Rep. Gary Alejano (Photo by AARON FAVILA / AP)
Magdalo Rep. Gary Alejano has called on the government to cancel the purchase order for two warships, claiming the Philippine Navy has been “baited” by the contractor into going for inferior technology and giving up its right to choose the vessels’ defense systems.
In a privilege speech on Monday evening, Alejano claimed the P15.5-billion Frigate Acquisition Project was a case where the “contractor won over the Navy.”
Tactics preferred
Alejano asked if the contractor, Hyundai Heavy Industries (HHI), had a backer in Malacañang who allowed the South Korean company to force its preferred combat management system on the Philippine Navy.
He said the Navy had preferred the Tacticos system made by Thales Nederland, which is used by 23 navies around the world and compatible with the combat management system of the Armed Forces of the Philippines.
The Philippine Navy, however, ended up settling for the Hanwha Thales Co. system, which is used only by South Korea’s navy.
Alejano questioned the alleged intervention by President Rodrigo Duterte and his right-hand man, Special Assistant Christopher Go, connecting the issue to the abrupt sacking of Navy chief Vice Adm. Ronald Joseph Mercado last month.
“How can the contractor be that powerful for them to get their way? Anyone who opposes gets fired. Who was the contractor’s backer in the Duterte administration?” Alejano said.
“Why did President Duterte or his close aides have to interfere in the Navy contract? It would have been good if it was in the Navy’s favor. But no, it was the contractor,” he added.
Alejano claimed the Navy even had to explain to Go why it preferred the Tacticos Thales system.
The lawmaker accused HHI of surreptitiously inserting “disadvantageous” provisions into the contract that the Navy leadership and Defense Secretary Delfin Lorenzana were unaware of.
Fine-print provisions
He said the “maker’s list” had provisions written in fine print at the bottom, stating “the final selection of the maker to be shipbuilder’s sole right as long as the equipment/system shall fulfill the owner’s requirements in building specifications and other design and build aspects.”
That document allegedly bore the signatures of only two Koreans. This provision supposedly allowed HHI to overrule the Navy’s preferences.
“In my investigation, HHI employed the strategy called ‘bait and switch,’ which means the contractor baits the buyer or client by offering superior systems or products and once he bags the contract he will find means to go around and eventually choose the lesser or inferior and thus cheaper systems or products to maximize profits,” Alejano said.
“In other words, you will be lured into the trap first and once you’re inside, there’s no escaping,” he added.
When top Navy officers learned that they have been had, Alejano said, they drew their version of the maker’s list stating the Navy had the right to choose the makers for its warships’ operational requirements.
But the Korean contractor disregarded the Navy’s version, saying the contract had already been signed (on Oct. 24, 2016) and the government had already made a 15-percent down payment.
Contract violations
“There are clear violations by the contractor of the contract, which endangers [the Armed Forces of the Philippines’] modernization program and our national security. By all means, we should cancel the frigate project contract before it’s too late,” Alejano said.
“I know we need modern fighting equipment, but we should not allow business interest to prevail over national interest,” he said.
Alejano also called for an investigation into the controversy to save the military’s modernization program and secure the national interest, imploring the House leadership to schedule a hearing and set aside his position as an opposition lawmaker.