DAPA Finalizes Coordination with KDDX Contractor This Week [Yang Nak-gyu's Defence Club]
by Yang Nakgyu
Published 28 Mar.2025 09:59(KST)
Updated 31 Mar.2025 09:39(KST)
Behind-the-Scenes Negotiations with Leaders of HD Hyundai Heavy Industries and Hanwha Ocean
Mediation Underway Between "Direct Contract vs. Competitive Bidding" for Project Method
The Defense Acquisition Program Administration (DAPA) is in successive contact with HD Hyundai Heavy Industries and Hanwha Ocean to finalize the business method for the Korean next-generation destroyer (KDDX) project. This appears to be in response to criticism that mediation has not been properly conducted despite conflicts arising among KDDX-related companies.
A government official said on the 28th, "Deputy Administrator Kang Hwan-seok of DAPA recently met with Joo Won-ho, head of HD Hyundai Heavy Industries' Special Ship Division, and today will meet with President Eo Seong-cheol, head of Hanwha Ocean's Special Ship Division," adding, "They are preparing a mediation plan related to KDD." It was also reported that Cho Hyun-gi, Director of Resource Management at the Ministry of National Defense, will attend the meeting with Hanwha Ocean.
DAPA has proposed three options regarding the 'KDDX Detailed Design and Lead Ship Construction Project' method: ▲direct contract ▲competitive bidding ▲joint design by both companies. Among these, joint design by both companies has been effectively excluded. This leaves only two options: the direct contract favored by HD Hyundai Heavy Industries and the competitive bidding preferred by Hanwha Ocean.
DAPA plans to create a final mediation plan, including this weekend, and devise a way to persuade the committee members of the project subcommittee. DAPA had scheduled a discussion on the KDDX project method at the project subcommittee meeting on the 27th but postponed it. The subcommittee is expected to convene next month.
However, it is reported that the civilian members of the subcommittee are not convinced by the direct contract option. Since the State Contract Act is a higher law than the Defense Acquisition Program Act, once multiple companies are designated, a direct contract may be illegal. In particular, there were concerns about whether it is possible to enter into a direct contract with HD Hyundai Heavy Industries, which received a 1.8-point security deduction in the national project bidding due to a guilty verdict on charges of military secrets theft and dissemination by its employees.
Park Jin-ho, a policy advisor at the Ministry of National Defense, said, "It does not seem easy to decide between direct contract and competitive bidding," adding, "It is necessary to persuade the National Assembly's Defense Committee to reduce risks such as future policy audits."
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