The competition between HD Hyundai Heavy Industries and Hanwha Ocean for the KDDX project is reaching its final stages. With the Defense Acquisition Program Administration expected to finalize the selection of the detailed design and lead ship construction contractor this month, both companies are intensifying their efforts.
According to industry sources on June 9, the Defense Acquisition Program Administration has begun evaluating proposals for the KDDX detailed design and lead ship construction, with the contractor's identity likely to be revealed within the month.
The KDDX project involves the construction of six 6,000-ton Aegis-class destroyers, utilizing domestic technology for the hull and combat systems, with a total project budget of 7.439 trillion won. The budget for the detailed design and lead ship construction is set at 882 billion won (including VAT).
The project will proceed in phases: concept design, basic design, detailed design and lead ship construction, followed by subsequent ship construction. Hanwha Ocean was awarded the concept design contract, while HD Hyundai Heavy Industries secured the basic design contract.
Both companies officially confirmed their participation in the KDDX second bidding round ahead of the deadline at the end of last month. A significant variable in this competition is the security penalty applied to HD Hyundai Heavy Industries.
The shipbuilding project is evaluated based on technology, execution capability, and price, but the score differences between companies are typically narrow, meaning even a 0.1-point deduction can influence the outcome. This is why the 1.2-point security penalty imposed on HD Hyundai Heavy Industries has drawn attention in the industry.
Previously, some employees of HD Hyundai Heavy Industries illegally obtained 12 classified naval documents, including the KDDX concept design from Daewoo Shipbuilding & Marine Engineering, and shared them internally. In November 2022, eight individuals were convicted in this case. Consequently, a security penalty was set to be applied until November 2025.
However, after one individual was acquitted in the first trial, the prosecution appealed, leading to a guilty verdict in the second trial in December 2023. As a result, the Defense Acquisition Program Administration announced that the security penalty would be applied until December 2026.
HD Hyundai Heavy Industries filed for an injunction against the extended penalty, but the court dismissed the request on June 5. This has led to analyses suggesting that Hanwha Ocean, which does not face a penalty, is in a relatively advantageous position in the KDDX bidding competition.
An industry insider noted, "In shipbuilding projects, outcomes are often determined by narrow score margins, so a 1.2-point penalty can be a significant burden. While HD Hyundai Heavy Industries has clear strengths from its basic design work, the current environment seems to favor Hanwha Ocean due to the absence of a penalty."
* This article has been translated by AI.
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