BY ANDREA SHALAL
WASHINGTON Wed Nov 5, 2014 6:29pm EST
(Reuters) - The U.S. government on Wednesday said it had canceled, at the request of South Korea, a preliminary contract with the U.S. unit of Britain's BAE Systems (BAES.L) to upgrade 134 F-16 fighter jets, ending a major arms deal initially valued at $1.7 billion.
The unusual move, announced by the Pentagon's Defense Security Cooperation Agency, paves the way for South Korea to pursue a similar upgrade deal with Lockheed Martin Corp (LMT.N), the warplanes' original manufacturer.
On November 5, 2014, at the request of the Government of the Republic of Korea, the U.S. Government notified BAE Systems Technology Solutions & Service of Rockville, Maryland, that it would terminate for convenience a contract with BAE for initial development and long lead production in support of the Republic of Korea KF-16 fighter aircraft upgrade. This contract was the first of a two-phase Foreign Military Sales (FMS) procurement for the upgrade of 134 KF-16s. The U.S. Government will work with BAE to close out the contract.
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