The rendered image shows the expected view of Hanwha Ocean's KDDX destroyer. (Hanwha Ocean) Hanwha Ocean edged out HD Hyundai Heavy Industries in the bid for South Korea's destroyer project worth about 7.8 trillion won ($5.1 billion), bringing a long-delayed naval modernization program a step closer to implementation.According to defense industry sources, the Defense Acquisition Program Administration has completed its evaluation of proposals submitted by Hanwha Ocean and HD Hyundai Heavy Industries for the detailed design and lead ship construction phase of the Korean Destroyer Next Generation Program. The two companies were notified of the results on Thursday.In the latest phase, Hanwha Ocean reportedly outscored HD Hyundai Heavy Industries by 0.5867 points.After follow-up procedures, including any appeals by the bidders, the DAPA will formally name the preferred bidder as early as July and sign the contract around the end of July, according to a DAPA official.The KDDX program is the country’s first domestically developed destroyer project in which both the hull and Aegis-type combat system are built using local technology. The DAPA plans to procure six 6,000-ton Aegis-equipped destroyers by 2030.The program has been under development since 2011 and consists of four phases: concept design, basic design, detail design, and lead ship construction and follow-on ship construction. Hanwha Ocean, then Daewoo Shipbuilding & Marine Engineering, won the contract for concept design in 2012, while HD Hyundai completed the basic design.The outcome was largely determined by a 1.2-point security-related penalty imposed on HD Hyundai Heavy Industries, industry officials said.The deduction was linked to the conviction of nine current and former HD Hyundai Heavy Industries employees found guilty by South Korean courts between 2022 and 2023 for illegally obtaining and leaking KDDX conceptual design documents.As a result, DAPA imposed the deduction on HD Hyundai Heavy Industries through December 2026 in the evaluation process. The company sought an injunction to block the deduction, but a court rejected the request on June 5, allowing the penalty to be reflected in the latest evaluation.Before the penalty, HD Hyundai Heavy Industries was said to have led Hanwha Ocean in technical evaluation. But the 0.5867-point margin between the two companies’ evaluation scores suggests that the deduction likely played a decisive factor in the outcome.While the six destroyers could eventually be divided between the two shipbuilders because of production capacity constraints, industry observers regard the detailed design and construction of the lead destroyer as the most critical phase. This is because the winning contractor will shape the final configuration of the warship and gain a strategic advantage in the construction of follow-on vessels.