Phl, S. Korea tackle sticking points in P18.9-B fighter jet deal

MANILA, Philippines - The Philippines and the South Korean firm Korean Aerospace Industries (KAI) are resolving issues related to the military’s plan to buy 12 fighter trainer jets worth P18.9 billion.

Defense Undersecretary Fernando Manalo yesterday admitted that they have yet to reach a consensus on some issues including the down payment to be given to the supplier and the period of delivery of spare parts.

“The lead-in fighter (project) is within the process of negotiation with the government of South Korea and there are major issues, there are several issues that we still have to hurdle,” Manalo said in a press conference yesterday.

The government plans to acquire 12 FA-50 jets from South Korea to boost the territorial defense capabilities of the Air Force. The negotiations with KAI started last July.

Earlier, Air Force chief Lt. Gen. Lauro Catalino de la Cruz said two FA-50 jets could be delivered by the end of 2014 if all the contracts and other necessary documents are signed this year.

Among the issues to be threshed out is the advance payment to be given to KAI.

Manalo said the law allows state agencies to pay a 15 percent down payment with the balance to be paid upon the delivery of goods.

KAI wants the Philippines to pay a 52 percent down payment but Manalo said this would require the approval of President Aquino.

“The approval of a down payment that is more than 15 percent does not rest on the BAC (Bids and Awards Committee). It will be up to the President,” Manalo said.

“Even if we consider their request on the terms of payment and more progressive billing, we cannot do it. We can only recommend to the president,” he added.

Another issue being threshed out is the turnaround time, the period required for the delivery of the jets’ spare parts under a two-year warranty.

Manalo said the turnaround time usually lasts for 30 to 45 days but KAI wants it prolonged to 180 days.

When asked whether he is still optimistic that the issues surrounding the project will be resolved, Manalo said: “This project should push through but we cannot continue without looking at it and ensuring that aircraft we will buy won’t be left unused without the spare parts.”

Manalo said they would decide whether to push through with a deal with KAI within the year.

“We are already preparing our firm position and then we are going to submit it to KAI for them to determine whether that is acceptable. We cannot just let it hang for a long time. We will immediately resolve the issue,” he said.

The acquisition of FA-50 fighter jets is one of the big-ticket items in the military’s multibillion-peso upgrade program.

A total of P85.29 billion is needed to bankroll the program for the next four years, defense department data showed.

Other items to be acquired were Navy frigates, ammunition, rocket launchers, handheld radios, long range patrol aircraft, amphibious assault vehicles, anti-submarine helicopter, aerial radars, engineering equipment and base support facilities

Manalo said the government is also planning to spend P6.5 billion to buy a shore-based missile system but declined to say where it will be located.

Meanwhile, the defense department also denied allegations of anomalies in the bidding for the supply of more than 44,000 sets of force protection equipment worth P1.76 billion.

Defense Assistant Secretary Efren Fernandez maintained that the decision to disqualify the lowest bidder, South Korean firm Kolon Global Corp., is justified since the company failed to meet some requirements.

“DND-BAC (Department of National – Defense Bids and Awards Committee) laments the move of some quarters that to discredit (it) for post-disqualifying Kolon Global Corp.,” Fernandez, who heads the BAC, said in a press conference.

“BAC’s decision is based purely on what is provided for under Republic Act 9184,” he added, referring to the procurement law.

Kolon offered to supply 44,080 sets of force protection equipment for P894 million, lower by almost P870,000 than the P1.763 billion approved budget for the project. Kolon’s offer was also cheaper than those offered by three other bidders.

A DND post-qualification team, however, declared that Kolon’s goods did not meet some standards aimed at ensuring the protection of soldiers in the field.

The team said all ballistic inserts of samples submitted by Kolon did not conform to dimensional requirements since they have shorter dimensional measurements.

“The lives of our soldiers will also be put to risk because the protected area of coverage has been reduced by more or less 5 mm each on both the width and length,” the team said in a report to the BAC.

“Any reduction in size will result (in) reduced protection of the user,” it added.

The post-qualification team also pointed out that the samples presented by Kolon are in single curve design. The military, however is seeking to acquire a multi-curve design to avoid the possibility of body injury due to secondary impact of plate to the body upon bullet contact and for increased bullet deflection.

BAC’s decision to disqualify Kolon has been questioned by anti-corruption watchdogs who observe the procurement process.

The Coalition Against Corruption (CAC) has asked Defense Secretary Voltaire Gazmin to reconsider the decision, noting that Kolon had tendered the lowest bid for the project.

The coalition consists of the Ateneo School of Government, Integrated Bar of the Philippines and the Catholic Bishops’ Conference of the Philippines.

Dennis Manalo, a lawyer for Kolon, also questioned BAC’s decision to disqualify his client and vowed to tap all available legal remedies.

He also claimed that Kolon’s offer would allow the government to save more money.

Fernandez, however, insisted that price is not the only consideration in accepting offers.

“Although the financial consideration is also important, one must understand that the nature of the product they are buying has for its purpose the protection of the lives and limbs of soldiers engaged in armed conflict and combat,” Fernandez said.