Hanwha Ocean Selected as Preferred Negotiator for 7.8 Trillion Won KDDX Project...Business Gets Back on Track After Two Years

KDDX Detailed Design and Lead Ship Construction
Prolonged Two-Year Stalemate Amid Fierce Competition
HD Hyundai Loses Out Due to Security Penalty
Hanwha Ocean: "We Feel a Tremendous Sense of Responsibility"

Hanwha Ocean has been selected as the preferred bidder for the detailed design and lead ship construction project of the Korean next-generation destroyer (KDDX), a project valued at 7.8 trillion won. KDDX is the first domestically developed Aegis-class destroyer, built entirely with local technology from ship design to combat systems, and has been considered a critical benchmark for technological self-reliance in the surface vessel segment of Korea’s defense industry. With the selection process for the builder, which had been stalled for over two years since the completion of the basic design in December 2023, now finalized, concerns about a gap in naval power have been alleviated.

KDDX bird's-eye view. Hanwha Ocean

On July 2, Hanwha Ocean announced via a regulatory filing that it had been chosen as the preferred negotiating partner for the KDDX detailed design and lead ship construction project, commissioned by the Defense Acquisition Program Administration.

The KDDX project involves sequentially acquiring six 7,000-ton-class destroyers by the early 2030s. Hanwha Ocean and HD Hyundai Heavy Industries have been competing for the detailed design and lead ship construction portion of the project. The contract amount, duration, and specific terms will be finalized through further negotiations between the parties.

Previously, on June 11, the Defense Acquisition Program Administration evaluated the proposals submitted by both Hanwha Ocean and HD Hyundai Heavy Industries and notified both companies that Hanwha Ocean had been selected as the preferred bidder. It is reported that Hanwha Ocean led HD Hyundai Heavy Industries by a margin of approximately 0.59 points.

In this decision, a 1.2-point security deduction applied to HD Hyundai Heavy Industries proved decisive. Employees at HD Hyundai Heavy Industries were convicted for photographing and leaking military secrets related to the KDDX concept design in 2013, resulting in a security deduction in the bid evaluation by the Defense Acquisition Program Administration. HD Hyundai Heavy Industries protested the evaluation results and filed an objection, but the agency rejected the appeal the previous day.

Although the difference was slight, the point gap—determined down to the decimal—was seen as difficult to overturn in such a competitive bidding process. In fact, HD Hyundai scored 0.6425 points higher in the technical capability assessment, but after the security deduction was applied, Hanwha Ocean ultimately prevailed.

With the selection of the preferred bidder, the competitive and protracted KDDX project—delayed for nearly two years—has now entered its final phase.

Hanwha Ocean emphasized that it has continued research and development (R&D) efforts to solidify its position as a "leading warship builder." Through the KDDX concept design, the company established the foundation for core technologies for advanced warships, including integrated electric propulsion, integrated mast, integrated network, and automation technologies to reduce personnel requirements. Hanwha Ocean also stated that it has continued independent research to develop new warship designs and enhance ship survivability.

Last year, Hanwha Ocean unveiled its "next-generation strategic surface ship" incorporating the latest smart warship technologies. The company independently performed the basic design for this vessel and successfully obtained Approval in Principle (AiP) from Lloyd’s Register of the United Kingdom. The next-generation strategic surface ship features a hybrid manned-unmanned combat system, a laser gun system, and a multi-layered defense system against suicide drones. It is also characterized by automation and unmanned technologies that optimize crew requirements, maximize combat efficiency, and enhance operational sustainability.

Hanwha Ocean plans to leverage its advanced warship technologies to execute the KDDX project without delay. In a statement, Hanwha Ocean said, "We feel a great sense of responsibility at being selected as the preferred bidder for the KDDX detailed design and lead ship construction project," adding, "With our advanced warship technologies and project management capabilities, we will faithfully engage in negotiations with the government as the designated preferred bidder and do our utmost to ensure the successful normalization of the project."

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