Unjustified Weapon Procurement Budget Cuts by Defense Acquisition Program Administration... Court Orders "Return It"

[Image source=Yonhap News]

[Asia Economy Yang Nak-gyu, Military Specialist Reporter] The Defense Acquisition Program Administration (DAPA) was forced to refund money after unilaterally cutting payments for weapons production by defense companies.

According to the government on the 15th, the Civil Division 16 of the Seoul Central District Court (Presiding Judge Lim Ki-hwan) ruled partially in favor of LIG Nex1 in a lawsuit claiming payment from the government filed by LIG Nex1 the day before.

Since 2013, LIG Nex1 has signed supply contracts using the mid-term fixed contract method for △ Tactical Information Collection System △ TACM performance upgrade mass production for destroyers △ Hyungung (infantry medium-range guided missile) system second mass production △ Cheongung follow-up mass production project.

The mid-term fixed contract is a contract method used when delivering new weapons, as production takes a long time and it is difficult to finalize costs. While developing the weapons, LIG Nex1 requested that increased costs and wages be reflected, but DAPA unilaterally reduced payments by 0.5~1% without providing specific reasons or grounds for the cuts. Consequently, LIG Nex1 claimed 19.4 billion KRW from DAPA.

DAPA argued that "it is common practice in general transactions for the buyer to adjust some amounts," claiming there was no problem with the reduction.

The court pointed out, "Such claims cannot be accepted as refusing to settle according to the Defense Acquisition Program Act, neglecting DAPA's obligation to review settlement materials, shifting the burden to the other party, or ignoring the superior position of the state," and ruled that DAPA must refund 10.6 billion KRW to LIG Nex1.

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