RP to bid out acquisition of 3 warships

The Department of Finance (DOF) said yesterday that the government will bid out the acquisition of three warships from Canada, saying that only the integration of the vessel, its components and training would be awarded to CAE of Canada on a negotiated basis.

Finance Secretary Jose Isidro Camacho told reporters yesterday that the acquisition of three Corvette-class warships would be bid out according to international bidding standards.

The planned acquisition of the warships is part of the modernization plan for the Armed Forces of the Philippines and is expected to cost at least $600 million.

CAE Inc. is not a shipbuilder, but specializes in the development and integration of naval defense systems, including computerization and training systems.

The proposed acquisition was supposed to be an alternative to an earlier plan of the DND to acquire three Corvettes from US warship builder Litton-Ingalls at $100 million each.

Camacho explained that since the acquisition was a government-to-government transaction between Canada and the Philippines, the integration portion would be awarded to CAE.

"There will be no bidding for the integration," Camacho said. "But the Canadian government assured us that the procurement of the components including the warships themselves, would be bid out."

Initially, Camacho said the government planned to enter into a lease-purchase agreement for all three warships where the Philippines would be paying for the vessels and the components over a period of years.

Canadian Ambassador Robert Colette met with Camacho last week to discuss the details of the transaction.

Camacho said the decision to consult the Department of Justice (DOJ) was to ensure that the transaction would not be in violation of any Philippine laws and would proceed smoothly.

However, Camacho admitted that there were no funds immediately available to finance the acquisition, except for P10 billion that would come from the AFP modernization fund.

The government is already saddled with debt and is still struggling to contain its budget deficit, but Camacho said the question of affordability was almost moot. "The question is can we afford not to do this?" he said. "Our navy has only one working frigate."

Corvette-class warships are mid-sized vessels that would be armed with anti-ship missiles with a crew of about 100 sailors.

The vessels would be used for open sea patrol missions and to protect the country’s economic interests in the Camago-Malampaya area and to "project power in the South China Sea," where the Philippines is engaged in a long-standing dispute with China over the Spratlys island group.

The original plan to acquire the Corvettes was first finalized during the Estrada administration, by then Defense Secretary Orlando Mercado but the plan collapsed when the details were made public.