Korean arms agency allows HD Hyundai Heavy to bid in state contracts

[Graphics by Song Ji-yoon and Han Yubin]

South Korea‘s defense procurement agency has allowed HD Hyundai Heavy Industries Co. (HHI) to bid in state contracts, following its decision not to impose restrictions over the shipbuilder’s involvement in a military secret leak.

The Defense Acquisition Program Administration (DAPA) said on Tuesday that it held a review council meeting to decide whether to punish the company by restricting it from bidding in government contracts for a given period of time.

The meeting came after nine HD Hyundai Heavy Industries employees were found guilty of violating the Military Secret Protection Act in November 2023. They were found to have acquired documents related to the KDDX project written by Daewoo Shipbuilding and Marine Engineering Co. (DSME), now Hanwha Ocean Co., between October 2012 and November 2015.

The state agency has decided to give administrative guidance on the company, one of non-binding law requirements, instructing HD Hyundai Heavy Industries not to engage in unfair practices.

The decision rescues the company from the risk of losing eligibility as a legitimate bidder and allows its participation in government contracts, including the Korean Next-Generation Destroyer (KDDX) project.

The KDDX project, which costs an estimated 7.8 trillion won, aims to build and displace six 6,000-ton mini Aegis combat destroyers by 2030.