Partnership for Democratic Governance and Security
Title: Philippines. AFP Modernization Program
AFP MODERNIZATION PROGRAM
Understanding The Modernization Program Of The Armed Forces Of The Philippines
SUBJECT: Letter of Promulgation
TO: All Concerned
1. The AFP Modernization Program Primer entitled, UNDERSTANDING THE MODERNIZATION PROGRAM OF THE ARMED FORCES OF THE PHILIPPINES was formulated through the efforts of the Deputy Chief of Staff and concurrent Director of the AFP Modernization Program Management Office, primarily to enlighten the different sectors of the society, who will invariably be affected by such a huge undertaking, of the true essence of the Modernization Program.
2. This Primer is hereby promulgated and prescribed for reference and guidance of all concerned.
3. For widest dissemination.
Joselin B Nazareno
The Armed Forces of the Philippines has now reached the turning point in history as it pursues the road towards the development of its capability through the AFP Modernization Program. Indeed, it is fortunate to have been afforded the opportunity to actualize its mighty vision of the future, that is, of developing into a responsive and credible defense- and nation- building force, one that can fully adapt to the changing times, a source of national pride, and at par with Armed Foxes of the region.
The AFP Modernization Program manifests the ardent desire of the military organization to better ably perform to the letter its mandated task. It seeks to transform and develop the Filipino soldiers into well-rounded individuals who can face the challenges and seize the opportunities posed by their noble mission to the country and its people. It is by far the most significant step the Armed Forces has and will continue to undertake to ensure that it remains to be an active and relevant player in promoting the interests and aspirations of the nation.
In this light, the Armed Forces intends to pursue and share this worthy and noble endeavor with the Filipino people - the people whom it has avowed to defend and the very essence of its vocation. The Armed Forces of the Philippines thus takes pleasure and pride in coming out with a primer on the Modernization Program This act signifies the AFP's sincere intent to infirm the Filipino people that the formulation and implementation of the Modernization Program have been and will always be guided by their needs, interests, and aspirations.
It is hoped that through this primer, both the military and the civilian sectors of the society will be enlightened of the true essence of the Modernization Program and will be one in pursuing such a worthy venture.
Joselin B Nazareno
It is the sincere intent of the Armed Forces of the Philippines to inform the people about the most significant development in its history. In all pride, therefore, the AFP presents this primer - an information guide on the Modernization Program and a clear-cut manifestation of the AFP's commitment to its avowed obligation.
A very significant program such as this should be fully understood in all its form and substance. The AFP, therefore, perseveres to detail out all essential information about the Modernization Program through this primer. It hopes to enlighten the people that the program, more than anything, is an investment to the nation's security and the people's well-being.
It can be foreseen that defense and warfare in the immediate future will put more premium on information, synchronized interplay of forces, and superiority of weapons, and technologies. Apparently, what is demanded to win in the future battlefield are modern equipment and weapons system that will have competent and professional soldiers to handle them. Professionalism covers familiarity with the basic doctrines and tactics, an understanding of the significance of the military's noble mission and an exemplification of discipline long been imbibed in the military culture.
Through the Modernization Program, it is envisioned that the nation shall have a well-trained, well-equipped and highly disciplined Armed Forces that is confident in its capability to win wars and to succeed in nation building endeavors.
The AFP is hoping to accomplish this noble vision hand in hard with the Filipino people.
Ismael Z Villareal
Vice Chief of Staff/Chairman, AFPMB
The Armed Forces of the Philippines is now in the process of creating a milestone in its history as it lays the foundation for developing its strength and capability through its Modernization Program. This goes to show once again that the Armed Forces never ceases to be a vital player in the nations affairs as it continuously defends the nation's sovereignty and contributes to its development.
The Modernization Program is the AFP's response to the evolving needs and interests of the nation and the people, as well as the demands of the volatile international security community. The requirement is loud and clear, that is, a highly capable Armed Forces that can effectively defend the Republic and its people and supplement the government's efforts in ensuring the continuous development of the nation.
The AFP intends to pursue this significant undertaking not with its goals alone but also with the Filipino people's interests and aspirations in mind. The Modernization Program is not merely intended to instill changes in the military organization -a matter of streamlining our forces to "lean and mean" fighting units or acquiring equipment to boost the country's arsenal. More importantly, it is the fulfillment of the AFP's avowed obligation as vanguard of the nation's freedom and the people's well-being.
For this reason, the AFP takes delight and pride in sharing the Modernization Program to the Filipino people, to whom it was primarily crafted for. With this comes the AFP's promise to maintain its integrity and adherence to the highest ethical standards at all times.
