The Marine Test Ship Will Be Selected Through Competitive Bidding... HD Hyundai Heavy Industries Chosen

DAPA "Different from Claim of Private Contract with Basic Design Company"

HD Hyundai Heavy Industries has been selected for the detailed design and construction project of the large offshore test ship. Hanwha Ocean was responsible for the basic design of the large offshore test ship. Until now, the Defense Acquisition Program Administration (DAPA) has claimed that if there is no special reason, the company that undertakes the basic design also proceeds with a sole-source contract for the detailed design and construction project.

The next-generation sea trial vessel "Cheonghaeho" with a total tonnage of 1,200 tons, built by STX Offshore & Shipbuilding.

According to DAPA on the 30th, HD Hyundai Heavy Industries was selected as the first priority in the bidding for the "Large Offshore Test Ship Detailed Design and Construction Project," a general commodity announced by the Agency for Defense Development (ADD) through the Public Procurement Service. The project scale is 125.5 billion KRW.

According to the construction specifications announced by ADD, the large offshore test ship is a multipurpose special vessel used to conduct tests for the development and practical application of next-generation guided missiles and high-altitude flying objects. To this end, it must be equipped with advanced test measurement equipment and possess long-distance, long-duration navigation capabilities. This vessel must meet conditions such as a light displacement (without cargo) of over 6,150 tons, a cruising range of over 10,000 nautical miles, and a navigation speed of over 27.78 km/h. Additionally, it must accommodate 86 people on board, including 60 researchers.

ADD’s current procurement aims to secure a test ship deployed for maritime testing in the development of space weapon systems, with Hanwha Ocean responsible for the basic design. Subsequently, this project proceeded as a competitive bidding between HD Hyundai Heavy Industries and Hanwha Ocean.

DAPA: Ballistic Missile Test Launch Offshore Test Ship Classified as “General Commodity”

DAPA’s position is that the large offshore test ship is a general commodity, not a defense material, and therefore the project was conducted through competitive bidding rather than a sole-source contract. The large offshore test ship used by the military to develop and launch missiles is not considered a defense material.

DAPA cited Article 34 of the Defense Acquisition Program Act as the basis for classifying it as a general commodity. This article states, “The Administrator of DAPA may designate certain materials classified as weapon systems, in consultation with the Minister of Trade, Industry and Energy, as defense materials for the purpose of securing stable procurement sources and strict quality assurance.” This can be interpreted to mean that the large offshore test ship does not require stable procurement sources or quality assurance.

Competitive Contracting Proceeded Contrary to Conventional Contract Methods

DAPA also presented Article 2 of the Military Supplies Management Act as a basis, which states, “Military supplies refer to items managed by the Ministry of National Defense and its direct agencies, the Joint Chiefs of Staff (hereinafter referred to as ‘Defense Offices’), and the Army, Navy, and Air Force (hereinafter referred to as ‘Each Service’).” This implies that ADD, which uses the large offshore test ship, cannot be considered a direct agency. However, ADD participates in the Defense Acquisition Program Promotion Committee (DAPPC), which decides on weapon development and procurement projects together with the military.

Until now, DAPA has argued that when conducting shipbuilding projects, the company responsible for the basic design should proceed with a sole-source contract for the detailed design and construction project unless there is a special reason. According to an internal DAPA document obtained by this publication titled “Korean Next-Generation Destroyer (hereinafter KDDX) Project Promotion Plan,” “Since the opening of DAPA, all 18 ship research and development projects have been conducted through sole-source contracts, with the basic design company performing the detailed design and constructing the lead ship.” This document appears to have been written earlier this month. It states, “The related regulations stipulate that the work should continue unless there is a special reason.”

Defense Industry Watches for Impact on KDDX Project

Seok Jong-geon, head of DAPA, recently presented the rationale in an interview with domestic media, saying, “Various combat systems, armaments, and sonar systems need to be developed and integrated, and when the company that performed the basic design also does the detailed design, risks are reduced and project management can be more efficient.”

The industry is paying close attention to whether the selection of the company for the large offshore test ship detailed design and construction project will affect the KDDX project. In the case of KDDX, HD Hyundai Heavy Industries performed the basic design. DAPA has stated that it is reviewing whether to proceed with a sole-source contract or competitive bidding for the detailed design and lead ship construction.

Some speculate that DAPA may decide on the project method after observing the results of a police investigation. The police are investigating whether the CEO or executives of HD Hyundai Heavy Industries were involved in the illegal acquisition of military secrets and whether former DAPA Administrator Wang Jeong-hong gave preferential treatment to HD Hyundai Heavy Industries.

This content was produced with the assistance of AI translation services.