US approves $2.5 bn Foreign Military Sale for South Korea's F-16 fighter aircraft upgrade project.

That deal was scrapped after the U.S. and BAE Systems asked for a combined $697 mn in additional costs.

South Korea has since decided to have Lockheed Martin, the F-16's manufacturer, carry out the project and asked for U.S. approval of a possible deal.

On Wednesday, the Defense Security Cooperation Agency said that the State Department decided to approve South Korea's request for sale of a number of parts, equipment and logistical support necessary for the project to upgrade 134 KF-16 variants C and D Block 52 "for an estimated cost of $2.5 billion."

According to the DSCA, the upgrade package includes 150 Modular Mission Computers (MMC 7000AH), 150 Active Electronically Scanned Array Radars (AESA), 150 AN/APX-125 or equivalent Advanced Identification Friend or Foe (AIFF) Systems, 150 LN-260 Embedded Global Positioning System/Inertial Navigation Systems, 150 Upgraded Radar Warning Receivers (RWR), 150 AN/ALQ-213 EW Management Units, 3 Joint Helmet Mounted Cueing System (JHMCS) II Group C Helmets, 150 JHMCS II Group A and B, 31 Joint Mission Planning Systems (JMPS), 5 GBU-54 Laser Joint Direct Attack Munitions (JDAM), 5 KMU-57C/B Bomb Tail Kits, 2 GBU-39 Small Diameter Bomb Guided Test Vehicles, 8 GBU-39 Small Diameter Bomb Tactical Training Rounds, 2 BRU-61 Small Diameter Bomb Common Carriage Assemblies, 5 MK-82 General Purpose Practice Bombs, 2 Joint Programmable Fuzes, 2 CBU-105 Wind Corrected Munitions Dispenser (WCMD) Sensor Fuzed Weapons (SFW), 1 CNU-411C/E, WCMD Container, 2 ATM-65 Maverick Training Missiles, 2 ATM-84 Harpoon Block II Training Missiles, 2 AGM-84 Harpoon Block II Guidance Units, 2 CATM-9X-2 Captive Air Training Missiles, and 1 AIM-9X-2 Guidance Unit.

The new cost estimate raises questions about why South Korea scrapped the original deal with BAE if a new deal would cost more.

Should the estimated cost be finalized in future negotiations, it is sure to prompt strong criticism of the South Korean government for wasting taxpayers' money.

The agency said it notified Congress on Tuesday of the possible sale.

The principal contractors will be Lockheed Martin and Northrop Grumman, it said.

"The ROK Air Force is modernizing its KF-16 fleet to better support its air defense needs. This upgrade allows the ROK to protect and maintain critical airspace and provide a powerful defensive and offensive capability to preserve the security of the Korean peninsula and its vital national assets," the agency said.