Timeline on Frigate Acquisition Project Went Viral on Social Media

The Philippine News Agency (PNA) revealed to the media the official Timeline of the Controversial Frigate Acquisition which became the subject of the latest Senate Hearing attended by some of the country's most powerful Cabinet members, Senators as well as uniformed personnel and officials of the Philippine Navy.


Based upon the timeline provided by the PNA, the controversial frigate deal started during the administration of former Pres. Noynoy Aquino. Last June 7, 2013, former DND Secretary Voltaire Gamzin signed Acquisition Decision Memorandum No. ‎‎2013-019 to initiate the immediate implementation of the acquisition of two brand new Frigates for the Philippine Navy with an approved budget of PHP18 billion.

The first stage of bidding was conducted last December 4, 2013 and on March 17, 2016, the two lowest cost bidders were declared which include Garden Reach Shipbuilders and Engineers (GRSE) with bid price of USD322 million or PHP15,047,704,000 (1USD = PHP46.732); and Hyundai Heavy Industries (HHI) with bid price of USD336,912,000 or PHP15,744,571,584.

On June 16, 2016 the ND Bids and Awards Committee declared HHI as the winning bidder and issued the Notice of Award in its favor. A few months later last September 13, 2016, DND Secretary Lorenzana sent a Notice of Award to Mr. Ki Yeong Sung with a corresponding contract price of PHP 15,744,571,584.00.

The controversial frigate deal made some headlines in the mainstream media after Rappler and the Inquirer reported that SAP Bong Go allegedly intervened with the frigate deal because of the presence of the post-it-notes in one of the confidential documents from his office to the DND.

Here's the Complete Timeline of the Controversial Frigate Deal:

Timeline on Frigate Acquisition Project (PNA):

June 7, 2013 – Former Defense Secretary Voltaire Gazmin signed Acquisition Decision Memorandum No. ‎‎2013-019 to initiate the immediate implementation of the acquisition of two brand new Frigates for the Philippine Navy with an approved budget of PHP18 billion.

Dec. 4, 2013 – The first stage bidding was conducted wherein six proponents were declared eligible by the DND Special Bids and Awards Committee (SBAC), namely: Daewoo Shipbuilding & Marine Engineering Co. Ltd. (DSME) – Korea; Hyundai Heavy Industries Co. Ltd. (Hyundai) – Korea; STX Offshore & Shipbuilding Co. Ltd. (STX O & S) – Korea; STX France S.A. – France; Garden Reach Shipbuilders & Engineering Ltd. GRSE – India; and Navantia SEP (Navantia) – Spain.

March 17, 2016 – The two lowest cost bidders were declared: Garden Reach Shipbuilders and Engineers (GRSE) with bid price of USD322 million or PHP15,047,704,000 (1USD = PHP46.732); and Hyundai Heavy Industries (HHI) with bid price of USD336,912,000 or PHP15,744,571,584.

April 30 to May 8, 2016 – GRSE was declared non-compliant to the financial requirements of the project as required by Section 23.5.2.6 of the Implementing Rules and Regulations (IRR) of RA 9184 or the Government Procurement Reform Act. Its Net Financial Contracting Capacity (NFCC) was found to be below the approved budget contract of PHP16 billion.

June 16, 2016 – DND Bids and Awards Committee declared HHI as the winning bidder and issued the Notice of Award in its favor.

Sept. 13, 2016 – DND Secretary Lorenzana sent a Notice of Award to Mr. Ki Yeong Sung with a corresponding contract price of PHP 15,744,571,584.00.

Oct. 24, 2016 – A contract agreement was signed by Sec. Delfin Lorenzana, Major Marlon B. Dayao, Comm. Robert A. Empedrad, Kisun Chung (Executive Vice President HHI) and Jae R. Kim (Senior Sales Officer of HHI’s Special and Naval Shipbuilding Division)

Jan. 11, 2017 – Col. Leonardo D. Dela Paz, chief of the DND’s Defense Acquisition Office, informed Mr. Ki Young Sund that the “Remarks on Makers” list are grossly disadvantageous to the PN and to the AFP/DND.

Feb. 8, 2017 - Mr. Ki Yeong Sung wrote a letter to the Defense Acquisition Office saying that HHI is entitled to choose HSC Naval Shield as the combat management system (CMS) for PN frigate, which is beneficial for both PN and HHI.

HHI said it can consider the CMS choice of the Navy if it is “willing to compensate USD9 million per ship which is aggregated sum of price difference for the system and service for installation, test and integration in our shipyard.”

April 1, 2017 - Vice Admiral Ronald Joseph Mercado wrote a letter to Lorenzana stating the opinion that “Remarks” provisions in the contract are grossly disadvantageous to the PN and to the AFP/DND, saying: “This remarks, if permitted, are akin to a buyer (PN/DND) with his/her own money being told by the seller HHI on what to buy.”

April 6, 2017 - Col. Dela Paz wrote a memorandum to Lorenzana, stating that the Thales offer, although compliant of the technical specifications, is not commercially competitive in view of the price difference of USD 14,050,000.00 as compared to the offer of HSC Naval Shield.

Commercial competitiveness is one of the requirements stipulated in the “Remarks” provision before the shipbuilder should consider the owner’s preferred maker.

April 20, 2017 - Dela Paz informed the Assistant Chief of Naval Staff for Logistics that Lorenzana has approved the recommendation for the continuation of the Frigate Acquisition Project with the HHI-selected maker of the CMS.

Aug. 10, 2017 - In a memorandum addressed to the AFP Chief-of-Staff, Lorenzana said it is improper for the PN, which had post qualified the HSC Naval Shield CMS, to declare it as non-compliant during the project implementation.

Sept. 14, 2017 - Hanhwa issued a Certificate of Conformance with respect to the request of HHI on the CMS and Link 16 on the new frigates of the PN.

Dec. 8, 2017 - Lorenzana sent a letter to Mr. Kisun Chung, EVP of HHI, informing them that the request for amendments to the contract Agreement of the Payment terms and Delivery Schedule of the 2 units Frigate Acquisition Project is approved.

Dec. 18, 2017 - Mr. Park Moon Yung, Senior VP of HHI, sent a reply-letter to Lorenzana, thanking him for the approval of the amendments to the Contract Agreement of the Payment Terms.

Source: PNA

Timeline on Frigate Acquisition Project Went Viral on Social Media Timeline on Frigate Acquisition Project Went Viral on Social Media Reviewed by Phil Newsome on February 19, 2018 Rating: 5
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