House hearing: Why let supplier pick frigate equipment instead of Navy?

Rear Adm. Robert Empedrad, chief of the Philippine Navy (Photo from the PN Facebook page)

Some members of the House of Representatives questioned again on Wednesday why Navy officials authorized frigate supplier Hyundai Heavy Industries (HHI) to have the “sole right” to choose which combat management system (CMS) to use instead of the end user.

At the hearing of the House Committee on National Defense on the controversial P16 billion Frigate Acquisition Program (FAP) of the Philippine Navy, Magdalo Rep. Gary Alejano asked Rear Adm. Robert Empedrad, the new Navy chief, if he agreed that HHI would choose its subcontractor for the CMS of the two frigates.

Empedrad, who was then commodore and head of the project’s technical working group, said it was a “collegial decision” but he also agreed with it because under the procurement law, they are forbidden to name any brand or express brand preference.

“It’s forbidden that we give preference sa brand under RA 9184. That’s why we agreed Hyundai to choose,” he said.

Republic Act No. 9184 is also known as the Government Procurement Reform Act.

Hyundai chose Hanwha Systems, which the former Navy chief, Vice Adm. Ronald Joseph Mercado, opposed, saying it did not meet the Navy’s specifications in the contract and was not a “proven” technology – unlike Tacticos Thales, which is used in as much as 23 countries.

Mercado was later relieved for allegedly insisting on Tacticos.

Ernesto Boac, then chair of the bids and awards committee of the Department National Defense (DND), said the legal basis of this decision was the provision in the contract that the supplier had to subcontract its CMS provider.

“I believe there is no anomaly in that. All things were aboveboard,” Boac said.

Both Rep. Danilo Suarez and Rep. Edgar Erice lamented this provision saying it should be the end user, or the Navy itself, which should decide on the CMS.

“Are we going to be at the mercy of the supplier? it should be the end user who should decide,” Suarez said.

“Why did Hyundai present the two options, Hanhwa and Tacticos, if it’s the one who will decide?” Erice asked in Filipino.

Defense Secretary Delfin Lorenzana maintained that they were limited by the procurement law.

At this point Rep. Romeo Acop raised the need to amend procurement laws to allow government agencies to ensure that they would get the best deals for the benefit of the country. Lorenzana agreed with this.

Lorenza, during the Senate hearing on the same issue, admitted that if it were not for budget constraints, he would also prefer Tacticos over Hanwha. /atm

READ: Lorenzana OK with buying Tacticos Thales if budget not an issue