No Conclusion Reached on KDDX... First Joint Design Possible

DAPA Fails to Reach Conclusion on KDDX Lead Shipbuilder Selection at Subcommittee Meeting

On the 17th, the Defense Acquisition Program Administration (DAPA) held a meeting to decide the lead shipbuilder for the Korean next-generation destroyer (KDDX) but failed to reach a conclusion, deciding instead to hold additional meetings before making a decision. The KDDX is the first domestically produced destroyer project where both the hull and Aegis system will be built using entirely domestic technology. A total of six ships are planned to be constructed, with a project budget reaching 7.8 trillion won.

Next-generation destroyer (KDDX), known as the 'Mini Aegis ship' (6000-ton class)

During the project subcommittee meeting held that day, DAPA discussed three options regarding the 'KDDX detailed design and lead ship construction project' method: ▲ negotiated contract ▲ competitive bidding ▲ joint design by both companies, but no conclusion was reached.

A DAPA official stated, "We will further review the necessity of a negotiated contract and joint development plans and hold in-depth discussions." DAPA plans to convene the project subcommittee again before the Defense Acquisition Program Promotion Committee meeting scheduled for the 2nd of next month to finalize the project implementation method.

So far, Hanwha Ocean and HD Hyundai Heavy Industries have been engaged in a battle of pride, as being selected as the final contractor for the KDDX would give them a strategic advantage in future global Aegis destroyer orders.

The key issue is the method for selecting the contractor for the KDDX detailed design and lead ship project. Typically, the shipbuilding order process first selects the lead ship (initial ship) contractor, and based on the detailed design of the lead ship, the contractor for subsequent ships is selected through competitive bidding. The company that completes the final design of the Korean next-generation destroyer and builds the first ship holds the ‘title’.

Due to the significance of the KDDX and the large project budget, HD Hyundai Heavy Industries and Hanwha Ocean have been engaged in a fierce competition since early last year, including public opinion battles and lawsuits. Hanwha Ocean secured the conceptual design, while HD Hyundai Heavy Industries won the basic design contract. However, the project was marred by controversies 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 KDDX detailed design in July. Then, in November last year, Hanwha Ocean withdrew its lawsuit, stating that establishing a foundation for mutual complementarity and cooperation is in the national interest to expand marine defense exports.

Some suggest that DAPA’s decision to add an additional designation reflects a break from the tradition of awarding the detailed design and lead ship construction contract by negotiated contract to the basic design contractor, instead pursuing the first-ever ‘joint development and joint construction’ approach since its establishment.

Earlier, Chief of Naval Operations Yang Yong-mo expressed concerns about delays in the KDDX project in a letter sent to both HD Hyundai Heavy Industries and Hanwha Ocean at the end of last month, stating, "There are many concerns about delays in the operational deployment timing of major warships amid the severe current security environment."