HD Hyundai Heavy Industries Opts Out of 2nd-Generation KDDX Concept Design Bid; Hanwha Ocean, Sole Bidder, Likely to Secure Negotiated Contract

Artist’s rendering of the Korean Destroyer Next Generation (KDDX) (Provided by HD Hyundai Heavy Industries)

With HD Hyundai Heavy Industries declining to participate in the concept design tender which is the first step of the 2nd-generation Korean Destroyer Next Generation (KDDX) program, Hanwha Ocean, which submitted the only bid, is expected to proceed with a negotiated contract. Meanwhile, the 1st-generation program, which has been adrift amid fairness disputes between the two companies, has yet to reach a conclusion.

According to defense industry sources on April 23, HD Hyundai Heavy Industries did not participate in either of the two concept design tender sessions for the 2nd-generation (Batch-II) KDDX program held on July 10 and July 20. With only Hanwha Ocean submitting a bid, both tenders were invalidated. Under regulations that allow a negotiated contract with a sole bidder after two failed tenders, Hanwha Ocean is expected to secure the concept design contract for the 2nd-generation program. Warship construction programs proceed in the following order: concept design, basic design, detailed design and lead ship construction, and follow-on ship construction.

KDDX is a national project that invests a total of 7.8 trillion won (approximately $5.3 billion) to build six 6,000-ton state-of-the-art destroyers equipped with the Aegis system (dubbed ‘Shield of the Gods’) using domestic technology. Ships 1 through 3 are classified as the first generation, and ships 4 through 6 as the second generation. Initially, the Defense Acquisition Program Administration planned to sign a contract for the detailed design and lead ship construction of the first generation by the end of this year and deploy them to the Navy for actual combat by 2030, but the project is being delayed.

HD Hyundai Heavy Industries said it made its decision on whether to participate in the 2nd-generation concept design based on business conditions. The two companies are locked in a head-to-head contest over the 1st-generation KDDX program. HD Hyundai Heavy Industries won the basic design contract in 2020 and was widely considered the frontrunner to secure the final contract as well, but circumstances changed thereafter. The contract selection method was also changed from a negotiated contract to competitive bidding after President Lee Jae-myung pointed out a past conviction involving an HD Hyundai Heavy Industries employee for leaking classified military information in December of last year.

Source:Business Korea