DAPA fails to collect royalties for T-50 exports

State auditors have found that the state defense acquisition agency failed to receive large amounts of royalties due on a local firm’s exports of the domestically built T-50 trainer jets overseas.

According to the Board of Audit and Inspection, the Defense Acquisition Program Administration has yet to receive royalties ― estimated to be worth up to 6 billion won ($5.91 million) ― for the 16 T-50s that Korea Aerospace Industries, the country’s sole aircraft maker, exported to Indonesia.

DAPA receives royalties from private defense firms that use state defense technologies for commercial purposes including selling defense products abroad.

DAPA officials said it recently established a system to accurately charge those royalties on defense exports built with state technologies. They added that the DAPA was not sufficiently prepared to secure the royalties as it was the first time Korea had sold its aircraft to a foreign country.

KAI developed the T-50 with technological assistance from the U.S. defense giant Lockheed Martin. It has a top speed of Mach 1.5 and range of about 1,500 kilometers. In May 2011, KAI signed a $400 million contract with Indonesia to sell 16 T-50s.

State auditors also found that there was not much progress on DAPA’s campaign to decrease the number of soldiers working for it and, in turn, increase the number of civilian public servants. The campaign is aimed at increasing professionalism and efficiency in DAPA’s everyday operations.

In June 2012, DAPA established a plan to decrease the percentage of soldiers in the administration to 30 percent or less. But the DAPA did not establish detailed implementation plans and there have not been active consultations between the Defense Ministry and the DAPA, according to the state auditors.

By Song Sang-ho (sshluck@heraldcorp.com)