Because the budget set aside this year as a mobilization fund for the Korea Destroyer Next Generation (KDDX) has effectively become unusable, the contract cannot move forward even if the contractor for detailed design and construction of the first ship is selected. The KDDX acquisition method must be approved by the Defense Acquisition Program Promotion Committee (DAPA Committee) before procedures such as contracting can proceed, but the committee is expected to convene only next month as its schedule overlaps with the National Assembly's review of next year's budget bill.
According to the military and the defense industry on the 10th, the Defense Acquisition Program Administration (DAPA) is coordinating the schedule to convene the DAPA Committee in December. DAPA had planned to execute the KDDX project's mobilization fund included in this year's budget by carrying it over, if the acquisition method were approved by the committee within this month, but as the committee itself has been delayed, the budget has become "unused funds (a budget not executed)."
With the KDDX project failing to take its first step again this year following last year, force integration is expected to be further delayed. The KDDX project is a plan to invest 7.8 trillion won by 2030 to build six EGIS destroyers domestically, including hulls, combat systems and radars.
A DAPA official said, "Budget is allocated annually under the midterm plan, so even if the mobilization fund became unused funds, there is no problem," adding, "We plan to carry out the project to ensure there is no setback to the force integration plan."
At the Project Management Subcommittee (subcommittee) meeting to be held on the 14th, a co-prosperity cooperation plan raised by the National Assembly and others is expected to be discussed. Regarding the KDDX acquisition method, HD Hyundai Heavy Industries is pushing for a private contract while Hanwha Ocean is calling for competitive bidding, creating friction, and the intent is to devise a co-prosperity plan for the two corporations. Cooperation between the two companies during detailed design, simultaneous orders for the first and second ships, and joint development are being discussed. DAPA maintains the position that the company that performed the basic design should be tasked with the detailed design.
As controversy over KDDX continued, the government and the ruling party even held a closed-door party-government consultative meeting, but it ended without any particular gains. Splitting the detailed design between two companies raises concerns about technology leakage, and a plan to steer the second ship to a specific company could escalate into a collusion issue. Other shipbuilders such as HJ Shipbuilding & Construction and SK oceanplant are also preparing to bid for the KDDX project.
An official at a mid-sized shipbuilder said, "Co-prosperity is something big companies and their partner firms do, so I don't know if co-prosperity between two competing big companies (HD Hyundai Heavy Industries, Hanwha Ocean) is possible," adding, "If this continues and the KDDX project itself is canceled, partner firms will see the work they were counting on shrink significantly."
Inside and outside the military, there are also views calling for additional procurement of the King Jeongjo-class EGIS destroyers, for which force integration has begun with the second ship, instead of the KDDX, which has been delayed by two years.