The Defense Acquisition Program Administration  is contemplating administrative measures against Hanwha Ocean, formerly known as Daewoo Shipbuilding & Marine Engineering, concerning the Korean Destroyer Next Generation  project. This potential action arises from allegations that Hanwha Ocean utilized items from the KDDX concept design report without authorization. The issue was initially investigated by the Defense Security Command at DAPA’s request. However, due to the expiration of the statute of limitations under the Military Secret Protection Act, a conclusion of “no charge” was reached.

On the morning of April 15, Cho Yong-jin, spokesperson for DAPA, addressed these concerns during a regular briefing at the Ministry of National Defense. He stated, “We are internally reviewing whether to impose administrative measures on Hanwha Ocean regarding matters related to the KDDX concept design report.” Despite this review process, Cho emphasized that “no decision has been made yet regarding the administrative measures.”

The timing of this review is particularly sensitive as DAPA plans to hold a subcommittee meeting on the April 24 to discuss detailed design and lead ship construction methods for the KDDX project. The agenda will subsequently be presented to the Defense Acquisition Program Promotion Committee on the 30th. Observers suggest that any decision on administrative measures could significantly impact the KDDX project, which has already faced delays due to differences between major shipbuilders and DAPA’s deferred decisions.

The KDDX project is a landmark initiative aimed at developing and constructing six advanced Aegis destroyers using entirely domestic technology. With a budget of approximately 7.8 trillion won (approximately $5.4 billion), it represents a critical component of South Korea’s naval expansion and modernization strategy. Originally scheduled to commence detailed design and lead ship construction last year, progress has been stalled for nearly a year.

Speculation within industry circles suggests that DAPA’s actions might be influenced by considerations for a sole-source contract with HD Hyundai Heavy Industries. However, spokesperson Cho refuted these claims by stating, “The promotion plan for the KDDX project is not related to the sanctions of any specific company.” He further elaborated that “the promotion plan for the KDDX project is being reviewed for an optimal plan considering various factors,” including technical complexity and industry conditions.

Despite these assurances, some analysts argue that it is challenging to view the sanction review as unrelated to the KDDX project. If Hanwha Ocean were designated as an unscrupulous contractor, its participation in future DAPA projects would be restricted for a certain period. Conversely, others believe it would be practically difficult to finalize such a designation before this month’s committee meeting concludes.

Source:Business Korea