KDDX project faces reset under defense minister nominee

Rep. Ahn Gyu-back, left, of the ruling Democratic Party of Korea poses with former Defense Minister Suh Wook at the launch ceremony of the party's national defense and security policy advisory group at the National Assembly in Seoul, May 21. After the June 3 presidential election, Ahn was named the defense minister, while Suh was appointed Hanwha Aerospace's president-level adviser. Courtesy of Ahn's office

The process of selecting a shipbuilder to lead the Korean Next-Generation Destroyer (KDDX) project is likely to return to square one, as President Lee Jae Myung has nominated Rep. Ahn Gyu-back of the ruling Democratic Party of Korea (DPK) as the administration's first defense minister.

As a result, HD Hyundai Heavy Industries (HHI) and Hanwha Ocean are expected to continue their fierce competition for the 7.8 trillion won ($5.7 billion) project, which aims to construct the Republic of Korea Navy's six next-generation destroyers by 2030.

Ahn, a five-term lawmaker poised to become Korea's first defense chief in 64 years without a military career, has strongly opposed the Defense Acquisition Program Administration's (DAPA) attempt to sign a sole-source contract with HD HHI.

Given the customary practice of awarding a sole-source contract to the company that drafted the basic design, the state-run arms procurement agency sought to task the shipbuilder with drafting a detailed design of the KDDX-class destroyers and constructing the first ship.

Spectators crowd the exhibition booths of HD Hyundai and Hanwha during the International Maritime Defense Industry Exhibition at BEXCO in Busan, May 28. Yonhap

However, in April, Ahn argued that the selection should be made through a competitive bidding process, apparently siding with Hanwha Ocean, which was responsible for the conceptual design of the destroyers.

During a National Assembly audit in 2023, he also highlighted that former HD HHI employees had stolen the conceptual design of destroyers between 2012 and 2015 from Daewoo Shipbuilding & Marine Engineering, now Hanwha Ocean. Although those involved were found guilty, DAPA still allowed HD HHI to bid for the KDDX project.

Ahn's fellow DPK lawmakers also criticized DAPA's plan to sign a sole-source contract with HD HHI as corrupt, after the agency reviewed the contracting method in March.

"The groundless pursuit of a sole-source contract with a certain company can be seen as a corrupt connection between the authority and the defense firm," DPK Rep. Boo Seung-chan said in April.

Former acting President and Prime Minister Han Duck-soo's visit to HD HHI's shipyard in Ulsan that month was at the time also suspected of signaling the government's support for the shipbuilder. Kim Sung-han, former national security adviser to former President Yoon Suk Yeol, still serves as a nonexecutive director of HD Korea Shipbuilding & Offshore Engineering, HD HHI's parent firm.

Amid growing criticism, DAPA delayed its decision, leaving the project adrift for nearly two years. An admiral overseeing the project was abruptly discharged last month as well.

Against this backdrop, Hanwha Group hired former Defense Minister Suh Wook as a president-level adviser to its defense arm immediately after the new government launched. He served as Lee's defense policy adviser during the presidential campaign.

Ahn has reportedly met with Suh every Wednesday in recent weeks to seek advice on the Lee administration's defense policies.