Successful ‘Wildcat' Bid in South Korea and Its Implications for the European Defense Industry

South Korea's Defense Acquisition Program Administration (DAPA) officials at the Paris Air Show. Image: The Republic of Korea Defense Acquisition Program Administration (DAPA) South Korea has one of the largest markets for conventional weapons in the world. Since the end of the Korean War in 1953, however, the United States has remained the predominant beneficiary in this market due to the South Korean familiarity with the U.S. weaponry, concern for force interoperability, and close ties between Seoul and Washington.[i] As a result, European successes in the South Korean market have been few and far in between. There have been only a few notable successes in the European defense industry: the SAM-X project that purchased retired Bundeswehr’s MIM-104C patriot PAC-2[ii], K-2 Black Panther Tank “power pack” consisting of engine and transmission, Korea Aerospace Industries (KAI)’s Surion (transport utility helicopter) research and development contract with Eurocopter, and MBDA Missile System’s Mistral missiles in recent years.


These successes were possible amid the American domination of the South Korean market because of more competitive prices, higher quality, and better technology transfer packages offered by European companies than those presented by their American counterparts. For example, during the SAM-X project, Bundeswehr’s Patriot PAC-2 had a definite competitive price since it was scheduled to be retired, while Eurocopter was selected as a partner because they offered a better technology transfer package. Yet, American products continued to dominate the market largely due to the close U.S.-South Korea alliance.

Under such circumstances, it came as a surprise when the South Korean Defense Acquisition Program Administration (DAPA) announced on 15 January 2013 that it had decided to choose the AgustaWestland AW-159 Wildcat helicopter as their new maritime operation helicopter.[iii] The decision was intriguing because the Seahawk helicopter, created by American company Sikorsky Aircraft Corp., was regarded as the better choice during the initial DAPA evaluation of source selection.[iv] In light of these new developments in the South Korean defense procurement market, this article will explain why Seoul chose the Wildcat helicopter, examine the implications of this decision, and conclude by discussing how the European defense industry could become more successful in a profitable South Korean market.

South Korea’s SH-X New Maritime Operation Helicopter Acquisition Project

After the sinking of the Ch‘ŏnan battleship on 26 March 2010, an incident believed to have been caused by a North Korean submarine torpedo attack, the South Korean Navy requested the Joint Chiefs of Staff in April to purchase new anti-submarine helicopters to strengthen its maritime defense against infiltration by North Korean submarines.[v] The South Korean Defense Acquisition Program Administration (DAPA) decided to pursue a foreign procurement in August 2011 after consulting the national defense acquisition program committee. The AgustaWestland AW-159 Wildcat helicopter and the Sikorsky SH-60 Seahawk helicopter were proposed to DAPA. During the DAPA evaluation of source selection in December 2012, the Seahawk helicopter had a better rating due to the generating power and armament capability of its engine, which enabled the Seahawk to carry out anti-submarine and anti-ship missions at the same time.[vi] Therefore, it was widely believed that the Seahawk would be chosen.

However, it was declared in January 2013 that the Wildcat helicopter was the preferred bidder. South Korea would purchase eight helicopters (worth $567 million) to be installed on 2300t new indigenous Guided-Missile Frigates in order to tighten surveillance on North Korean submarines. A DAPA spokesman explained to reporters at a briefing[vii] that they evaluated the proposals on four standards: expense, capability, operation suitability, and contract conditions. It turned out that except for capability, the Wildcat’s proposal was superior to that of the Seahawk helicopter.

A Change of Mind

The obvious reasons for the Wildcat’s success were its lower price and better contract conditions. However, a more careful examination of the South Korean defense market and its previous relations with the U.S. government reveals that there are additional, underlying reasons to this change of mind. The Seahawk was proposed under the Foreign Military Sales program (FMS), which typically enables the U.S. government to procure defense articles and services on behalf of certain countries approved to participate in this program. These countries pay with their own national funds or with funds provided through the U.S. government-sponsored assistance programs.[viii] Nevertheless, FMS became an unattractive option to the South Korean government; it could not negotiate the price and technology transfer package directly with those in the industry because the U.S. government was the broker. Compared to direct commercial sales, this was an obvious disadvantage in price and contract conditions.

