Multiple-award system needed to grow MASGA, legal adviser says

"The time has come to show the United States a concrete contract and investment structure."

Joo Woo-hyuk, an attorney on the international legal team at law firm Dongin, said Monday at his office in Gangnam-gu, Seoul, that to ensure stable implementation of Korea-US shipbuilding cooperation projects, South Korea must present a specific business model aligned with US policy goals of national security and revitalizing the shipbuilding industry.

He added that the key to entering the US market is not simply setting up a single corporation in America, but helping Korean companies establish a stable start and a sustainable foundation there. Identifying concrete cooperative business models to build American trust must go hand in hand with creating conditions for Korean companies to settle sustainably on the ground, he said.

Joo currently serves as legal adviser for the operation of the Korea-US Shipbuilding Partnership Center, known as KUSPC, which opened in Washington in July as part of the MASGA shipbuilding cooperation initiative between the two countries.

The MASGA project, declared by the two governments last year, still faces a number of difficult challenges. The United States hopes to revive its domestic shipbuilding industry with South Korea's help as it looks to build at least 100 new naval vessels to strengthen its naval power.

South Korea, for its part, must secure tangible benefits while cooperating with the US. Building warships in the United States would require massive infrastructure investment, while constructing them in South Korea remains blocked by security regulations. Against this backdrop, reports have emerged from political circles that the US government has pressured South Korea to produce visible results.

Joo said the bilateral shipbuilding cooperation discussions themselves have already gained momentum. "The project is moving forward, as budgets are being disbursed through KUSPC for workforce development and to implement MOUs already concluded between companies and governments of both countries," he said.

He added that from the US perspective, multiple policy goals must be weighed simultaneously — protecting the production base and jobs of its domestic shipbuilding industry while leveraging Korean technology and capital to strengthen the productivity and supply chain of American shipbuilding. The legal challenge ahead, he said, is designing a concrete business structure that combines US-side investment, employment, technology transfer and workforce development with South Korea's shipbuilding capabilities.

For the time being, domestic discussions are underway on maintenance, repair and overhaul — MRO — work ahead of any warship construction in the United States. Naval MRO is seen as a meaningful business opportunity not only for large Korean shipbuilders but also for the small and midsize suppliers that provide marine equipment.

In that context, the Korea Marine Equipment Association recently asked Dongin for advice on how domestic equipment makers can enter the value chain for US naval MRO. Joo said inquiries from Korean companies seeking to supply equipment or bid on related contracts for US naval MRO work have been numerous, adding that "the most efficient strategy for building local credibility is to establish a corporate foothold inside the United States."

To expand the scale of Korea-US cooperative projects, Joo proposed adopting a multiple-award system — a procurement approach in which two or more contractors are selected in a single public tender. Under such a model, for example, both a US company and a Korean company could be awarded contracts together for a US government naval MRO project.

The multiple-award system has a legal basis in South Korea as well, though it has yet to be tried in practice. In the United States, by contrast, the government actively uses it — particularly in the defense sector — to foster competition among contractors and reduce project risk.

"From the US perspective, awarding work on its own naval projects exclusively to Korean companies could be politically uncomfortable," Joo said. "But if a Korean company is included as one of several contractors handling naval MRO through a multiple-award arrangement, it can build competitiveness in the local market over time."

He added, however, that the US government has not yet applied the multiple-award system to naval MRO, making it something the South Korean government needs to actively propose to the American side.

Joo said the South Korean government must take an active role in identifying Korea-US cooperative business models while also serving as a "bridge" that guides domestic companies through US regulations.

"What companies on the ground need most is greater predictability around US regulations, and a government that plays an institutional bridge role between Korean firms and the US government and Congress," he said. "From a company's standpoint, reviewing individual regulations one by one is not enough — what matters is a government-level guidance and support system that allows businesses to understand in advance what regulatory framework will apply to their entire business structure."