses.


5. Embassy Seoul will be continuing strong advocacy with key
ROK officials at every appropriate opportunity. However, at
this time, we do not believe that public comments or advocacy
in the media would be beneficial. We will focus our efforts
on DAPA, which is the primary decision making authority on
the EX bid, to make sure the agency has the information to
determine whether the IAI bid has the capability to meet the
tender specifications and program requirements. The EX
program bids do not close until the end of April. Although
Boeing currently appears to have the upper hand, if DRS
receives further licenses, as required by the bid
specifications, we would reexamine the Embassy advocacy
position and adjust our strategy accordingly.


6. We plan to continue to use the following talking points
in advocating Boeing's bid. We would appreciate any guidance
on responding to IAI's claims regarding export licenses.

SOLE ADVOCACY
--------------

-- At this time, the US government solely endorses the Korean
acquisition of the Boeing 737 Airborne Early Warning and
Control Aircraft, which provides the requisite level of
interoperability to meet the security interests of both
countries.

-- Te Boeing 737 option ensures interoperability with
Korea's newly purchased F-15Ks, upgraded KF-16s, and
potentially with other future aerospace
developments/procurements.

-- The USG stands by sole advocacy on behalf of Boeing.

BID EVALUATION PROCEDURES
--------------

-- The USG promotes the transparent, fair, competitive and
timely evaluation of the EX program bids which will also
serve to build confidence in the new DAPA organization's
capabilities and meet the requirements of the ROK
government's procurement reform.

-- The USG does not support any further postponement of the
EX program past June 2006. The EX procurement has already
been delayed in December 2001, January 2005 and December

2005.

USG EXPORT LICENSE
--------------

-- The requirement to obtain USG export licenses for
sensitive U.S. origin equipment is known by all defense
contractors. Obtaining export licenses early on in a
competition is critical in order to provide technical
information required to meet the proposed solution.

-- The export license application system is an unbiased and
clearly defined process. All applications, regardless of
origin, go through due process and receive careful
consideration. The U.S. has never attempted to use the
export licensing process to prevent a company of any
nationality, including Israel, from selling its aircraft to
South Korea.

-- The USG does not comment on export licenses for a
particular company. Export licenses are proprietary to the
applicants who request them.

-- As part of the licensing process, the USG requires a
signed contract before an export license will be issued. The
approval of a marketing license is a good sign that a project
will ultimately be approved, however, it is not an approval
for the final export of an item. A decision on final export
approval will be made once the application has been
submitted. If the sale is over a certain dollar value, it
will also require Congressional notification.
VERSHBOW