Will the KDDX Project Be Concluded After Two Years?

Joint Development Plan by Hanwha Ocean and HD Hyundai Heavy Industries
Likely to Be Approved at Defense Project Promotion Committee

The selection method for the lead ship contractor of the next-generation Korean destroyer (KDDX) will be decided on December 22, 2025. Instead of the previously discussed private contract or competitive bidding methods, a joint development approach between HD Hyundai Heavy Industries and Hanwha Ocean is emerging as the most likely option.

According to a government official, the Defense Acquisition Program Administration (DAPA) is scheduled to hold a Defense Project Promotion Committee meeting at the Ministry of National Defense in Yongsan, Seoul, on the afternoon of the same day. The committee is expected to approve the KDDX project implementation plan, as well as the basic plan for detailed design and construction of the lead ship. Since the contractor selection process has been delayed for two years, DAPA has stated its intention to finalize the contractor by the end of the year.

HD Hyundai Heavy Industries and Hanwha Ocean have been at odds over whether to proceed with a private contract or competitive bidding. The shipbuilding project proceeds in the following order: conceptual design, basic design, detailed design and construction of the lead ship, and construction of subsequent ships. HD Hyundai Heavy Industries argues that, as is customary, it should be awarded the contract for the detailed design phase since it has already carried out the basic design. The KDDX project aims to secure six 6,000-ton Aegis destroyers by 2030. The company claims that using a private contract method would allow the Navy to fill operational gaps in line with the decommissioning schedule of three Gwanggaeto the Great-class destroyers (DDH-I) currently in service.

In contrast, Hanwha Ocean has insisted on a competitive bidding process. This would involve HD Hyundai Heavy Industries and Hanwha Ocean competing sequentially from the bidding announcement stage to win the final project rights. If a competitive bidding process is conducted, HD Hyundai Heavy Industries would face a "security penalty," putting it at a disadvantage. This is due to an incident in which internal employees of HD Hyundai Heavy Industries were convicted for secretly photographing and leaking conceptual design materials from Daewoo Shipbuilding & Marine Engineering during the KDDX basic design phase. As a result, the security penalty has been extended until December 2026.

If the selection of the KDDX contractor is finalized as a joint development, two lead ships would be ordered simultaneously, with each company responsible for building one. Adopting this approach is expected to reduce costs if additional ships are needed in the future. However, it would require the creation of new regulations and systems, and it could be difficult to determine responsibility if technical defects or other issues arise in subsequent ships. Notably, DAPA recently requested a legal interpretation from the Fair Trade Commission regarding the possibility of "collusion" under the Fair Trade Act, but the commission reportedly responded that this would be an issue to judge retrospectively, suggesting that the conflict may persist.