Towards this end, the AFP shams this primer, which, in black and white, captures the AFP's earnest intent to produce soldiers the Filipino people can trust and readily rely upon.
Luisito F Fernández
Deputy Chief of Staff/Director, MPMO
TABLE OF CONTENTS
- Defense Force Capability Development
- Modernization Programs of the Major Services
- Financial Requirement
- Requirements for Implementation.
- Equipment Acquisition Process
- Military/Security Benefits
- Socio-Economic Benefits
- The AFPMP and the Filipino People
The Armed Forces of the Philippines (AFP) Modernization Program has its legal basis on Republic Act No. 7898, otherwise known as the AFP Modernization Law. s approved by the President on February 23, 1995, the law declares that it is the policy of the state to modernize the AFP to a level where it can fully and effectively perform its constitutional mandate of upholding the sovereignty and preserving the patrimony of the Republic.
Both Houses of Congress approved the Program, with the promulgation of Joint Resolution No. 28 on December 19, 1996. As provided by the Resolution, the AFP Modernization Program shall be implemented over a period of 15 years.
Likewise, pursuant to the Resolution, the AFP formulated its first Five- Year Rolling Plan on the AFP Modernization Program that serves as the basis for the yearly appropriation of funds and as an implementing guide to the Department of National Defense (DND) and AFP during the first five years.
The AFP Modernization Program depicts the capability of the future Armed Forces in terms of personnel, equipment and facilities. It aims to develop the AFP into a responsive and effective force which is highly capable of providing external defense, and of performing peacetime functions. It demonstrates the dual role of the Armed Forces, that is, a warfighting force on the one hand, and a developmental force on the other.
As outlined in Republic Act No. 7898, the objectives of the AFP Modernization Program are as follows:
* To develop the AFP's capability to uphold the sovereignty and territorial integrity of the Republic and to secure the national territory from all forms of intrusion and encroachment
* To develop the AFP's capability to assist civilian agencies in the preservation of the national patrimony, including the country's living and non-living marine, submarine, mineral, forest, and other natural resources located within its territory and its exclusive economic zone (EEZ)
* To enhance the AFP's capability to fulfill its mandate to protect the Filipino people not only from armed threats but from ill effects of life-threatening and destructive consequences of natural man-made disasters and calamities
* To enhance the AFP's capability to assist other agencies in the enforcement of domestic and foreign policy as well as international covenants against piracy, white slavery, smuggling, drug trafficking, hijacking of aircraft and seacraft and the transport of toxic and other ecologically harmful substances taking place in or through Philippine territory
* To enhance the AFP's capability to assist the Philippine National Police (PNP) in law enforcement and internal security operations
* To enhance the AFP's capability to fulfill the country's international commitments
* To develop the AFP's capability to support national development
The AFP intends to achieve the objectives of the AFP Modernization Program through the Program's five interlocking components:
1. Force Restructuring and Organizational Development entails the reconfiguration and reduction of the AFP structure into a compact, efficient, responsive and modem force highly capable of engaging in conventional and/or unconventional warfare, disaster relief, rescue operations, and nation-building activities. This component also involves the organization, training and development of a 403,758-strong Reserve Force that can provide the base for expansion of the AFP Regular Force in the event of war or any national emergency.
2. Capability, Materiel and Technology Development involves the acquisition and upgrade of the AFP equipment. It shall be synchronized with the phase-out of uneconomical and obsolete capital assets and weapons systems in the AFP inventory. It also emphasizes on joint-use schemes in the procurement programs, that is, utilizing military equipment not only for military but for civilian purposes as well.
3. Bases/Support System Development refers to the development of permanent bases for land, air and naval forces. It involves a systematic relocation of AFP units, adequate support systems and housing facilities, training grounds and facilities for maneuver and territorial forces. It further ensures that bases and camps are developed along the standard criteria for space allocation and zoning.
4. Human Resource Development seeks to attract and retain quality individuals in the AFP. Competence shall be developed through relevant and effective education and training programs that emphasize values, patriotism, nationalist consciousness, professional and respect for people's rights, and environment and resource protection. It also aims to transform the AFP into a professional and people-and service-oriented force.
5. Doctrine Development includes the formulation of a rational and integrated approach for the generation, evaluation, consolidation and formalization of doctrines. Once doctrines are developed, periodic review shall be conducted through field application, testing and exercises. After approval, these doctrines shall be disseminated at all levels of command.