Moreover, the U.S. government has been anxious. It believes that once South Korea develops new weaponry after the certain technology transfer, it will lose the precious market and face a new competitor in the international defense procure market. In fact, the United States and South Korea have had a history of problems with military technology transfer and leak of military technology. Last year, there was a strong accusation from the United States that the South Korean Air Force illegitimately dismantled F-15K’s Tiger Eye sensor. South Korea insisted that it was opened for the maintenance, but U.S. inspectors from the Central Intelligence Agency (CIA) and related industry experts suggested that South Korea tried to reverse-engineer the Tiger Eye sensor to improve KF-16’s Low Altitude Navigation and Targeting Infrared for Night (LANTIRN)[ix] and eventually install LANTIRN technology to the newly developing indigenous low-to-mid air fighters. It was also reported that the U.S. government was suspicious that sixteen newly developed South Korean indigenous weaponries were reverse-engineered with stolen U.S. military technology. After this event, U.S. FMS, which was causing the South Korean government to pay top money with poor technology transfer package and maintenance support, has become a target to avoid among the South Korean public and defense community.[x]

As a result, there have recently been visible changes in the South Korean defense procurement market. South Korea is giving a warning to the United States, a country that has been negligent about maintenance support and has remained stubborn on the issues of technology transfer and price negotiation. Although the U.S. Department of Defense (DOD) notified Congress of its plan to sell four Global Hawks to South Korea on 24 December 2012, the South Korean DAPA announced that they were going to switch to an open-bid contest instead of accepting the U.S. DOD's Global Hawk Block 30 FMS offer.[xi] On 16 January 2013, the Wildcat helicopter was selected despite the fact that the Seahawk had better marks during the initial DAPA evaluation of source selection. To those in the European defense industry, however, this change of mood presents a wonderful opportunity. Unlike their American counterparts, European defense commodities are generally more lenient on technology transfer and more reasonably priced. What should the European defense industry do, then, to maximize potential benefits presented by such opportunity?

Opportunities for the European Defense Industry

According to the Stockholm International Peace Research Institute Fact Sheet titled “Trends In International Arms Transfer,” South Korea ranked second in conventional arms imports between 2006 and 2010.[xii] In the first half of 2013 alone, there will be open bidding contests of F-X project (the New Generation Air Fighter; the Boeing F-15SE, the Lockheed Martin F-35, and the EADS Eurofigher Typhoon), and the Joint Air-to-Surface Standoff Missile project (Lockheed Martine AGM- 158 and TAURUS KEPD-350).[xiii] This suggests that South Korea’s defense market will continue to be attractive and lucrative.

As mentioned before, the U.S. defense industry has had definite advantages in the South Korean defense market due to South Korea’s familiarity with U.S. weaponry and good human network connecting the two countries.[xiv] Moreover, as Morri Leland of Lockheed Martine commented in an interview with the Korean media, American products tend to have obvious advantage because of their interoperability.[xv] Luckily for AgustaWestland AW-159 Wildcat helicopter, however, the South Korean Navy has used Westland Lynx helicopters before and was familiar with the company’s weapon system. Yet, for the upcoming F-X project, Boeing F-15SE and Lockheed Martin F-35 will enjoy the usual advantages of interoperability and familiarity because the South Korean Air Force has previously adopted only the U.S. air fighters in their ranks and will be able to use their retained weapons system and operational experiences for the new U.S. air fighters.

Unfortunately, problems with interoperability and amassed operation experience cannot be resolved quickly. Furthermore, since the United States and South Korea regularly conduct joint military exercises such as Key Resolve and Ulchi-Freedom Guardian, it is highly unlikely that the United States will lose the force interoperability advantage.

Therefore, the European defense industry should draw a bigger picture and cooperate with their governments to enhance military ties with South Korea. For example, Israel and Turkey—the countries that became potent suppliers of military equipment to South Korea—have been conducting regular military exchanges[xvi] to facilitate cooperation. These exchanges helped Israel and Turkey to extend their human networks within South Korea and introduce their weaponries to the profitable South Korean market. In fact, South Korea and Israel signed the Memorandum of Understanding (MOU) on Cooperation in Logistics and the Defense Industry on 27 August 1995, under which both countries agreed to establish a Korea-Israel Joint Defense Industry Cooperation Committee that would meet on a regular basis to exchange information about industrializing military technology.[xvii] As a result of this strengthened military exchange, Israel exported defense commodities worth approximately $187 million to South Korea between 2005 and 2010.[xviii] South Korea and Turkey also agreed on 26 May 2006 to hold regular military exchange meetings every year to enhance military exchanges and cooperation in the defense industry.[xix]

