The outline of the South Korean next-generation destroyer (KDDX) project, valued at 7.8 trillion won, will soon be revealed. KDDX is a project to build six 6,000-ton class South Korean next-generation destroyers by 2030, with conceptual design initiated in 2012, but it has been continuously delayed. HD Hyundai Heavy Industries and Hanwha Ocean are competing for the KDDX project contract.
According to the Defense Acquisition Program Administration (DAPA) and the defense industry on the 17th, DAPA held a subcommittee meeting at 2 p.m. at the government complex in Gwacheon. A DAPA official noted, "The main focus of the subcommittee today was the implementation method of the KDDX project and the review of the detailed design and basic plan for the leading ship construction." The results of the subcommittee will be decided at the Defense Project Promotion Committee (DPPC) scheduled for early next month.
The focus is on the method of promoting the KDDX project. The options are a negotiated contract, competitive bidding, or joint design. If the KDDX project proceeds with a negotiated contract, HD Hyundai Heavy Industries will take charge of the detailed design. The shipbuilding project follows a sequence of conceptual design, basic design, detailed design and leading ship construction, and follow-on ship construction, with the convention being that the company that completed the basic design also handles the detailed design and leading ship. The conceptual design for KDDX was done in 2012 by Daewoo Shipbuilding & Marine Engineering, and the basic design was completed by HD Hyundai Heavy Industries in 2020.
DAPA is considering a joint development plan between HD Hyundai Heavy Industries and Hanwha Ocean as competition between the two companies heats up. Under this plan, HD Hyundai Heavy Industries, which completed the basic design, would lead the detailed design and construction of the leading ship while Hanwha Ocean would collaborate. However, it has been reported that the two companies found aspects such as equity distribution and contract methods with DAPA to be inappropriate.
If the project proceeds through competitive bidding, the KDDX project could be further delayed. Recently, Admiral Yang Yong-mo sent an unusual letter to HD Hyundai Heavy Industries and Hanwha Ocean last month. He said, "There are many concerns about the delay in the timeline for the commissioning of key vessels amid the serious current security environment. For the sake of national security and prosperity, it is important that the navy’s core capabilities are secured in a timely manner, and I urge you to pay attention and effort to this matter."
For this reason, industry insiders believe there is a high possibility that the project will proceed via a negotiated contract. A DAPA official said, "Given that the KDDX project itself has already been delayed, we will reach a conclusion as soon as possible."
It is reported that the follow-on ship comprehensive order was not a major agenda item at the subcommittee meeting. A comprehensive order means selecting a contractor for five follow-on ships, excluding the KDDX leading ship, divided into one order of three ships and another of two ships. A revised plan for promoting the follow-on ship must be approved by the DPPC after undergoing an additional review. DAPA has previously selected contractors by awarding contracts to the highest-scoring bidders for 1 and 2, and subsequently bidding again for 3 and 4.
As this is a large-scale national project with over 1 trillion won invested per ship, there is the possibility of further discussions. An industry insider noted, "Whatever decision is made, there is a possibility of backlash, requiring a clever solution. If legal disputes arise again, the KDDX project could experience delays once more."