Hanwha Ocean has been selected as the preferred bidder for the detailed design and lead ship construction of the Korea Destroyer Next Generation (KDDX). The score gap between Hanwha Ocean and HD Hyundai Heavy Industries was 0.5867 points, and the 1.2-point "additional security deduction" applied to HD Hyundai Heavy Industries is seen as the key factor that decided the outcome.
According to the defense industry on the 11th, the proposal evaluation committee of the Defense Acquisition Program Administration evaluated the proposals submitted by HD Hyundai Heavy Industries and Hanwha Ocean, selected Hanwha Ocean as the preferred negotiation partner, and notified both companies of the result that afternoon. Hanwha Ocean will take charge of the KDDX detailed design and the construction of the lead ship (the first ship) after detailed negotiations with the agency.
KDDX is a project worth about 7.8 trillion won to build six 6,000-ton-class destroyers with domestic technology. Major components such as the hull, combat system, and large integrated mast will be developed with domestic technology, and an integrated electric propulsion system will be applied for the first time in a domestic naval ship program.
Daewoo Shipbuilding & Marine Engineering conducted the KDDX concept design in 2012, and HD Hyundai Heavy Industries carried out the basic design in 2020. The plan was to begin detailed design and lead ship construction in 2024 after completing the basic design at the end of 2023, but the project was delayed by about two years due to disputes over the selection method. The first bid, which closed on the 10th of last month, failed because Hanwha Ocean was the sole bidder, and HD Hyundai Heavy Industries joined the re-announced second bid, continuing the competition for the order.
A security deduction of 1.2 points applied to HD Hyundai Heavy Industries is cited as the variable that decided the outcome. Nine employees of HD Hyundai Heavy Industries were accused of illegally obtaining and sharing Navy confidential materials, including KDDX concept design drawings from Daewoo Shipbuilding & Marine Engineering in 2013, in violation of the Military Secret Protection Act; eight received final guilty verdicts in 2022, and one in Dec. 2023. The agency initially viewed the two rulings as a single case and imposed a 1.8-point deduction, but after an internal legal review, it changed its view to treat them as separate and, based on the date the last person's conviction was finalized, applied an additional 1.2-point deduction through Dec. this year. HD Hyundai Heavy Industries sought an injunction, arguing the extension lacked legal grounds, but the court dismissed it on the 5th.
Within the defense industry, some say the result would have been different without the deduction. There is also speculation that HD Hyundai Heavy Industries could pursue further legal action, including a suit on the merits.
The contractor responsible for detailed design and lead ship construction holds the initiative to decide which parts and equipment to apply. Although the two companies are expected to split the follow-on ships, the lead ship record can serve as a key credential in future overseas naval ship bids, drawing intense industry attention.
Hanwha Ocean said, "We received strong marks in the proposal evaluation based on our advanced naval technology and project execution capabilities," adding, "As this is an indigenous destroyer equipped with nine core domestically developed systems, we will do our best to deliver world-class performance and quality through flawless system integration."
HD Hyundai Heavy Industries said, "We regret not being selected despite leading significantly in the technical score," and added, "We plan to request a debriefing, the procedure to explain the evaluation results, to verify the details and the basis."