KDDX Project: HD Hyundai’s Legal Challenge Could Delay South Korea’s Next-Gen Warship

[Herald Economy = Reporter Jeon Hyun-geon] HD Hyundai Heavy Industries has launched legal action over distribution of the basic-design request for proposals (RFP) for the Korean next-generation destroyer program (KDDX), as the project moves into competitive bidding.

Multiple defense industry sources said HD Hyundai filed for a provisional injunction yesterday at the Seoul Central District Court against the Defense Acquisition Program Administration (DAPA), seeking to block the RFP distribution and the sharing of basic-design materials.

DAPA had planned to distribute the KDDX RFP to the two designated competitors, HD Hyundai and Hanwha Ocean, on the 26th. After a full review following the injunction filing, the agency decided to proceed with the RFP distribution as scheduled.

But if the court grants the injunction and the schedule is disrupted, DAPA may not receive proposals by the May 15 deadline. Its plan to select a contractor by July could also be delayed. The court is expected to issue a ruling as early as the 26th or, at the latest, early next week.

The KDDX program is the first domestic destroyer project to use Korean technology for both the hull and the Aegis combat system. The plan calls for building six 6,000-ton-class mini-Aegis ships (about 6,614 short tons) with a budget of 7.0439 trillion KRW (approximately $5.283 billion).

Shipbuilding programs typically progress through concept design, basic design, detailed design and lead-ship construction, then follow-on ships. Hanwha Ocean and HD Hyundai previously handled the concept and basic designs, respectively.

KDDX was slated to finish basic design in December 2023 and begin detailed design and lead-ship construction in 2024, but fierce competition between the two companies prevented DAPA from reaching a decision, delaying the program.

Against that backdrop, the government convened the Defense Procurement Promotion Committee last December and decided to award the detailed-design and lead-ship construction contract through competitive bidding.

DAPA issued the bidding notice in March and allowed prospective bidders to pre-review project documents, including HD Hyundai’s basic-design materials, to clarify key requirements.

HD Hyundai’s injunction has renewed concerns that the program could face further delays.

“This issue could determine the outcome of the newly launched designated competitive bidding,” a defense industry source said. “If the court grants the injunction, the program could drift again.”

Even if the injunction is dismissed, some industry observers say HD Hyundai could file another injunction over whether a security-related score deduction should apply.

HD Hyundai is reportedly considering legal action against DAPA if security-score deductions cost it the contract.

The company previously received a 1.8-point security deduction through November for a violation of the Military Secrets Protection Act, and DAPA is reviewing an additional 1.2-point deduction.

DAPA has not yet decided whether to apply the additional deduction and says it will finalize the matter during the proposal-evaluation process. Because shipbuilding contracts often hinge on fractional score differences, any extra deduction could significantly affect the outcome.

An HD Hyundai spokesperson said, “The injunction seeks to prevent competitors from accessing certain important trade secrets, not to block access to the company’s entire basic-design deliverables,” and emphasized the company does not intend to delay the KDDX detailed-design and lead-ship selection process.