VZCZCXYZ0000
OO RUEHWEB

DE RUEHUL #0865/01 0750906
ZNR UUUUU ZZH
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 
 
¶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