On the 8th, the Ministry of Trade, Industry and Energy conducted a field audit of HD Hyundai Heavy Industries to designate domestic defense companies related to the Korean Next-Generation Destroyer (KDDX). Based on this field audit, it is expected that the business method for KDDX will be finalized as early as next month.
According to the defense industry, on this day, HD Hyundai Heavy Industries underwent a field audit for KDDX defense company designation. A field audit was conducted for Hanwha Ocean on the 19th of last month. The audit is a procedure to verify production capabilities, including manufacturing facilities, quality inspection facilities, and production personnel. Typically, a field audit takes one day, but it might take an additional 2 to 3 days depending on the verification process.
Once the field audit is completed, the designation of defense companies will be determined after a security assessment by the Defense Security Command. Observers expect that the Defense Acquisition Promotion Committee will present and discuss detailed design and leading ship construction companies next month.
The Ministry of Trade, Industry and Energy is reported to have established a policy to designate both companies as defense firms if they meet the criteria. If only one company is designated as a defense firm, that company will enter into a contract with the Defense Acquisition Program Administration to undertake detailed design and lead ship construction. If both are designated as defense firms, one of them will be selected through competitive bidding for detailed design and lead ship construction.
The KDDX project involves the construction of six 6,000-ton next-generation destroyers at a total cost of 7.8 trillion won by 2030. The project will proceed from concept design to basic design, detailed design, and lead ship construction. Among these, the concept design was undertaken by Daewoo Shipbuilding & Marine Engineering (currently Hanwha Ocean) in 2012, and the basic design was secured by HD Hyundai Heavy Industries in 2020. If there are no disqualifying factors, it is customary for the company that performed the basic design to undertake detailed design and lead ship construction through a negotiated contract.
However, issues arose when nine employees of HD Hyundai Heavy Industries were convicted in December 2023 for the theft and distribution of military secrets. Due to 'leakage of military secrets,' HD Hyundai Heavy Industries is currently subject to a security penalty of 1.8 points. Consequently, Hanwha Ocean strongly opposed proceeding with a negotiated contract instead of a competitive bid.