The selection of a company to carry out the detailed design and build the lead ship (the first ship) of the Korean next-generation destroyer (KDDX; Korea Destroyer neXt generation), a 7.8 trillion won program, has been delayed once again. With differences between companies unresolved, the government and the ruling party said they would look into the matter, effectively putting on the brakes, raising industry concerns about reigniting conflict between HD Hyundai Heavy Industries and Hanwha Ocean. If the dispute persists, major overseas orders, including Canada's submarine project, are expected to be adversely affected.
The Defense Acquisition Program Administration (DAPA) planned to put the KDDX program on the agenda of the Program Planning and Management Subcommittee on the 18th but postponed it. The industry believes parliamentary influence was at play. As opinion spread among subcommittee members that the win-win cooperation plan discussed by DAPA and each company was insufficient, the government and the ruling party said they would look into it.
Since March, DAPA has met with HD Hyundai Heavy Industries and Hanwha Ocean to discuss the implementation method for the KDDX program. It is said that working-level staff from each company met regularly and produced a plan under which HD Hyundai Heavy Industries would take on the detailed design and lead-ship construction through a private contract, and Hanwha Ocean would cooperate during the detailed design phase.
HD Hyundai Heavy Industries maintained that a private contract should be used, in line with the practice of having the basic design contractor also perform the detailed design. Hanwha Ocean, by contrast, has argued for competitive bidding, citing HD Hyundai Heavy Industries' involvement in an incident related to military secrets. Although a government agency stepped in to set the table, the two companies ultimately failed to agree on a cooperation plan, prompting even the government and the ruling party to get involved.
In political and industry circles, there are concerns that overheated competition between the companies could hurt overseas order bids. HD Hyundai Heavy Industries and Hanwha Ocean have formed a consortium to participate in Canada's submarine project and, together with German company TKMS, have made the final shortlist.
An industry official said, "If conflict is severe among companies in a consortium, it inevitably becomes a weakness. Wouldn't the client also feel uneasy?" Canada's submarine project calls for 8 to 12 submarines of around 3,000 tons (t), with the program estimated at up to 60 trillion won. The result is expected around the end of this year.
HD Hyundai Heavy Industries and Hanwha Ocean each jumped into Australia's program to introduce 11 new frigates last year but were eliminated, trailing Japan and Germany. At the time, there were comments that the outcome might have been different had they bid as one team, as Japan and Germany did.