HD Hyundai Heavy Industries' request for an injunction against the Defense Acquisition Program Administration over the Korea Destroyer Next Generation (KDDX) program was not granted. The company argued that the KDDX basic design materials it produced should not be provided to rival Hanwha Ocean, but the court sided with the Defense Acquisition Program Administration.
The Seoul Central District Court Civil Agreement Division 60 (Presiding Judge Kim Mi-gyeong) on May 8 dismissed HD Hyundai Heavy Industries' request for an injunction related to the distribution of the KDDX basic design request for proposals (RFP) and the sharing of materials against the Defense Acquisition Program Administration.
KDDX is a program to build six 6,000-ton (t) Korea-style destroyers with an investment of about 7.8 trillion won. It is the first domestic destroyer program to develop the hull and combat system with Korean technology, and is considered a core project in Korea's warship programs.
HD Hyundai Heavy Industries and Hanwha Ocean, the two major players in Korea's special vessel sector, have long competed for the order. Hanwha Ocean handled the concept design, while HD Hyundai Heavy Industries was in charge of the basic design.
Typically, the company that performs the basic design often goes on to take the follow-up detailed design and lead ship construction. However, after employees of HD Hyundai Heavy Industries were convicted for photographing and leaking Hanwha Ocean's concept design data, the method for selecting the contractor also became a point of contention. In Dec. last year, the Defense Acquisition Program Administration decided to select the KDDX contractor through competitive bidding.
The Defense Acquisition Program Administration initially planned to distribute the KDDX basic design request for proposals to HD Hyundai Heavy Industries and Hanwha Ocean, the designated competitors. In response, HD Hyundai Heavy Industries filed for an injunction with the court on Mar. 24.
HD Hyundai Heavy Industries argued that some of the basic design deliverables contained its trade secrets, including the latest construction methods, new technologies, and product specifications, and that providing these materials to a competitor could influence bidding strategies. The point was that sharing the materials by the Defense Acquisition Program Administration could lead to unfair competition.
After the court dismissed the injunction request, HD Hyundai Heavy Industries expressed regret. A company official said, "We respect the court's decision, but it does not change the fact that our important trade secrets were passed to a competitor," adding, "We are deeply regretful that the fairness of a national project has been significantly undermined."
The Defense Acquisition Program Administration said the court's decision confirmed the legality of the project's promotion procedures. An agency official said, "We respect the court's decision," adding, "This decision is very significant in that the court recognized the procedural legality and fairness in the process of providing government-owned materials for the efficient conduct of weapons systems research and development."
The official added, "The Defense Acquisition Program Administration will continue to carry out the KDDX program fairly and lawfully in accordance with relevant laws and procedures."