Will the 8 Trillion Won KDDX Project Be Finalized Today? [Yang Nakkyu's Defence Club]

Agenda Submitted to the Defense Acquisition Program Promotion Committee...
Debate Over Private Contract vs. Competitive Bidding
Opposition from Civilian Committee Members and Democratic Party Lawmakers Emerges as a Key Variable

The method for the construction of the next-generation Korean destroyer (KDDX) project, valued at 7.8 trillion won, is expected to be decided as early as the afternoon of April 24. However, since neither the candidates for the project?HD Hyundai Heavy Industries and Hanwha Ocean?nor the Defense Acquisition Program Promotion Committee, which holds the authority to decide the project method, have been able to narrow their differences, the final decision is expected to face significant difficulties.

A government official stated, "Although members of the National Assembly's Legislation and Judiciary Committee requested a postponement of the agenda the previous day, the Defense Acquisition Planning and Management Subcommittee will convene this afternoon to discuss the 'KDDX Detailed Design and Lead Ship Construction Basic Plan' as the first agenda item."

The core issue regarding the KDDX project method is which company?HD Hyundai Heavy Industries or Hanwha Ocean?will be responsible for the detailed design and construction of the lead ship. HD Hyundai Heavy Industries maintains that, following established practice, the company that handled the basic design should also carry out the detailed design through a private contract. In contrast, Hanwha Ocean argues that the process should proceed fairly through competitive bidding.

The Defense Acquisition Program Administration (DAPA) is leaning toward a private contract for the KDDX construction project, but it is reported that civilian members of the Defense Acquisition Program Promotion Committee are opposed. The committee consists of 25 members: 19 from the military and government, and 6 civilian members. The civilian members insist that, since the Ministry of Trade, Industry and Energy designated both companies as "multiple defense contractors" earlier this year, the project must proceed through competitive bidding. DAPA also proposed negotiation plans to both HD Hyundai Heavy Industries and Hanwha Ocean regarding the private contract, but the two sides failed to reach an agreement. As a result, DAPA concluded that further persuasion efforts would be meaningless and decided to proceed according to the planned schedule, holding the subcommittee and the main committee meetings to determine the project method by majority vote.

Some observers believe that strong political influence will make it difficult to reach a decision. HD Korea Shipbuilding & Offshore Engineering, the holding company of the HD Hyundai Group, recently appointed several figures from the Yoon Suk-yeol administration, including former National Security Office chief Kim Sung-han, as outside directors. Furthermore, controversy has grown since Acting President and Prime Minister Han Duck-soo visited HD Hyundai Heavy Industries in Dong-gu, Ulsan, on April 16. With a sensitive business decision looming, criticism has arisen over the acting president visiting only one of the competing companies, with some alleging favoritism. For this reason, it is rumored within the military that even Vice Minister Kim Sun-ho, who is acting as the Minister of National Defense, is pushing for a private contract.

A government official said, "If the subcommittee fails to reach a decision, the matter will have to be resolved by the next administration," and added, "Since the KDDX project, which began in 2011, has already been delayed by 15 years, there may be calls to incorporate a new design reflecting updated operational requirements (ROC)."