South Korean fighter pilots in training fly KF-16 aircraft in August during a session held in Pocheon, Gyeonggi province, South Korea. Photo by Yonhap

SEOUL, Sept. 8 (UPI) -- A South Korean defense plan to deploy KF-16 fighter jets by 2020 could be dropped because of a dispute over contractor fees with a British defense company.

Seoul's fleet of 134 KF-16 fighter jets was developed under a broad set of cooperation agreements with the United States, with $1.3 billion of a $1.9 billion-dollar South Korean budget allotted to contractor Lockheed Martin, South Korean newspaper Donga Ilbo reported.


South Korea had originally allocated around $1.7 billion toward the development of the air fleet, but an unforeseen hike in contractor fees from British firm BAE Systems has led to a series of lawsuits that have canceled much needed upgrades to the aircraft.

In 2012, South Korea's Defense Acquisition Program Agency selected BAE Systems to improve the mission computer on the KF-16, including the jet's Tactical Data Link and to enable compliance with the latest Identification of Friend or Foe System. The United States recently upgraded the IFF designation to Mode 5 from Mode 4, South Korean television network SBS reported.

But a series of legal battles surrounding the contract have proved to be stumbling blocks to upgrade plans. Seoul said the problems began when BAE Systems requested an additional $668.4 million in fees in 2014, citing escalating costs in development. Seoul refused to accept the additional costs and in a counter-lawsuit in 2015, DAPA filed suit against BAE Systems for refusing to complete the $1.7 billion KF-16 upgrade program, putting the project in limbo.

South Korean lawmaker and ruling party member Song Young-keun said Seoul plans to turn down BAE System's additional fee demands, because the collaboration with the firm has brought no benefits to South Korean taxpayers.

The KF-16 fighter jets currently do not have the upgrades that IFF systems could use within a range between 60 to 120 miles or greater, in order to classify the aircraft as "friend."