HD HHI logs court injunction over government project snub

HD Hyundai Heavy Industries (HD HHI) lodged an injunction at the Seoul Central District Court against the Defense Acquisition Program Administration (DAPA) on Monday after being excluded as a preferred bidder for a government project.

The 3,600-ton-class frigate "Chungnam", which is the first ship of Ulsan-class Batch-III, built by HD Hyundai Heavy Industries [HD HHI]

HD Hyundai Heavy Industries (HD HHI) lodged an injunction at the Seoul Central District Court against the Defense Acquisition Program Administration (DAPA) on Monday after being excluded as a preferred bidder for a government project to build the last two FFX Batch-III frigates for the Navy worth 830 billion won ($631.6 million).

The DAPA last month chose Hanwha Ocean as the preferred bidder for the fifth and sixth frigates for the FFX Batch-III project, also known as Ulsan-Class Batch-III. Its rival Hanwha Ocean edged ahead in the bidding evaluation with a final score of 91.885 points, narrowly surpassing HD HHI's score of 91.743 points.

Although HD HHI outscored Hanwha Ocean in the technical evaluation, it saw a deduction of 1.8 points for unfair practices. A penalty was imposed following the conviction of HD HHI employees who leaked Hanwha Ocean's conceptual design for the next-generation KDDX destroyers back in 2020.

The recent injunction stems from HD HHI's dissatisfaction with the outcome, which it lodged with the DAPA but was eventually turned down last Wednesday. The company escalated its response, taking the matter down a legal route. In a related initiative, the company filed a civil complaint to the National Human Rights Commission last Friday.

"While having successfully completed the construction of the first ship of Ulsan-class Batch-III [Chungnam] and achieving high scores in the technical evaluation, we failed to sign the contract due to deductions for the security incident," the company said through a press release late Monday. "We filed an injunction with the Seoul Central District Court on Monday to seek a review of the evaluation scores and the underlying criteria's rationality."

When the DAPA made certain amendments to the security incident deduction criteria in September 2019, following recommendations from the Office for Government Policy Coordination and the National Human Rights Commission, HD HHI found itself disproportionately affected by the revisions.

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