For decades, the AFP has virtually engaged all of its resources in internal security operations, since the presence of the United States (US) in the country some years ago served as an effective deterrent against external threats. Consequently, the AFP has become less focused on external defense to the point that its capability to operate with other armed forces and to address contemporary threats remained in a dismal status and continue to lag behind that of the neighboring armed forces. There is a need, therefore, for the AFP to focus its efforts in building up a capability suited to the changing scenarios of the international security community.
Recent years have witnessed how countries in the region exert efforts in projecting credible military power in order to instill regional balance of power. While our country does not intend to join any perceived arms race in the region, the AFP needs to make its present capabilities credible. This is to ensure that the AFP would be able to effectively and efficiently interplay and operate with other armed forces in whatever security alliance. Apparently, a modest modernization program is the first step necessary to gain respect from our neighbors and be a worthy member of any security alliance. Once our nation is able to project a credible armed forces, it could then work in synchrony with the armed forces of other countries in deterring would-be military adventurism, and in performing peace operation efforts for the international community.
In addition, a credible armed force would mean a capable force that could effectively support our government's diplomatic efforts in addressing contemporary security concerns as territorial conflicts and maritime disputes, as well as threats of transnational nature such as piracy, poaching, smuggling, and environmental pollution.
Evidently, the increasingly dynamic and unpredictable nature of the security environment demands credible armed forces that will ensure overall national security. While diplomacy is the best policy in addressing our security concerns, it would prove inadequate without a credible military force behind it.
DEFENSE FORCE CAPABILITY DEVELOPMENT
Framework for Formulation
The National Defense Strategy (NDS), which was designed based on the analysis of the overall environment, is the basic reference in the formulation of the capability development of the nation. Defense interests, objectives and policies contained in the NDS are translated into civil and military strategies. The civil defense strategy is primary geared toward developmental programs and projects and other crisis and peacetime operations in which the military could render assistance to. On the other hand, the military defense strategy is aimed at addressing the defense needs of the nation in time war. Taking into consideration both the civil and military defense strategies, the AFP then analyzes the gap between the required and existing capability, and after which, determines, analyzes and evaluates the new requirements to fill the gap. The program that outlines the new requirements in general terms is then valued for funds allocation. The new requirements undergo several reviews and adjustments based on the financial status of the government. The achievable defense program is then translated into new capability standards and is validated against the NDS and military strategy. If the revised program is still valid in the present and projected security environment, it is adopted and implemented.
This is the basic cycle used in the formulation of the AFP Modernization Program that frames the AFP Modernization Act.
National Defense Strategy
Based on the strategic scan and the underlying national defense and security premises, as well as the national defense/security policies, the national defense objectives are laid out as follows:
* To uphold the sovereignty and defend the territorial integrity of the Philippines
* To secure the border areas from smuggling, piracy, drug trafficking, poaching and other illegal activities
* To assist in the protection of the country's natural resources and ecological environment
* To assist in socio-economic development, including relief and rescue during disasters and calamities
* To protect the exclusive economic zone (EEZ)
* To support the Philippine National Police (PNP) in the maintenance of peace and order
* To contribute to the stability of the Association of Southeast Asian Nations (ASEAN)
* To support regional and United Nations (UN) initiatives for stability such as peacekeeping activities
* To assist as directed in transnational border efforts with other countries, as in anti-piracy on the high seas, anti-maritime pollution operations and search and rescue in disasters
Based on these national defense objectives, the civil and military strategies are formulated. The civil defense strategy focuses on national civil defense and assistance program. As such, its operations are basically undertaken during crisis and peace. During crisis, operations are aimed at providing safety and protecting property. These include search and rescue and disaster relief operations. At peacetime, necessary measures are prepared for the population's protection when disasters strike.
On the other hand, the military strategy follows a spectrum of deployment for three conditions: peacetime, crisis and war.
During peace, the aim is to deter hostile and aggressive acts against the nation and establish an aura conducive to national prosperity. In this time, the Armed Forces actively participates in developmental activities such as construction of infrastructures and preservation of national resources. During disasters, wherein immediate restoration of normalcy is the priority, the AFP assists government agencies in conducting disaster relief operations. In time of war, the AFP defends our national territory and ends any conflict immediately. Considering the archipelagic configuration of the country, the national military strategy conforms to the general principle of defense-in-depth that requires coordinated application of the full range of ground, sea, and air forces.
Given the National Defense Strategy, the overall development of the Armed Forces must:
(1) Be consistent with national defense objectives and strategic priorities
(2) Provide a generally adequate defense capability for the key roles identified in the National Defense Strategy
(3) Emphasize on the fast developing concerns of joint operations
(4) Apply selectively modern technology
(5) Promote competence, professionalism and team spirit in military operations
In sum, the development of AFP capabilities has a dual purpose, that is, to address the defense needs and the national development needs.
