South Korea's Military Drone Vehicle Project Faces Collapse as Hyundai Rotem Boycotts Final Evaluation

South Korea's multipurpose unmanned ground vehicle procurement project, a key component of the Army's future combat system "Army TIGER 4.0," faces potential failure after nearly two years of inter-company disputes.

The Defense Acquisition Program Administration (DAPA) issued an emergency tender in April 2024, but contractor selection—originally targeted for the first half of last year—has been delayed by approximately one year. Military officials warn that force deployment plans will be pushed back by more than a year.

According to the Seoul Economic Daily's investigation on March 11, Hanwha Aerospace and Hyundai Rotem are competing for the contract. DAPA's April 2025 decision to prioritize document evaluation over physical testing sparked conflicts between the two companies, delaying procedures by about one year. Although DAPA mediation recently restarted the process, Hyundai Rotem is now refusing to participate in the final performance evaluation, citing fairness concerns.

Performance verification is currently underway from March 3 through next week, testing only Hanwha Aerospace's equipment. Hanwha Aerospace has entered its "Arion-SMET" while Hyundai Rotem is competing with its "HR-Sherpa."

A Hyundai Rotem official said, "Test equipment should be stored under security management in identical conditions until the final performance evaluation concludes. However, one of Hanwha Aerospace's prototype vehicles was removed externally and not returned for an extended period." The official added, "Extended external operation could have allowed performance improvements through pre-testing adapted to evaluation conditions, making fair assessment impossible."

The critical issue is that unresolved fairness disputes could derail the entire project. DAPA sent a final notice to Hyundai Rotem on February 25 warning of potential disadvantages for non-participation and requesting a response by February 27. Hyundai Rotem has not replied and maintains it cannot participate without resolution of fairness issues.

Furthermore, while DAPA planned to conduct price bidding next month following the final performance evaluation, Hyundai Rotem reportedly will not participate in price bidding either. Under current competitive bidding rules, bids are considered invalid without price submissions. Continued boycott by Hyundai Rotem would likely result in project failure.

If the project fails, it would be either re-tendered or converted to a new tender. Re-tendering maintains existing request-for-proposal terms, while a new tender would restart procedures from scratch with revised evaluation criteria. For government contracts where companies have significant disagreements over evaluation standards and methods, standard practice is to clarify conflict factors and convert to a new tender rather than simply re-tender.

Regarding concerns about project failure, a Hanwha Aerospace official said, "The competitor has expressed concerns about DAPA's policy of prioritizing document evaluation over physical testing, but we are willing to make concessions on this. Even the military disagrees with claims that performance differences beyond the remote control distance standard of 10 kilometers should be reflected in evaluation scores." The official added, "Rather than continuing to raise reasons for project delays, we hope they will participate in performance verification and price bidding so the project can proceed smoothly without disrupting military deployment schedules."

A DAPA official said, "The prototype Hyundai Rotem claims was removed is a backup prototype, not a performance verification prototype, and is unrelated to performance testing. Fairness concerns can be sufficiently addressed through verification of the performance confirmation prototype stored by the military." The official added, "If Hyundai Rotem does not participate in performance verification and price bidding, we will make a final determination on project failure in early April. Whether to re-tender or convert to a new tender is a separate matter for review."

The multipurpose unmanned ground vehicle project aims to mass-produce future ground platforms that integrate artificial intelligence and unmanned technology to perform surveillance, reconnaissance, combat, and logistics missions in place of soldiers. It is considered a core capability of the Army's "Army TIGER" future combat system. Designated as a rapid demonstration acquisition project in April 2024, it was scheduled for completion by 2026. Initial production scale is 50 billion won, but industry officials consider it a high-impact project given follow-on programs and export potential.