The military will launch a project next year to introduce next-generation ocean intelligence ships. Ocean intelligence ships are combat support vessels that detect missile threats from neighboring countries at sea. HD Hyundai Heavy Industries and Hanwha Ocean, rivals in the shipbuilding sector, are expected to take part in the project, but if the Defense Acquisition Program Administration (DAPA) extends its security penalty against HD Hyundai Heavy Industries, the company is expected to be hit.
According to the military authorities and the defense industry on Oct. 20, the Defense Acquisition Program Administration (DAPA) plans the Ocean Intelligence Ship III project to build two new ocean intelligence ships by investing 158 billion won from next year through 2035. A feasibility study for the first phase was conducted last year, and DAPA is said to be reviewing the bidding method. The military currently operates the 2,800-ton (t) Sinsegi (ship No. 1) and the 3,800-t Singiwon (ship No. 2). The project aims to replace the aging first ship.
The new ocean intelligence ships will be equipped not only with unmanned aerial vehicles (UAVs) but also unmanned underwater vehicles to expand intelligence collection capabilities. The industry expects both HD Hyundai Heavy Industries and Hanwha Ocean to participate in the next-generation ocean intelligence ship project. HD Hyundai Heavy Industries built both Singiwon and Sinsegi, and also carried out the conceptual design of the next-generation ocean intelligence ship. Having constructed numerous vessels, HD Hyundai Heavy Industries is ahead of competitors in terms of safety.
The key issue is DAPA's security penalty. On Sept. 30, DAPA said it would apply a security penalty on HD Hyundai Heavy Industries through Dec. next year. Nine HD Hyundai Heavy Industries employees received final guilty verdicts for leaking military secrets related to the Korea Destroyer neXt generation (KDDX) program. Final guilty verdicts were reached for eight in 2022 and one in 2023.
DAPA initially viewed the two verdicts as one case and decided to impose a 1.8-point penalty, but after a recent internal review it said it would treat them as separate matters and apply an additional 1.2-point penalty through Dec. next year. The 1.8-point penalty is set to expire in Nov. this year.
DAPA is reviewing whether to make a final disposition after hearing HD Hyundai Heavy Industries' opinion on the security penalty extension. A DAPA official said, "We plan to make a decision after hearing HD Hyundai Heavy Industries' opinion and conducting one more review." Defense bids are usually decided by fractional differences, so if the security penalty is extended, it will be difficult for HD Hyundai Heavy Industries to win the next-generation ocean intelligence ship project.
HD Hyundai Heavy Industries has said it will take legal action if DAPA extends the security penalty, raising the possibility that the next-generation ocean intelligence ship project could be delayed.