Change in evaluation requirements follows backlash against FFX program bidding results
The new evaluation process will put greater emphasis on signing a “negotiated contract” as opposed to the “one-way” evaluation model used before. It is hoped that this will allow a more nuanced appraisal of technology requirements and other factors, instead of focusing on low-cost.
“Several voices within the defense industry criticized the evaluation process as being inappropriate for advanced complex weapon systems such as warships…This change takes onboard several differing opinions…We expect more intense technology competition as a result of this change, leading to the development of new technologies and the creation of a virtuous cycle within the shipbuilding industry.”
The changes will apply to programs that begin next year, which means that decisions made this year, including the FFX Batch III contract recently secured by SamKang, will be unaffected. Moreover, contracts for support ships will continue to use the original criteria, given the reduced importance of high-technology in constructing them.
The change in policy puts an end to the bidding controversy that has gained attention in recent weeks. Major shipbuilders such as Daewoo Shipbuilding & Marine Systems claimed that the government evaluation procedure unfairly favours mid-sized shipbuilders, such as SamKang, which can offer to build ships at lower prices due to low upkeep costs.
“[SamKang] offered an unrealistically low price…I cannot help but wonder whether they will be able to deliver the ships in one piece at this price.”
Anonymous South Korean shipbuilding industry source
SamKang, which will build the 2nd, 3rd, and 4th FFX Batch III ships, maintains that the evaluation process for the program was fair. A SamKang source said:
“We won contracts for a 2,800-ton and a 3,800-ton coast guard vessel in 2017 and 2020 respectively…Concerns were raised back then about our ability to produce high-technology systems and whether the ships would be successfully delivered…We managed to not only deliver the ships on time, but also received the Deputy Prime Minister award in September of 2021. We secured the contract this time round because the government recognized that we were proficient shipbuilders.”