In a setback to Boeing, South Korea's evaluation committee has rejected the company's revamped F-15, an order that could have boosted the production at the company's St Louis facility.
The country has instead postponed a decision on a multibillion-dollar contract for the acquisition of 60 new aircraft, according to The Wall Street Journal.
Boeing's F-15 Silent Eagle, the only contending aircraft that came under South Korea's budget cap, failed to meet the requirements, according to the country's defense ministry.
According to a defence ministry spokesman the reason behind the decision, was the threats from North Korea's as also "rapid advances in aviation technology."
The paper said, the South Korean order for the F-15SE would have extended the life span of the aircraft maker's St Louis production line into the next decade.
The company had to however, secure an orders for the F-15SE, an upgrade to one of the world's best-selling fighter jets.
The bids from competitors Lockheed Martin and a Eurofighter consortium exceeded South Korean budget cap, 8.3 trillion won, the equivalent of $7.7 billion, which led to their disqualification according to the Journal.
But the critics slammed the government over the expected purchase of Boing F-15 SE, which according to them was ineffective against North Korean defenses.
Critics said, the F-15 Silent Eagle, lacked state-of-the-art stealth capabilities and could not effectively cope with North Korea's increasing nuclear threats.
Associated Press reported quoting defence ministry spokesman Kim Min-seok, ministry officials had decided at a meeting yesterday to delay naming a winning bidder. The process, however, was expected to restart at an early date, the report said.
He added South Korea needed to have better air power in line with an international trend to develop "fifth generation" fighters, adding that the rejection of the company's bid came against the backdrop North Korea's nuclear weapons programme as also other factors.
According to ministry officials, the reference was to a warplane with cutting-edge radar-evading stealth functions which Boeing's plane did not have.
In a statement, Boeing said it was "deeply disappointed" by yesterday's decision, and added that it "rigorously" followed the South Korean arms procurement agency's instructions throughout the entire process.
South Korea has traditionally favoured fighter jet as also imports of other weapons from the US, which has 28,500 troops in the country to deter potential aggression from North Korea.
The Korean peninsula, this spring witnessed a sharp escalation in tensions, with Pyongyang threatening nuclear wars to protest toughened UN sanctions after its third nuclear test in February.