Thu, Aug 18, 2011 - Page 1 News List

No delays on Patriot systems, defense contractor says

WAR GAMES:After the KMT blocked the budget for the missiles for three years, legislators were surprised to see how much the price had increased when it was released

By J. Michael Cole  /  Staff Reporter

A US-made Patriot surface-to-air missile is launched during a military exercise in Yilan County on July 20, 2006.

Photo: Reuters

A US defense contractor yesterday denied local reports that efforts by Taiwan to procure two additional PAC-3 air defense batteries were jeopardized by political bickering and a lack of funds.

The Chinese-language United Daily News on Monday wrote that since the US had agreed to sell two additional Patriot Advanced Capability-3 (PAC-3) systems in January last year, the military had had difficulty raising enough money to complete the deal, as the cost of acquisition allegedly exceeded the military’s budget by as much as 40 percent.

The report cited military sources as saying that the military had lobbied the Pentagon to lower the price for the two batteries on several occasions, but that little progress had been made, adding that the Ministry of National Defense would have to increase its budget for the acquisition and that delivery could be deferred.

US authorities have warned Taipei that if it failed to make any progress by the end of this year, the purchase price could be -invalidated and subsequent orders could be higher, the report said.

The two firing units are part of the US$6.4 billion arms package agreed by the administration of US President Barack Obama in January last year. In addition to fire units, one training unit and 114 PAC-3 missiles were included in the US$2.8 billion deal.

The two batteries are to complete a total of six PAC-3 defense systems sought by Taiwan following notification in October 2008 of four fire units and 330 PAC-3 missiles for US$3.1 billion.

At the heart of the alleged funding shortfall is the three-year boycott by the Chinese Nationalist Party (KMT) of the NT$120 billion (US$4.14 billion) budget for the missile defense program in the legislature from 2004 until 2007, the paper said. When the budget was finally released in 2007, Taiwan discovered that the unit cost for the PAC-3 system had gone up substantially. Legislators later claimed that cost overruns, estimated at US$800 million, were added to a draft of the letter of acceptance (LOA) for the 2008 deal, resulting in further delays.

Contacted for comment, an official at Raytheon, the US defense firm that manufactures the Patriot ground systems, said it was their understanding that the purchase of the two fire units was “on track.”

That position was echoed by a US-based source familiar with the situation, who told the Taipei Times last night that the program was in the final stages and on schedule to be signed this fall.

The ministry on Monday denied the reports and said it was proceeding with the purchase.

Raytheon and Lockheed Martin Corp, the maker of the “hit-to-kill” PAC-3 missile, are the two principal firms involved in the sale.

Taiwan is scheduled to field the first four PAC-3 batteries by 2014. Raytheon is also in the process of upgrading Taiwan’s three PAC-2 missile batteries, acquired in the 1990s, to PAC-3 configuration.

The ministry was forced to deny similar rumors in May after KMT Legislator Lin Yu-fang (林郁方) claimed that budgetary issues could force delays to three major procurement programs — UH-60 Black Hawk helicopters, AH-64D Apache Longbow attack helicopters and the PAC-3 batteries.

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