Legal battle continues over validity of security penalty deduction

Defense Acquisition Program Administration says procurement process will proceed as planned

A concept design model of the Korea Next-Generation Destroyer (KDDX) by Hanwha Ocean. [Herald DB]
A concept design model of the Korea Next-Generation Destroyer (KDDX) by Hanwha Ocean. [Herald DB]

HD Hyundai Heavy has appealed after a court rejected its bid to block a security penalty deduction imposed by the Defense Acquisition Program Administration.

According to industry sources, HD Hyundai filed an appeal with the Seoul Central District Court on Thursday against the dismissal of its injunction request. HD Hyundai had sought to suspend DAPA's extension of the security penalty deduction period through December this year, but the court rejected the request on June 5.

As a result, HD Hyundai Heavy received a 1.2-point security penalty deduction in the recently concluded proposal evaluation for the Korea Next-Generation Destroyer (KDDX) detailed design and lead ship construction project. HD Hyundai Heavy had led by approximately 0.6 points in the technology assessment, but after the deduction was applied, Hanwha Ocean came out ahead by roughly 0.6 points in the total score. The security penalty deduction effectively proved decisive in determining the preferred contractor.

If the appeal is upheld, it could introduce significant uncertainty into the KDDX procurement process.

However, DAPA said it intends to press ahead with the procurement schedule as planned. A DAPA official told reporters Thursday that the agency sees no legal obstacle following the court's dismissal of the injunction. "There will be no interruption to the process," the official said.

The official added that if the appeal is granted, the agency would reassess accordingly, but said it would proceed with follow-on steps based on the existing evaluation results for now, as any other outcome remains hypothetical.

DAPA aims to officially designate a preferred negotiating partner as early as early July, with a contract signing targeted for late July or early August.


rimsclub@heraldcorp.com