Germany’s Thyssenkrupp Marine Systems (TKMS) has been selected as the preferred bidder for Canada’s Canadian Patrol Submarine Project (CPSP). A Hanwha Ocean-HD Hyundai Heavy Industries one-team group was designated as a pre-qualified supplier, losing out in a bidding contest valued at 60 trillion won.

Canadian Prime Minister Mark Carney said on July 6 (local time) at a naval base in Halifax, Nova Scotia, that TKMS had been selected as the preferred bidder for the CPSP. Carney said it was a very difficult and close decision between two highly qualified suppliers. He said both TKMS and Hanwha Ocean met the Royal Canadian Navy’s required performance and made strong proposals in Canada’s interest.

He added that Canada has the right to begin negotiations with Hanwha Ocean, the backup supplier, if talks with TKMS break down. As this is a preferred-bidder stage rather than a final contract, it means Hanwha Ocean’s chances have not completely disappeared.

The CPSP is a project to replace four Victoria-class submarines currently operated by the Canadian navy with up to 12 diesel submarines by the mid-2030s. Including acquisition costs and 30 years of maintenance, repair and overhaul (MRO) costs, the project totals 60 trillion won.

NATO is cited as a factor that determined the outcome. Canada is a founding NATO member, and the 212CD proposed by TKMS is a model jointly operated by Germany and Norway. An analysis says the decision was influenced by a judgment to strengthen alliances in the Arctic and the North Atlantic by integrating into joint operating, maintenance and training systems among NATO members. Canada also cited growing uncertainty within NATO due to changes in U.S. security policy as a backdrop for placing more weight on European allies.

TKMS also addressed weaknesses in delivery competitiveness. An industry analysis says TKMS influenced the outcome by proposing early delivery of the first four boats by 2034 by adjusting the production sequence for orders from Germany and Norway. That effectively offset Hanwha Ocean’s strength in faster delivery.

◆Despite failing to win the order, KSS-III gains international validation... Backup supplier status remains

Hanwha Ocean said in a statement on the day that it had made an all-out effort based on government support, submarine performance and the navy’s operating experience, but could not overcome the wall of the NATO alliance. It said it would analyse identified tasks and seek a path for South Korea’s maritime defence industry to leap forward in the global market.

Although the order fell through, some assessments said it was not without results. Hanwha Ocean competed with TKMS to the end with its 3,000-ton KSS-III, internationally proving the export competitiveness of domestically built submarines. An analysis says its ability to offer fast delivery, proposing delivery of four boats by 2035, was also imprinted on countries with demand to replace ageing submarines.

Local partnership networks also remained as an asset. Since 2023, Hanwha Ocean has broadened its cooperation base in Canada by signing memorandums of understanding with about 20 defence and technology companies, including CAE, Babcock Canada and L3Harris. Observers say the network could be used for future entry into the North American market and other overseas bidding contests.

The Canadian government is targeting 2028 for the final CPSP contract. If negotiations with TKMS are delayed or break down, there remains room for Hanwha Ocean, the backup supplier, to re-emerge as a negotiating counterpart.