More on Boeing-S.Korea AWACS deal

, Korea on Wednesday signed a formal contract with Boeing of the United States valued at about $1.59 billion, the country's defense procurement agency said. 
 
On Nov. 8, Korea awarded its much-coveted surveillance aircraft project to Boeing after the two sides concluded price negotiations. 
 
“The contract was signed between the Defense Acquisition Program Agency (DAPA) and Boeing,” Song Ha-ki, chief of the international contract team at DAPA. But he refused to reveal the exact amount of money for the contract, saying it had exceeded DAPA's target price. 
 
According to defense officials, Boeing had initially asked for about $1.9 billion, but whittled down the price in a series of negotiations. They argued that the price is much lower than those of Turkey and Australia. 
 
The contract would enable Boeing to win the project, code-named E-X, which aims to provide four 737 AEW&C spy planes to Korea by 2012. Both sides refused to reveal the range of prices addressed in the negotiations. 
 
In August, Korea chose Boeing as the sole bidder for its project to procure early warning aircraft, dropping Israeli aircraft manufacturer IAI ELTA from the competition. 
 
But Korea declined to confirm whether Boeing was the winner of the project until they completed price negotiations for the contract. 
 
In September, Korea extended the deadline for price negotiations with Boeing for the purchase of surveillance aircraft until the end of November because of a wide difference in the range of prices. 
 
The surveillance plane project is aimed at strengthening the aerial surveillance capability of Korea. 
 
Korea plans to deploy the first surveillance plane in 2011 and the other three in 2012. The country now depends on U.S. radar aircraft based in Okinawa, Japan, as it has no aerial warning systems of its own. 
 
Korea gave IAI ELTA until the end of July to remove any restrictions on its U.S. export license, but it disqualified the Israeli company from the competition after the company failed to meet the deadline. 
 
But IAI ELTA said it has obtained U.S. approval for technical assistance related to surveillance plane exports, and it wants to be back in the competition for Korea's big-ticket project. 
 
In June, South Korea gave a green light to two surveillance plane models vying for the project, but asked the Israeli company to ensure it could obtain an export license on par with that of Boeing when it sets forth the terms of the contract, as well as accept a penalty clause if it fails to comply. Boeing had no conditions attached to the license. 
 
Earlier this year, IAI ELTA and its U.S. partner DRS submitted the export license to sell Datalink equipment, which can identify other aircraft, and the Satcom ground satellite communication system. They were to be installed in its G-550 model. 
 
But Boeing questioned whether the license is sufficiently exclusive, saying it does not cover all of the sensitive items made in the U.S. for exporting the Israeli model. 
 
Boeing's 737 airborne early warning and control system encompasses both the Boeing 737-700 aircraft platform and a variety of aircraft control and advanced radar systems, according to Boeing officials. 
 
Consisting of components created by Boeing and Northrop Grumman, the 737 model has an operational ceiling of 41,000 feet and a flight range that exceeds 3,500 nautical miles. 
 
In particular, its integrated identification friend or foe (IFF) function shares the primary radar arrays to reduce weight, improve reliability and simplify target correlation. It also has an advanced open-system architecture with standards-based design for cost-effective integration and add-on flexibility. 
 
Korea purchases most of its military weapons from the U.S., although their prices are comparatively high. But calls have risen among Korean officials to diversify the sources of their weapons depending on cost and other positive factors. 
 
In 2002, Seoul chose Boeing's F-15K as its next-generation fighter model in consideration of the long-standing military alliance with the U.S., giving a new lifeline to Boeing's then-sputtering F-15 production line in Missouri. The French-built fighter Rafale beat the F-15K by a narrow margin in the technical phase of evaluation. 
 
About 30,000 U.S. troops are currently stationed in Korea, a legacy of the 1950-53 Korean War.