In addition to help establishing more close government-to-government ties, the European defense industry should take advantage of the United States’s weaknesses in technology transfer and maintenance packages. Lower prices will also remain an advantage for the European defense industry as long as the U.S. government sticks to FMS; this is compounded by the fact that South Koreans are now keen on compromise trades.[xx] Recently, Indonesia offered a CN-235 Transport Aircraft as a barter deal for a South Korean T-50 Advanced Trainer[xxi], and it has been suspected that South Korea wishes to purchase the Israeli Iron Domes a compromise trade for 1,300 ton mid-sized battleships.[xxii]

The European defense industry will be able to capture even more decisive opportunities once it is able to capitalize on the stubborn technology protectionism of the United States. The technology transfers to South Korea could possibly have a boomerang effect, since the European defense industries would then have a new competitor in the international defense procurement market. The South Korean Defense Agency for Technology and Quality (DTaQ) claimed in December 2012 that it predicts South Korea’s conventional arms exports, which have been growing rapidly in the last five years, to soon exceed a record $2.4 billion, the biggest sales in the country’s history.[xxiii] Nevertheless, it takes time to develop a sophisticated weapons system. South Korea still lacks technological competence in aviation, surveillance, and reconnaissance sectors, which are highly profitable in the defense industry. Moreover, the European defense industry has exhibited strong competitiveness in sales of many high-tech weapons that are battle-proven. It will thus take some time for South Korea to become Europe’s serious competitor in the global defense procurement market.

Furthermore, if European defense industries are able to gradually make inroads on U.S. defense industry’s market shares in Korea, South Korea will be a lucrative and attractive market for Europe in the long term. For example, once the Eurofighter becomes the preferred bidder for South Korea’s next generation air fighter project (F-X), South Korea will demand reasonable pricing, technology transfer, and maintenance support. Yet, air fighter business does not involve selling only fuselage; South Korea will also buy new software, armament, and expensive components for the maintenance. More importantly, European equipment will become a serious consideration for the South Korean Air Force, which has only used U.S. air fighters in their ranks. It is likely that South Korea will try to acquire technology that would be equipped in the newly developed indigenous air fighter (Korean Fighter eXperimental, KFX). Due to the severe initial investment, however, this new air fighter will not have the same strong edge in price in the defense procurement market as the T-50 advanced trainer did.[xxiv] Given these facts, it has been suspected that the European Aeronautic Defense and Space Company N.V. (EADS) has already suggested the licensed production of the Eurofighter and strong technological support for the KFX project from DAPA.[xxv]

In this regard, Israel’s success in the South Korean defense procurement market is again worth examining for those in the European defense industry. After Israel signed the Memorandum of Understanding on Cooperation in Logistics and the Defense Industry, it saw huge success in the South Korean reconnaissance equipment market. The United States was reluctant to provide reconnaissance technology, so South Korea chose Israel as an alternate supplier. After the U.S. joint developer of Arirang 1-ho Satellite, TRW Inc., declined to develop the Arirang 2-ho’s multi spectral camera lenses, Israel’s ELOP Ltd. was chosen as the joint developer and successfully launched the satellite in 2006. ELOP Ltd. was also selected as the supplier of EO-X project[xxvi], which purchased the reconnaissance pod for the KF-16s. South Korea also purchased the Israeli Aerospace Industry’s Searcher Mk II unmanned aerial vehicles.


The Korean Peninsula has been divided for more than half a century, and North Korea remains an immense threat to the security of the Korean Peninsula. In order to cope with the existing North Korean threat, South Koreans spend a significant portion of their national budget for defense procurement each year.

Additionally, South Korea is bordered by great powers like China, Russia, and Japan. Due to historical legacies, territorial disputes, and strong presence of nationalist sentiments in Northeast Asia, close cooperation among these countries have proven difficult. For example, South Korea is involved in a number of major territorial disputes: one with Japan over the Dokdo/Takeshima islands, and another with China over Ieodo/Suyan Rock. It thus comes as no surprise that South Korea finds it nearly impossible to trust other regional powers. Furthermore, as a country heavily dependent on trade, South Korea needs to secure Sea Line of Communication (SLOC) and is actively looking for ways to further modernize its military forces to match their economic prowess.

South Korea is an extremely attractive market for the European defense industry. As one can see from the success of the Wildcat helicopter, South Korea is no longer tolerating unilateral FMS deals with the United States. When European competitors are able to enhance existing military ties with Seoul and offer the Koreans reasonable deals and prices, better maintenance services, as well as sound technology transfer packages, South Korea will become an even more lucrative market for the European defense industry.

