The competition for the order of the Korean next-generation destroyer (KDDX), valued at 7.8 trillion won, between Hanwha Ocean and HD Hyundai is expected to be concluded early next year. Although the conflict between Hanwha Ocean and HD Hyundai has not been completely resolved, it is considered that further delays could negatively impact South Korea's defense exports.
According to the industry on the 19th, the Ministry of Trade, Industry and Energy is soon expected to conduct a fact-finding mission to proceed with the designation process for Hanwha Ocean as a defense company. To participate in the detailed design and lead ship construction project for KDDX, Hanwha Ocean must be designated as a defense company in advance.
Seok Jong-geun, head of the Defense Acquisition Program Administration, noted during a meeting with the chief executive officers of major defense companies on the 17th, "As soon as the designation by the Ministry of Trade, Industry and Energy is completed, we will proceed with the internal procedures as quickly as possible to decide on the plan for promoting the KDDX project early next year." He urged, "Please consider the ecosystem of the industry, including small and medium-sized defense companies."
If the Ministry of Trade, Industry and Energy designates Hanwha Ocean as a defense company, the Defense Acquisition Program Administration will have to decide whether to proceed with a negotiated contract or a competitive bid. Hanwha Ocean wants a joint order and construction, while HD Hyundai desires a negotiated contract. The two companies have been in conflict for over a year, engaging in legal battles and public campaigns over the KDDX project. Last month, in a spirit of compromise, they canceled their lawsuits against each other, but they have not narrowed their differences. HD Hyundai maintains that according to existing practices, the basic design company should independently undertake the detailed design and lead ship construction, and the application for Hanwha Ocean's designation as a defense company should also be withdrawn.
As the conflict between the two companies has stalled the KDDX project, the National Assembly has also stepped in. Legislators from both the ruling and opposition parties affiliated with the National Defense Committee, as well as lawmakers from districts where Hanwha Ocean and HD Hyundai have establishments in Geoje and Ulsan, are planning to arrange meetings with each company. This is because continued conflict could negatively impact the submarine projects in Canada (70 trillion won), Poland (3 trillion won), and the Philippines (2 trillion won).
A National Assembly official said, "While the opinions among lawmakers differ slightly, there is a consensus that the KDDX project needs to be wrapped up quickly. We will find a win-win solution at the National Assembly level."