Hanwha Ocean has effectively seized victory over HD Hyundai Heavy Industries in the Korean Destroyer Next Generation project worth 7 trillion won . Although Hanwha Ocean fell short in the technical capability assessment, a deduction imposed on its competitor for a past security breach proved to be the decisive factor, making it highly likely that Hanwha Ocean will be named the preferred negotiating partner.

The Defense Acquisition Program Administration completed its evaluation of proposals for the KDDX detailed design and lead ship construction project on June 11 and notified each company of the results. The project is a large-scale undertaking to build six next-generation 6,000-ton-class destroyers for the Navy using domestically developed technology, and it is considered a pivotal contract that will determine dominance in the future defense industry market.

According to the evaluation results, Hanwha Ocean outscored HD Hyundai Heavy Industries in the overall assessment by approximately 0.58 points. A closer look at the individual indicators reveals that HD Hyundai Heavy Industries scored 0.6425 points higher than Hanwha Ocean in the technical capability evaluation, giving it an edge in that category. However, a 1.2-point deduction applied for a past security incident ultimately reversed the final rankings.

Industry observers analyze this outcome as yet another confirmation of the stringent security standards that govern the defense industry market. Despite demonstrating unrivaled technical capability, HD Hyundai Heavy Industries now faces the prospect of losing the bid, unable to overcome the penalty deduction.

With this win, Hanwha Ocean is expected to take charge of not only the detailed design but also the lead ship construction. The experience gained from building the lead ship is expected to serve as a powerful competitive advantage in future follow-on ship procurement competitions, making it a significant contributor to the company’s overall value.

The Defense Acquisition Program Administration plans to finalize the preferred negotiating partner following an objection and appeal process. Some friction is anticipated before the final contract is signed, depending on how HD Hyundai Heavy Industries responds, but as things currently stand, Hanwha Ocean’s contract award appears highly likely.

Source:Business Korea