KAI Recognized as the Industry's First 'Defense Industry Cost Integrity Estimation Company'

Separate Cost Verification Can Now Be Omitted

[Asia Economy Reporter Dongwoo Lee] Korea Aerospace Industries (KAI) announced on the 8th that it was recognized as a Defense Cost Integrity Estimation Company by the Defense Acquisition Program Administration (DAPA) on the 30th of last month, becoming the first in the defense industry to receive this recognition.

A Defense Cost Integrity Estimation Company is a concept equivalent to the taxpayer integrity estimation system under the Framework Act on National Taxes. When certain conditions are met, the cost data submitted by a defense company is presumed to be truthful, allowing for the omission of separate cost verification.

To be recognized as a Defense Cost Integrity Estimation Company, three conditions must be met: the introduction of an internal control system for defense costs, external audits of defense financial statements, and maintaining certification of the defense cost management system.

KAI participated as a pilot company in DAPA’s Defense Cost Integrity Estimation system in October last year and had all three submitted supporting documents recognized by DAPA last month. Once the amendment to the Defense Acquisition Program Act is passed, the status of an integrity estimation company will be officially recognized, which is expected to enhance the transparency of cost data and corporate credibility.

This will not only resolve conflicts that frequently occurred during DAPA’s cost data review process but also enable smooth contract execution, thereby improving administrative efficiency. Through this integrity estimation, KAI plans to grow into a global defense company by leveraging the ‘New Defense Cost Management System’ as a foundation, having been acknowledged for its global-level management system, reliability, and transparency.

Kim Jeong-ho, Executive Vice President and Chief Financial Officer (CFO) of KAI, said, “As a leading defense company in Korea, we will strive to ensure that the integrity estimation system is established promptly.”

This content was produced with the assistance of AI translation services.