Development of AFP Capabilities
To be consistent with the national defense objectives and strategic priorities and provide a generally respectable national defense posture, the AFP capabilities will be developed along the key roles identified in the National Defense Strategy, as follows:
* Command, Control and Communications - focuses on the development of joint operating procedures and systems. On communications, the civil infrastructure will be used increasingly to complement the defense needs.
* Maritime Surveillance - consists of significant numbers of maritime patrol aircraft and surface naval assets. A key concern will be placed on the command, control and communications system that would integrate all information pertaining to movements or traffic in the maritime areas and on the exclusive economic zone (EEZ). Aside from AFP facilities, information from other concerned agencies will also be integrated through installation of appropriate communication links.
* Air Defense - consists of multi-role aircraft, with adequate ordnance and armament loads, air defense radar system and airborne early warning and control system. This will be complemented with effective command/control/communications systems.
* Maritime Patrol and Response - consists of surface naval assets and long-range patrol and multi-role aircraft. The vast expanse of the EEZ, the border areas in the south and the north, and other roles required of these forces will mean that response capability will always be selective and will require an effective conduct of joint operations.
* Protection of Offshore Territories and Strategic Resources - focuses on enhancing reconnaissance, surveillance and ground and air mobility. Surveillance services have the potential to overcome some of the problems of limited resources of personnel. The reserve force will be an important contributor to this role.
* Intelligence Collection and Evaluation - involves improvement in the integration and dissemination of intelligence to meet the strategic, tactical and operational needs of defense and other government agencies, as required.
* Integrated Logistics Support - focuses on enhancing the AFP capability in conducting and sustaining joint operations across the length and breadth of the archipelago and in adjacent maritime areas.
MODERNIZATION PROGRAMS OF THE MAJOR SERVICES
On Force Restructuring, the Army aims to create a lean and compact ground force complemented by a large and strong reserve force that can be readily mobilized. Further, it intends to develop into a more responsive ground force capable of engaging in conventional and/or unconventional warfare, disaster relief and other non-traditional military roles.
On Equipment Acquisition, the Army will focus on filling up mobility, firepower and communications assets to address its expanded role as a credible ground defense force while phasing out unreliable and antiquated equipment. Among the major equipment to be acquired are artillery, armor vehicles, individual weapons, engineering and tactical communication equipment. The Army will also upgrade and refurbish some howitzers and armor assets in its inventory.
On Bases Development, the Army follows the "base force-base camp" concept designed to prioritize facilities that will enhance ground defense. Priority for development will be camps of maneuver forces and command and control headquarters, territorial bases, and facilities for the training of active and reserve units.
On Human Resource Development, programs will be devised in relation to procurement, career development, discipline, law and order, pre-retirement and reserve force development in the Army, as well as in the other Major Services.
On Doctrine Development, the Army, and likewise, the other Major Services, will embark on research and formulation of doctrines, test and evaluation, validation and revision of doctrines, the end product of which will be the publication of manuals.
Philippine Air Force
On Force Restructuring, the Air Force aims to reorganize into a simplified command structure, that is, into five functional commands.
To restore the air defense capability, the Air Force will acquire multi-role aircraft with adequate weapons systems, ordnance loads, air defense radars with complementary communication and control systems, and missile systems, long range patrol aircraft, heavy lift helicopters, search and rescue helicopters and transport aircraft. It will also upgrade its F-5 fighters, F-27 transport, C-130 and helicopter fleet.
On the Air Force bases, infrastructures and support systems will be developed to ensure an effective and efficient utilization of weapons systems/equipment by the operating units in air defense and air operations. In the near future, thirty-one (31) air bases and stations will be developed.
The reorganization of the Navy will be carried out in a five-year period. In the future, the Navy will have four (4) type commands, and four (4) naval operating forces.
On Equipment Acquisition, it plans to procure patrol boats of various types, offshore patrol vessels, corvettes, transport ships, auxiliary ships, shipborne rotary wing aircraft, seaplane and underwater operation equipment. Also included in the program is the upgrade of a number of ships and equipment of the naval shipyard.
In consonance with its organizational restructuring, the Navy will establish four (4) naval operating bases. Other naval stations to support naval operations will be maintained. Twenty (20) naval bases and stations will be developed.
