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Photo = Yonhap news |
[Alpha Biz= Kim Jisun] South Korea’s Defense Acquisition Program Administration (DAPA) announced on Tuesday that it is reviewing possible administrative sanctions against Hanwha Ocean as it prepares to decide on the business model for the 8 trillion KRW ($5.8 billion) Korean Destroyer eXperimental (KDDX) project.
Hanwha Ocean and HD Hyundai Heavy Industries are currently competing to win the contract for the detailed design and construction of the lead vessel in the next-generation destroyer program.
According to reports, DAPA is reviewing findings from the Defense Counterintelligence Command, which concluded that Hanwha Ocean — formerly Daewoo Shipbuilding & Marine Engineering — plagiarized parts of a conceptual design report it had previously submitted during the KDDX bidding process in 2020.
The investigation revealed that 27 items, including diagrams, were copied from the conceptual design report without authorization, and the original report was not properly submitted to DAPA but retained by the company.
Due to the expiration of the statute of limitations under the Military Secrets Protection Act (10 years), the Defense Counterintelligence Command did not pursue criminal charges and instead advised DAPA to determine appropriate administrative measures.
The KDDX program follows a phased process: conceptual design → basic design → detailed design and lead ship construction → follow-on ships. Daewoo Shipbuilding (now Hanwha Ocean) was responsible for the conceptual design in 2012, while HD Hyundai Heavy Industries completed the basic design in December 2023 after being awarded the contract in 2020.
The rivalry between the two companies has intensified, with ongoing legal disputes delaying DAPA’s decision on the detailed design and lead ship phase for over a year. HD Hyundai Heavy Industries argues that, in line with standard practice, the firm responsible for the basic design should be awarded the follow-up work via a negotiated contract. In contrast, Hanwha Ocean insists on a competitive bidding process, citing HD Hyundai’s past conviction for illegally obtaining military secrets.
DAPA is reportedly leaning toward awarding the contract via negotiation, which has led to speculation in the defense industry that the review of sanctions against Hanwha Ocean may be aimed at clearing the way for a sole-source contract with HD Hyundai. If Hanwha Ocean is designated as an ineligible contractor, it could be barred from participating in DAPA projects for a certain period.
DAPA is expected to reconvene its subcommittee later this month to discuss the business model for the KDDX detailed design and lead ship construction phase, after which the proposal will be submitted to the Defense Project Promotion Committee for a final decision.
AlphaBIZ Kim Jisun(stockmk2020@alphabiz.co.kr)
