KDDX Ultimately a Two-Way Race... Heading Toward Joint Design [Yang Nakgyu's Defence Club]

Ministry of Trade, Industry and Energy Designates Hanwha Ocean and HD Hyundai Heavy Industries as Defense Contractors
Concerns Over DAPA's Push for 'Joint Development and Joint Construction' with Company Involved in Classified Information Leak

Hanwha Ocean has been designated as a defense contractor equipped with the production capabilities for the Korean-type next-generation destroyer (KDDX). There are talks that the Defense Acquisition Program Administration (DAPA) might be breaking tradition and moving toward the first-ever 'joint development and joint construction' approach since its establishment.

On the 6th, a model of the KDDX destroyer was exhibited at the 'Joint Weapon System Development Exhibition' held at the Defense Convention in Yongsan-gu, Seoul. Photo by Jinhyung Kang aymsdream@

On the 3rd, the Ministry of Trade, Industry and Energy announced, after consultations with DAPA and related agencies, that Hanwha Ocean and HD Hyundai Heavy Industries have been designated as defense contractors capable of producing the Korean-type next-generation destroyer (KDDX). The Ministry conducted on-site inspections of Hanwha Ocean in December last year and HD Hyundai Heavy Industries in January this year. This procedure involves visiting the shipyards directly to verify manufacturing facilities, quality inspections, and production personnel, serving as a preliminary step to selecting the KDDX project contractors.

Until now, Hanwha Ocean and HD Hyundai Heavy Industries have engaged in a battle of pride, as being selected as the final contractor for the KDDX would give them a favorable position in future global Aegis destroyer orders. The KDDX is the first domestically produced destroyer project that constructs both the hull and the Aegis system using entirely domestic technology. A total of six ships are planned to be built, with a project budget reaching 7.8 trillion KRW. The KDDX will be equipped with a system capable of intercepting enemy vessels, submarines, fighter jets, destroyers, and ballistic missiles in maritime warfare.

The key issue lies in the selection method for the detailed design and lead ship contractor of the KDDX. Typically, the lead ship (initial ship) contractor is selected first, and based on the detailed design of the lead ship, the contractor for the subsequent ships is chosen through competitive bidding. The contractor who completes the final design of the Korean-type next-generation destroyer and builds the first ship holds the 'title.'

Due to the status of the KDDX and the large-scale project budget, HD Hyundai Heavy Industries and Hanwha Ocean have engaged in a fierce competition since early last year, including public opinion battles and lawsuits. The concept design was awarded to Hanwha Ocean, while the basic design went to HD Hyundai Heavy Industries. However, controversies arose involving criminal cases related to the leakage of KDDX military secrets by HD Hyundai Heavy Industries employees.

As the competition between the two companies escalated into a mudslinging fight, DAPA postponed the order for the detailed design of the KDDX in July. Then, in November last year, Hanwha Ocean withdrew its accusations, stating that establishing a foundation for mutual complementarity and cooperation is in the national interest to expand maritime defense exports.

Some suggest that DAPA’s additional designation reflects a break from the tradition of awarding the detailed design and lead ship construction contract by sole negotiation to the basic design contractor, instead promoting the first-ever 'joint development and joint construction' approach since its establishment. DAPA is considering holding a Defense Acquisition Program Promotion Committee meeting around mid-March to review and select contractors for the detailed design of the KDDX, the lead ship, and the construction of the five subsequent ships.

A source from the shipbuilding industry said, "The KDDX project is worth about 8 trillion KRW, but it holds value beyond that. If the Korean-type Aegis destroyer is produced with domestic technology, it could lead to a flood of orders for ship projects overseas, potentially multiplying its value several tens of times."