[i] Force interoperability is defined in ‘NATO Glossary of Terms and Definitions’ as the ability of the forces of two or more nations to train, exercise and operate effectively together in the execution of assigned missions and tasks.
[ii] The SAM-X project was intended to find a successor to the Nike-Hercules; however, due to financial concerns, the project was delayed until South Korea finally decided to purchase the retired German Patriot Missile in 2008.
[iii] Anthony Osborne, “AW159 Wildcat Trumps Seahawk In South Korean Competition,” Aviation Week, 16 January 2013,, (date accessed: 2 February 2013).
[iv] Source selection is a critical phase of the pre-award procurement process. This is the process of assessing whether the bidder’s weaponry specifications are capable of meeting the ROC set by the South Korean armed forces.
[v] Sung-ki Jung, “Navy looking for 20 new anti-sub helicopters by 2014,” The Korea Times, 25 October 2010.
[vi] Yong-wŏn Yu, “6000ŏk haesang chakchŏn helgi, mi sihokŭ yuryŏk,” The Chosun Ilbo, 2 January 2013.
[vii] Hee-jin Kim, “Defense agency goes with British-made helicopters,” Korea Joongang Daily, 16 January 2013.
[viii] United States of America Department of Defense, “The FMS Advantage: Frequently Asked Questions About Foreign Military Sales,” Internet,, (date accessed: 18 January 2013).
[ix] LANTIRN would allow the F-15Ks and KF-16s to fly at low altitudes, during the night, and below the weather in order to attack ground targets with a variety of precision guided and unguided weapons.
[x] Chong-dae Kim, Miguk Han’guk F-15K kisul yuch‘ul h‘yŏmŭi  kokangdo chosa,” Defence 21, 28 October 2011.
[xi]  “U.S. Drones Too Expensive for Korea,” The Chosun Ilbo, 26 December 2012.
[xii] Mark Bromley and others, “Trends in international arms transfers, 2011,” SIPRI Fact Sheet, (March 2012): 5.
[xiii] Nak-kyu Yang, “Han’gukkun mugi saŏp ‘miguk-ŭi asŏng’ munŏ jina,” Asia kyŏngje, 16 January 2013.
[xiv] Through effective human networking, they could easily access critical inside information, such as the ROC and initial procurement cost ceiling. Meanwhile, it could facilitate the contract negotiation process.
[xv] Chŏng-u Sun, “Han’guk haesang jakchŏn helgi-e MH60-R, hanbando haesang anbo-e chŏkgyŏk,” Asia News Agency, 20 October 2011.
[xvi] The agenda, such as exchange visits by military officers and cadets, and the cooperation of the defense industry, are normally discussed in the regular military exchange.
[xvii] “Chapter 7: Military Ties,” in Republic of Korea’s complicity in Israel’s occupation, colonialism, and apartheid, Palestine Peace Solidarity @ Seoul, S. Korea, (December 2011): 26.
[xviii]Han’guk-ui 3dae mugi suipguk Miguk-Togil-Isŭrael,” Yonhap News Agency, 4 July 2010.
[xix] Yŏng-min pak, “Han- t‘ŏk‘I kunsa kyoryu Chŏngnyehwa,” Kukpang Ilbo, 29 May 2006.
[xx] Compromise trade is the system that on the condition of purchasing military service or appliance, the importer asks for the technology transfer, part production, and export. South Korea has been keen on the aviation technology transfer for their KFX project.
[xxi] Sung-ki Jung, “Korea set to endure bad terms for T-50 export to Indonesia,” The Korea Times, 5 April 2011.
[xxii] Arie Egozi, “S. Korea eyes Iron Dome defence system,” Israel Defence, 10 August 2012.
[xxiii]Kanglyŏkhan han’guk mugi wilyŏk, i chŏngdorani,” Seoul kyŏngje, 21 October 2012.
[xxiv] Sung-ki Jung, “Indonesia To Buy 16 S. Korean T-50 Trainers,” Defense News, 26 May 2011, Korean-T-50-Trainers, (date accessed: 15 January 2013). The per-unit price of T-50 is about $25 million. The first success of T-50 came when Korea Aerospace Industries (KAI) signed a $400 million deal to sell 16 T-50 Golden Eagle supersonic trainer aircraft to Indonesia on 25 May 2012 but the deal obligates South Korea to buy Indonesian-built CN-235 transport airplanes.
[xxv] Pyŏng-chin Pak, “Eurofighter han’guk-seo saengsan kongsik chean,” Segye Ilbo, 20 August 2011.
[xxvi] T‘ae-chin Kim, “Kun EO-X saŏp  isŭrael ŏp ch‘e sŏnjŏng,” YTN, 13 February 2006.