F-16 Fallout Clouds Future Foreign Deals, May Alter National Security

Peter Lichtenbaum and Fred Levy are quoted in a Federal Contracts Report article regarding the dispute, which is on appeal in the Fourth Circuit, between South Korea and BAE following the failure to finalize a deal to upgrade the F-16 jet. According to Lichtenbaum, the contracting community would expect the Fourth Circuit not to enforce the BAE-South Korea agreement. This understanding has existed since Secretary of State for Defence v. Trimble Navigation Ltd. in 2007, which denied third-party beneficiary rights to a foreign government under an FMS sale. ‘‘South Korea won’t like the result, but a disruption to its relationship with the U.S. is unlikely,’’ he says. Lichtenbaum adds that allowing the Seoul suit to proceed would likely affect defense contractor behavior, and hinder national security interests. 

According to Levy, the Seoul suit ‘‘would be very chilling’’ for defense contractors’ participation in the Foreign Military Sales (FMS) program. ‘‘Where do you draw the line?’’ he asks. ‘‘Allowing this suit could open the possibility of foreign governments suing in their courts to enforce terms of a U.S. government FMS contract.’’