KDDX Project Method to Be Reconsidered on August 28 [Yang Nakkyu's Defence Club]

Based on Technical Review Meeting, DAPPC Deliberation Planned
Persuasion Unlikely Amid Ongoing Controversies Over Technology and Project Method

There is growing interest in whether a conclusion will finally be reached this month on the Korean Next-Generation Destroyer (KDDX) project, which has remained unresolved for over a decade. The project, aimed at countering North Korea's nuclear and missile threats, has been adrift for years due to fierce competition between HD Hyundai Heavy Industries and Hanwha Ocean, as well as poor project management by the Defense Acquisition Program Administration (DAPA), despite the Navy's requirements being finalized in 2011.

On August 13, a government official stated, "Following the Minister of National Defense's directive, a Technical Advisory Committee meeting on the KDDX was held yesterday. Based on the results, a briefing to the National Assembly will be completed, and on August 28, the Defense Acquisition Program Promotion Committee (DAPPC), chaired by the Minister of National Defense, is scheduled to convene."

The technical review meeting held the previous day was prompted by concerns over 'technological obsolescence.' The KDDX project is a large-scale national initiative to invest 7.8 trillion won by 2030 in acquiring six 6,000-ton Aegis destroyers. In 2012, Daewoo Shipbuilding & Marine Engineering (the predecessor of Hanwha Ocean) conducted the phase-one conceptual design, and from 2020 to 2023, HD Hyundai Heavy Industries was responsible for the basic design. During this process, an HD Hyundai Heavy Industries employee was found guilty of illegally photographing the KDDX conceptual design, which had been developed under Hanwha Ocean's leadership.

Technical Review Meeting Reaches "No Issues" Conclusion

The project timeline has been delayed. The KDDX is now scheduled to be delivered to the Navy in 2031, and controversy has arisen over its inability to reflect future maritime operational environments from the design stage. Some have argued that the design should be revised or redone based on the review results.

However, the outcome of the Technical Advisory Committee meeting held the previous day was different. The meeting, chaired by the acting head (Colonel) of DAPA's Naval Ship Project Division and attended by university professors and the Agency for Defense Development (ADD), reportedly reached a consensus that "the technologies incorporated in the KDDX cannot be considered obsolete." Based on this, DAPA plans to complete a briefing to the National Assembly within the month and hold the DAPPC, chaired by the Minister of National Defense, on August 28.

Is the KDDX Designed for the Future?

The basic design handled by HD Hyundai Heavy Industries reflects the 2016 operational requirements (ROC) set by the military. However, there are criticisms that it is not suitable for future maritime operational environments. The Navy plans to apply the 'Navy Sea GHOST,' a manned-unmanned integrated combat system, to its maritime operations. As the advancement of aircraft carrier and nuclear submarine projects has become difficult, the Navy is shifting its focus to unmanned vessels for cost reasons. At the 2023 International Maritime Defense Industry Exhibition (MADEX), the Navy conducted an amphibious operation demonstration involving six manned warships, three aircraft, three KAAV amphibious assault vehicles, special forces, and unmanned assets including 30 unmanned surface vessels (USVs) and unmanned aerial vehicles (UAVs). In reality, Ukraine, despite losing most of its naval power early in the war, managed to sink the Russian Black Sea Fleet's Ivanovets patrol ship using so-called "sea drones."

To realize the Navy Sea GHOST concept, the KDDX must be equipped with various systems. Manned-unmanned integrated combat systems require technologies such as integrated antenna systems within the vessel, integration of unmanned combat systems, and the integration of multiple and diverse consoles. However, these systems are not included in the basic KDDX design. In contrast, other countries are already pursuing manned-unmanned integrated combat systems. The United Kingdom is conducting trial operations of such systems on its aircraft carrier Queen Elizabeth. Turkiye, a military power in the Mediterranean and Middle East, is building a new aircraft carrier modeled after the Spanish Navy's Juan Carlos I, known as a "mini carrier," with plans to deploy around 50 manned and unmanned carrier-based aircraft of various types.

Choi Bongwan, a professor of Industrial and Management Engineering at Hannam University, emphasized, "The basic KDDX design focuses on localization of the combat system and integrated mast, so it is essential to incorporate the manned-unmanned integrated combat system required by the Navy to enhance operational capabilities."

Claims of Incompatibility with Future Battlefields: Manned-Unmanned Systems and Crew Size

The KDDX's crew size is also a point of contention. The KDDX is designed to accommodate about 150 crew members. In a report to the National Assembly last year, the Navy stated, "To address the sharp decline in conscription resources, we plan to implement a 'cadre-based' or 'fully cadre-based' operation model on all naval vessels by 2030, reducing or eliminating the proportion of enlisted sailors." Since 2022, the Navy has been operating pilot vessels under these models, aiming to reduce the existing crew by about 180 personnel. This is a different concept from the basic KDDX design. For comparison, the French FDI-class frigate has a crew of 110, the Japanese Mogami-class frigate (FFM) has 90, and the Italian multipurpose offshore patrol vessel (PPA) has around 100 crew members. Although ship sizes differ, the KDDX's crew size is considered large.

Choi Kiil, a professor of Military Science at Sangji University, stated, "The US Navy is also considering the 'ghost fleet' concept, which incorporates manned-unmanned integrated combat systems to address personnel shortages. A redesign of the KDDX should be considered."

Is the KDDX Project Subject to Political Influence?

The core issue in the KDDX project 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 argues that, following precedent, the company responsible for the basic design should also handle the detailed design through a negotiated contract. In contrast, Hanwha Ocean insists that a fair competitive bidding process should be conducted.

HD Hyundai Heavy Industries' argument for a negotiated contract is due to a 'security penalty.' The company is subject to a 1.8-point deduction in national project bids until November this year, following a conviction of its employees for violating the Military Secrets Protection Act. In defense procurement, where outcomes are decided by fractional differences, this can be decisive. For example, in the 2023 Ulsan-class Batch-III frigate 5th and 6th ship project, HD Hyundai Heavy Industries led in the proposal evaluation, but Hanwha Ocean won the contract by a margin of 0.1422 points due to the penalty.

Persuading the DAPPC After the National Assembly Is Key

DAPA is also leaning toward a negotiated contract for the KDDX construction project, but civilian members of the DAPPC are reportedly opposed. The DAPPC consists of 25 members: 19 from the military and government, and 6 civilians. The civilian members argue that, since the Ministry of Trade, Industry and Energy designated both companies as "multiple defense contractors" earlier this year, competitive bidding is required. DAPA has proposed negotiation plans to both HD Hyundai Heavy Industries and Hanwha Ocean regarding the negotiated contract, but the two sides have failed to narrow their differences.

Some observers believe that political influence is making it difficult to reach a decision. HD Korea Shipbuilding & Offshore Engineering, the holding company of the HD Hyundai Group, has appointed several figures from the Yoon Suk-yeol administration, including former National Security Advisor Kim Sung-han, as outside directors. The controversy intensified when former Acting President and Prime Minister Han Duck-soo visited HD Hyundai Heavy Industries in Ulsan Dong-gu. There is speculation that visiting only one of the competing companies ahead of a sensitive business decision could be seen as favoritism. For this reason, there are even reports that former Vice Minister Kim Sunho, who previously served as acting Minister of National Defense, is pushing for a negotiated contract from within the military.