Hanwha Ocean "Urges Reconsideration and Police Investigation"
HD Hyundai Heavy Industries, which was embroiled in controversy over military secret leaks related to the Korean next-generation destroyer (KDDX) project, will not face sanctions. Accordingly, it will maintain its eligibility to participate in the bidding.
The Defense Acquisition Program Administration (DAPA) announced on the afternoon of the 27th that the contract review committee decided to impose an 'administrative guidance' rather than sanctions on HD Hyundai Heavy Industries as a dishonest contractor.
DAPA explained the reason for the decision, stating, "The violation of the Military Secret Protection Act does not fall under fraudulent acts such as improper construction differing from the design documents during contract execution or causing financial damage under Article 27, Paragraph 1, Items 1 and 4 of the State Contract Act," and "since the disqualification period has passed, sanctions cannot be imposed."
It added, "Sanctions under Article 59 of the Defense Acquisition Program Act cannot be imposed because there is no objective evidence confirming the involvement of representatives or executives, which is a prerequisite for violating the integrity pledge."
Previously, employees of HD Hyundai Heavy Industries were found guilty last November of violating the Military Secret Protection Act by secretly acquiring military secrets related to the KDDX project and others from 2012 to 2015 and sharing them through the company’s internal network.
HD Hyundai Heavy Industries had already received a security penalty (-1.8 points) during DAPA’s bidding process due to the military secret leak incident. If it had been sanctioned with a bidding participation restriction this time, it would have been unable to participate in naval ship projects for a certain period. With DAPA’s recent decision, HD Hyundai Heavy Industries will not face restrictions on bidding for the upcoming KDDX construction project.
The KDDX project is a program to build six 6,000-ton next-generation destroyers for the Republic of Korea Navy by 2030, with a budget of 7.8 trillion won. The project proceeds in stages including conceptual design, basic design, detailed design, and construction contracting. Hanwha Ocean secured the conceptual design contract, while HD Hyundai Heavy Industries won the basic design contract.
A representative of HD Hyundai Heavy Industries stated, "We respect DAPA’s judgment and will do our best to contribute to the growth of K-defense by advancing the domestic shipbuilding industry and increasing overseas exports."
On the other hand, Hanwha Ocean strongly opposed the decision, saying, "HD Hyundai Heavy Industries’ theft of secrets is considered a serious negligence that shakes the foundation of the defense industry," and "we strongly urge a re-examination, audit, and strict police investigation once again."
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