Interesting, thanks for sharing! I thought in the beginning that you were referring to a possible deal where South Korea would purchase a "license" to produce for example an F16, or F-15 with major South Korean sensors, avionics, and weapon packages.
So from what I understood from your post, the winner of the F-X program/tender would transfer the necessary technology to South Korea during the development phase of the KF-21, right?
I think there are some misunderstandings, so I'll give you more details so that it's easier to understand the whole situation.
To clarify,
Korean MoD wanted to directly link the two separate fighter procurement programs (the third F-X program and KF-X program) through offset requirements, requiring the winner of the F-X bid to take part in the KF-X program and contribute financially and technically.
The 3rd F-X program (following the first two F-X programs, which led to the procurement of 61 F-15K fighters) was officially initiated in March 2011. Then plan was to send RFPs by January 2012, receive proposals until 2014, evaluate them, and select the preferred bidder by October of the same year. This rather tight schedule was very much intentional, since the KF-X preliminary studies were to be concluded by December 2012, 2 months after the preferred bidder for the F-X was chosen.
Fast-forward, for various reasons, the F-X bidding process didn't proceed as planned and was faced with program revisions and delays.
First, by the end of 2012, the selection of the preferred bidder had been postponed due to the change of administration, and the fighter was now supposed to be chosen under the next presidential administration. Then, the bidding process was reset after it was deemed that the evaluation was inadequate. This happened in September 2013. The preferred bidder was ultimately chosen in March 2014, which was LM and their F-35.
An important thing to remember here is that the details regarding the offset participation in the KF-X program weren't clearly outlined by the Korean MoD, apart from that they are required to participate as a technical assistance company, so it was up to each F-X bidders to submit different proposals regarding how they will participate in KF-X.
While all this was happening on the F-X side, on the KF-X side there was a separate round of discussions taking place after the conclusion of preliminary studies. Now it was time for the program to proceed into the system development phase, but it was still undecided what the base-design model would be.
Different models and acquisition plans were evaluated, and they were eventually shortlisted into 3 options.
The first option was to continue with the indigenous model researched during the preliminary studies. These models were C103 and C203, a conventional wing-tail design and a cannard-delta model respectively. C103 was to be chosen should Boeing or LM win the F-X bid and C203 if EADS or SAAB wins it.
The second option was a FA-50 based design, which in the later years was renamed the C501. (KAI called it KFX-E) It was based on the earlier C102E design and was going to have some design commonalities with FA-50, making it a far cheaper option for less performance and, more importantly, less independence from American control.
The third option was a derivative fighter based on the F-X bidder's existing fighters.
Due to the existence of this third option, F-X bidders were submitting two separate offset proposals. One, should the KF-X proceed with an indigenous model, and another, should Korea choose to develop a derivative fighter based on a foreign design. For the derivative fighter option, Boeing offered an Advanced Super Hornet-based proposal,
LM a F-16-based proposal, and EADS a Eurofighter-based proposal.
Here, the
"$5.4 billion development cost for a derivative fighter", mentioned in my earlier replies,
was the projected cost for the LM proposal based on the F-16.
As I've said before, (and as you've correctly understood)
the derivative fighter was to be indigenized with Korean components, including parts of critical avionics and flight control systems. Technical documents and details, as well as parts of the IP rights were also to be transferred, but details varied depending on the bidder. EADS promised most extensive offers due to poor state of the Eurofighter program, but it was later found that their contractual offer didn't reflect what they were saying publicly.
Though,
all this became meaningless since the derivative fighter option was ditched all together. If you take a look at the table I've posted above, you'll notice that the decision to ditch the derivative fighter option was made by August 2013, a month before the resetting of F-X bidding process.
Now, F-X bidders were solely required to submit their proposals for KF-X participation in the development of the indigenous Korean model. All bidders
pledged financial participation as well as cooperation in international marketing and ToT, but the details varied.
As a result, LM is an official TAC of the KF-X porgram, providing technical assistance as well as having transferred dozens of technologies for use in the KF-X program, although the transfer of certain critical technologies was denied by the US government. Also, LM later backtracked on their promise to financially participate in the program and, as compensation, struck a deal to supply the Korean armed forces with a military communication satellite, now called the ANASIS-II and launch it into orbit.