As Hanwha Ocean has been effectively selected as the preferred bidder for the 7.8 trillion won KDDX detailed design and lead ship construction project, HD Hyundai Heavy Industries has filed an appeal against the ruling that dismissed its request to prohibit the application of a security penalty. With the selection of the KDDX contractor approaching, there is growing interest in whether this legal dispute will introduce new variables into the process.
On June 12, defense industry sources reported that HD Hyundai Heavy Industries submitted the appeal to the Seoul Central District Court the previous day. The company had filed the request for a temporary injunction in response to the Defense Acquisition Program Administration's (DAPA) decision to extend the security penalty measures for one year until December. However, the court dismissed this request on June 5.
The security penalty stems from an incident in which nine employees of HD Hyundai Heavy Industries leaked KDDX conceptual design materials from Daewoo Shipbuilding & Marine Engineering, Hanwha Ocean's predecessor, between 2012 and 2015. Eight of these employees were convicted in November 2022, while one was convicted in December 2023. DAPA has applied a 1.2-point security penalty during the bidding process due to this incident.
Initially, DAPA indicated that the penalty would end in November of last year based on the eight individuals who had received confirmed convictions. However, following the final conviction of the last individual in September of last year, DAPA decided to extend the 1.2-point penalty until December of this year.
As a result, while HD Hyundai Heavy Industries outperformed Hanwha Ocean by approximately 0.6 points in technical scores, the security penalty ultimately allowed Hanwha Ocean to surpass HD Hyundai Heavy Industries by 0.5867 points in total scores, leading to its selection as the preferred bidder.
HD Hyundai Heavy Industries argues that DAPA's extension of the penalty period until December is unjust. If the appeal is accepted, it could introduce variables into the KDDX contractor selection process.
Meanwhile, DAPA has stated that it will proceed with the subsequent procedures as planned, independent of HD Hyundai Heavy Industries' appeal. The agency aims to officially select the preferred bidder by early next month and finalize the main contract by the end of next month or early August.
* This article has been translated by AI.
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