A major multi-million deal to sell South Korea four Northrop Grumman RQ-4 Global Hawk UAVs has been placed on hold, possibly for another year. South Korea’s Yonhap News Agency filed a report stating that the deal will be delayed, and might even be cancelled, due to a disagreement over costs and delays in getting formal US government approval for the sale.
The Yonhap report indicates that South Korean leaders are dissatisfied with cost increases and now want to consider other options. Originally, the cited cost was approximately $379 million, but later cost estimates placed the price much closer to a total of $800 million. The price included replacement parts, ground systems, and other necessary equipment.
South Korean leaders recognize a critical need to equip their field commanders with an effective unmanned recon and surveillance vehicle, but budget restraints are a crucial factor in any decision on which vehicle to buy. The Yonhap report indicates that South Korea will be looking at alternatives including the AeroVironment Global Observer and Boeing’s Phantom Eye as part of a revised acquisition plan.
Although the South Korean deal may not become reality, Japan and Australia, among other Pacific nations, have expressed significant interest in procuring the Global Hawk. Northrop Grumman is also completing negotiations with NATO representatives to make the Global Hawk the featured UAV in NATO’s Ground Surveillance project.
As fiscal constraints become increasingly important in future defense expenditures, defense contractors worldwide need to seek out and lock up procurement deals on an expanded and extremely competitive international stage to increase profits.