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South Korea Could Remove LIG Nex1 Contractor from Satellite Reconnaissance Project

The Korean Peninsula photographed from the International Space Station at night. Photograph courtesy of NASA.

South Korea’s Agency for Defense Development (ADD), an agency of the Defense Acquisition Program Administration (DAPA), has said that it does not rule out finding another contractor to lead the South Korean reconnaissance satellite programme after current contractor, LIG Nex1, is reported to want to lower the requirement standards for satellite imagery quality and quantity.

LIG Nex1 is currently in negotiations with ADD officials over “technology and other terms,” according to a report in South Korean news agency Yonhap.

LIG Nex1 was awarded the contract last month to build the satellite reconnaissance constellation – known as 425 Project –  that will consist of five satellites using a mix of electro-optical (EO) and synthetic aperture radar (SAR) sensors, and due to start operations in 2023. Yonhap reports, however, that ADD officials have intimated that there might be some flexibility in the programme schedule.

“DAPA and the ADD will try to put the military satellite in operation at an appropriate time,” said a DAPA official in a statement to Yonhap.

However, the negotiations between LIG Nex1 and ADD are such that DAPA has authorised ADD officials to launch negotiations with Korea Aerospace Industries (KAI), the previous runner-up to LIG Nex1 in the bid for contract lead on the 425 Project, perhaps to gain leverage over LIG Nex1 executives in the ongoing contract and requirements negotiations.

The 425 Project is said to be worth an estimated U.S.$880 million, and has been in the works for some time with the bidding process – which began in 2017 –  delayed by four years because of bureaucratic turf battles between the South Korean defence ministry, science ministry, and intelligence agencies over control of the system and requirements.

“The satellites, if developed, will be operated basically under the ministry’s responsibility for military purposes including the surveillance of core targets such as North Korea’s nuclear and missile programs,” a defence ministry official told South Korean press in 2017.

LIG Nex1 is a South Korean aerospace and defence company that specialises in defence electronics, sensors, missiles, and torpedoes, and was a wholly-owned subsidiary of the Lucky Goldstar (LG) Group until 2013 when a consortium led by STIC Investments, a South Korean private equity firm, purchased a 49% stake in the company thought to be worth about U.S.$395 million.

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