Hanwha Ocean, HD HHI vie for $632M Navy contract

Hanwha Ocean and HD Hyundai Heavy Industries (HD HHI) are each vying for a government project to build the last two FFX Batch-III frigates for the Navy worth 830 billion won ($631.6 million).

Booths of Hanwha Ocean and HD Hyundai Heavy Industries installed at the International Maritime Defense Industry Exhibition (Madex) in Busan in early June. The rivals vied to boast warship technologies at the exhibition. [KIM SU-MIN]

Hanwha Ocean and HD Hyundai Heavy Industries (HD HHI) are each vying for a government project to build the last two FFX Batch-III frigates for the Navy worth 830 billion won ($631.6 million).

The two companies submitted their bid proposal for the fifth and sixth frigates for the FFX Batch-III project, also known as Ulsan-Class Batch-III, on Friday, the bid deadline. The bid marks the first major encounter between Hanwha Ocean and HD HHI since Hanwha's acquisition of Daewoo Shipbuilding and Marine Engineering, which was subsequently rebranded as Hanwha Ocean.

Proceeded by the Defense Acquisition Program Administration (DAPA), the Ulsan-Class Batch-III is a project to develop six state-of-the-art 3,500-ton frigates to replace aging ones.

DAPA declined to disclose whether other competitors submitted bids due to "confidentiality issues." The agency is expected to announce the winner in mid-July.

The builders for the first four ships have already been selected.

HD HHI secured the contract to construct the first ship in March 2020, valued at 400 billion won. The contracts for the second to fourth ships were awarded to SK Ocean Plant, with contract values ranging from 330 billion to 350 billion won. However, the lower bidding prices sparked controversy within the industry, leading DAPA to adjust its approach to evaluating the fifth and sixth frigate contracts, focusing more on technological capabilities rather than solely on price.

Hanwha Ocean and HD HHI both stressed their "ample experience" is a competitive advantage in the current bidding process.

"We aim to win the bid and revive the legacy of surface vessels," a Hanwha Ocean official said.

Their last surface vessel order was the contract bid to supply a submarine rescue ship in December 2018.

The figure of Hanwha Ocean's proposed frigate for Ulsan-class Batch-III [HANWHA OCEAN]

Although Hanwha Ocean wasn't successful in securing contracts for the ongoing Ulsan-class Batch-III project, the company managed to ink contracts for four out of eight ships in the previous Batch-II project. It was notably selected to build the destroyers in all of the KDX program's three phases.

Hanwha Ocean anticipates synergies with its defense-related subsidiaries particularly following its acquisition by Hanwha.

The proposed Ulsan-class vessel features an integrated sensor mast, called I-mast, and a combat system developed by Hanwha Systems. The I-mast combines a multi-functional phased-array radar, infrared detection and tracking equipment, as well as a diverse range of communication devices. Similar to Aegis-type ships, it can engage multiple aerial targets simultaneously using its four fixed radars.

The figure of HD Hyundai Heavy Industries' proposed frigate for Ulsan-class Batch-III [HD HHI]

Meanwhile, HD HHI has built 102 warships, including battleships, Aegis-type ships and frigates, since 1975.

It completed the construction of the first vessel for the Ulsan-class Batch-III project and will now focus on securing contracts for the remaining ships. The vessel, named "ROKS Chungnam," is equipped with a four-sided fixed multi-function phased-array radar capable of 360 degrees omnidirectional detection, tracking and engagement that will strengthen the Navy's antiaircraft defense.

A penalty imposed on HD HHI is a critical variable in the current bidding competition. Following the conviction of HD HHI's employees for the leakage of Hanwha Ocean's conceptual design for the next-generation KDDX destroyers, a penalty of 1.8 points will be deducted from HD HHI' technical score in the DAPA's bidding process. This could cost the company dearly, particularly when the winning bidder will be determined based on decimal points according to industry insiders.

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]