AnalysisKorea's next-gen destroyer program hit by dispute over design data

A simulated sea trial of the Korea Destroyer Next Generation developed by Hanwha Ocean / Courtesy of Hanwha Ocean

Legal disputes over design data in Korea’s next-generation destroyer program have exposed a growing fault line in how defense projects are awarded and managed.

The row centers on the Korea Destroyer Next Generation project, also known as KDDX, a plan to build six 6,000-ton Aegis-class destroyers with domestic technology.

The project, valued at around 7.8 trillion won ($5.1 billion), has already faced delays, and the latest clash adds fresh uncertainty as companies prepare bids for the next phase.

This time, the issue is not about who will win the contract, but what information should be shared before the decision is made.

The program was shifted from a negotiated deal to an open bidding process by the Defense Acquisition Program Administration (DAPA), after controversy over a past security breach involving HD Hyundai Heavy Industries.

The move opened the competition to Hanwha Ocean, which did not take part in the basic design stage, to compete for the detailed design and construction work.

That change created a practical dilemma. Hanwha Ocean needs access to the existing design to submit a meaningful bid. Without access to the basic design, it would be difficult to produce a credible proposal or accurate pricing, an industry source familiar with the matter said.

DAPA says the data provided to bidders has already been screened and includes only what is necessary. Officials argue that withholding the material would undermine fair competition.

HD Hyundai Heavy Industries disagrees. The company has asked the court to block the release of some of the design data on the grounds that it contains sensitive information directly related to its competitiveness.

“Sharing such data in a competitive bidding situation could expose pricing levels and technical strategies, making the competition fundamentally unfair,” the company said.

Hanwha Ocean has kept its public response brief, saying it will follow the government’s plan and prepare its bid accordingly.

At the heart of the dispute lies a fundamental question with no clear answer in Korea’s defense industry: Who owns the outcome of a design project funded by the government but developed using a company’s expertise?

The industry source said the current system does not draw a clear line.

“In principle, the design belongs to the government because it paid for it. Once the results are delivered, they are considered part of the government’s assets, even though they reflect the contractor’s accumulated know-how,” the source said.

“At the same time, in a competitive bidding structure, access to that design is essential. Without it, the bidding process itself loses meaning.”

The shift to competitive bidding has made this tension harder to ignore. Under the previous system, the company that completed the basic design typically moved on to the next stage. There was little reason to debate access to the data.

“That structure is gone,” another industry source said. “Now, if you want companies to compete, they need to see what they are bidding on. Otherwise, it is not a real competition.”

Experts say the concerns raised by HD Hyundai are not without merit.

Moon Byung-young, a professor of naval architecture and ocean engineering at Kunsan National University, said that the basic design is at the heart of many warship projects.

“All of the ship’s key functions and characteristics are defined at this stage,” he said. “Handing over that level of design detail to a competitor is not something the industry would normally accept.”

He added that the government’s role complicates the issue.

“In a state-led project, the final decision rests with the government,” he said. “That makes these situations difficult to resolve using industry norms alone.”

Some industry observers also view the legal action as a tactical move in the broader competition.

“It could be an attempt to create variables in the bidding process or delay the schedule,” the source said.

The dispute is also raising concerns about the broader impact on the project. Legal challenges could affect not only the timeline but also the cost structure and supply chain.

Choi Gi-il, a professor of military studies at Sangji University, said companies could end up absorbing losses if project conditions do not reflect rising costs.

“That can lead to delays in delivery, risks in contract execution and added pressure on subcontractors,” he said.

For now, DAPA plans to move ahead with the bidding process. The court’s decision on the injunction is still pending, and the outcome could shape how similar disputes are handled in the future.