- South Korea warned that it could cancel a planned $1B+ deal for BAE Systems (OTCPK:BAESY) to upgrade its F-16 fleet and may seek a different contractor if talks with the company do not proceed smoothly.
- The contract, which BAE Systems won in 2012, has run into trouble after the U.S. Air Force added on significant risk "reserves" to proposed costs.
- While BAE has been on cost and schedule for the initial $140M development contract of upgrades, the U.S. government has warned South Korea that the projected cost of 1.75T won ($1.7B) could rise by 800B won.
- The company has assured Seoul that it would cover any cost overruns on its part of the contract, and that the projected cost increase was based on false assumptions, Reuters reports.