Seok Jong-geon Chief “Companies Must Accept KDDX Decision” [Yang Nak-gyu's Defence Club]

Director of Defense Acquisition Program Administration Pays Support Fee and Produces YouTube Content
"Basic Design Contractor Should Also Handle Detailed Design"
Effectively Expresses Position on HD Hyundai Sole-Source Contract

Seok Jong-geon, Administrator of the Defense Acquisition Program Administration (DAPA), expressed his intention to proceed with a sole-source contract for the Korean next-generation destroyer (KDDX) project. He stated that there is no problem even if defense companies that leaked military secrets continue to win contracts.

Administrator Seok appeared on the YouTube channel 3PROTV and said, “To build a warship, we need to proceed with detailed design based on the basic design. We cannot wait for the investigation results on the companies. We intend to make a decision even if it is not perfect before the investigation results come out.”

The KDDX project involves constructing a total of six ships with a budget of 7.8 trillion won. Employees of HD Hyundai Heavy Industries were caught leaking military secrets. Between 2013 and 2014, HD Hyundai Heavy Industries employees leaked more than 10 classified documents, including two KDDX secrets, next-generation submarines, and special warfare support ships from the Navy Headquarters. Nine HD Hyundai Heavy Industries employees were convicted by the Supreme Court in November last year for violating the Military Secrets Protection Act (Military Service Act). HD Hyundai Heavy Industries received a security demerit score of 1.8 points, which is insufficient to win the KDDX project.

However, Administrator Seok argues that regardless of the Military Service Act, since HD Hyundai Heavy Industries conducted the basic design, the detailed design must be done. He said, “We will make decisions transparently and according to procedures,” adding, “Companies must comply with the decision, and contractors must accept it. Otherwise, the military that uses the ships and ultimately the public will suffer.”

DAPA has internally set a de facto policy for a sole-source contract. In July, when controversy arose over a sole-source contract with HD Hyundai Heavy Industries, DAPA sent a text message to reporters covering the Ministry of National Defense stating, “No project implementation plan has been finalized,” which is the exact opposite of their current stance. DAPA plans to expedite the project by holding a project subcommittee meeting soon, even though the contract method can be decided after the police investigation. In particular, if the National Contract Act, which is a higher law than DAPA regulations, is applied, competitive bidding would be possible. However, DAPA insists on a sole-source contract citing its own regulations.

Meanwhile, it has been confirmed that the police recently requested additional investigation from the prosecution after applying for an arrest warrant for former DAPA Administrator Wang Jeong-hong, who is suspected of bid-rigging in the Korean next-generation destroyer (KDDX) project. As a result, the case involving former Administrator Wang, which was expected to conclude around late September to early October, is likely to take more time until the investigation is completed.

The police have been investigating allegations that former Administrator Wang gave preferential treatment to HD Hyundai Heavy Industries during the KDDX contractor selection process. The suspicion involves changing regulations in May 2020 before the basic design bidding for the KDDX project to favor HD Hyundai Heavy Industries. Additionally, the police reportedly applied additional charges beyond abuse of authority against former Administrator Wang. The police executed a search warrant at DAPA in August last year, followed by a search of former Administrator Wang’s residence in December of the same year. Furthermore, former Administrator Wang was summoned for questioning in July.