GHQ/AFP-Wide Service Support Units
On Equipment Acquisition, General Headquarters will develop an integrated command and control facility essential for the successful conduct of military operations. Among the major equipment to be acquired are land-based and satellite-linked communication equipment. Information technology systems such as computer hardware and software will also be acquired to enhance management of AFP resources and assets. Likewise, acquisition of support services such as medical/health and training equipment will be given priority.
On Bases Development, eight major camps and a national command center will be developed. Training facilities, housing projects, and medical facilities will also be enhanced.
AFP Modernization Program Budget
Joint Resolution No. 28 approved the whole P331.62 billion Modernization Program, which is broken down into two sub-programs. Sub-program 1, the priority program, which amounts to P164.55 billion, will be funded from appropriations to include projects that are essential in developing the AFP's core capability requirements. On the other hand, sub-program 2, amounting to P167 billion, will be funded from revenues other than appropriations stated in Section 11 of Republic Act No. 7898 or from additional funds generated as a result of an increase in the Gross National Product (GNP) in the future.
The financial requirement to implement the first five years of the AFP Modernization Program amounts to P50 billion. For the second five years, the needed amount is P74.2 billion; for the third five years, P37.6 billion; and for the fourth five years, P2.8 billion.
AFP Modernization Program Five- Year Rolling Plan
The AFP Modernization Five- Year Rolling Plan specifies a budget ceiling of P50 billion allocated to Major Services under the five Component Programs. By Major Services, budgetary allocation is as follows: GHQ - P4.8 billion; PAF - P14.7 billion; PN - P18.7 billion; and PA - P11.6 billion. By component programs, the allocation is as follows: Acquisition and Upgrade - P41.2 billion; Bases Development - P8.4 billion; Human Resource Development - P.351 billion; and Doctrine Development - P.078 billion or a total of P50 billion.
AFP Modernization Program Trust Fund
As envisioned, the required financial support for the Modernization Program will be provided by the operation of the AFP Modernization Trust Fund, which shall be used solely for the said Program, exclusive of salaries and allowances, and will be funded out of the following:
* Appropriations for the AFP Modernization Program
* Proceeds from the sale, lease or joint development of military reservations, as may be authorized by Congress, not covered by the Bases Conversion Development Authority (BCDA), as provided for in Republic Act No. 7227 (BASES Conversion Law), as amended by Republic Act No. 7917
* Shares of the AFP from the proceeds of the sale of military camps provided for under Republic Act No. 7227, as amended by Republic Act No. 7917
* Proceeds from the sale of the products of the Government Arsenal
* Proceeds from the disposal of excess and/or uneconomically repairable equipment and other movable assets of the AFP and the Government Arsenal
* Funds from budgetary surplus, if any, as may be authorized by Congress subject to the provisions of Republic Act No. 7898
* Other revenues that can be generated as authorized by law and those that are to be identified under Congress Joint Resolution No. 28 (Section 3)
* All interest income of the Trust Fund
REQUIREMENTS FOR AFPMP IMPLEMENTATION
To ensure the smooth and efficient implementation of the AFP Modernization Program, the DND- AFP completed certain pre-requisites under Republic Act No. 7898, as follows:
Functional structures were created at the DND, GHQ and Major Service levels. At the DND, the Committee on Equipment Acquisition and Inventory Upgrade (CEAIU) chaired by the Undersecretary of National Defense was created to review the recommendations of the AFP. At the AFP level, GHQ created the AFP Modernization Board and component committees; Doctrine Development Board; corresponding Bids, Awards and Negotiations Committee (BANCs) for each priority project; and the AFP Modernization Program Management Office (AFPMPMO). At the Major Service level, Major Service Modernization Boards, Technical Working Groups for the different projects, Program Management Offices, and the Doctrine Development Board were organized.
AFP Defense Acquisition Code of Ethics and Conduct Handbook
The DND-AFP came out with the AFP Defense Acquisition Code of Ethics and Conduct Handbook that sets the ethical standards of conduct required of all AFP personnel in all procurement dealings and contractual obligations. To support this effort, several seminars and lectures were conducted AFP-wide purposely to emphasize ethical values among AFP personnel.
Arrangements/Agreements with Government Agencies
Several arrangements, particularly on the AFP's security and development concerns, have been forged by DND-AFP with other government agencies. One of these is a Memorandum of Agreement (MOA) with the Department of Trade and Industry (DTI) with regard the conduct of countertrade through the AFP-Philippine International Trading Corporation (PITC) Joint Countertrade Working Group (JCWG). Likewise, a Memorandum of Understanding (MOU) with the Air Transportation Office (ATO) on the joint use of facilities and equipment particularly on the integration of both air defense surveillance and civilian air traffic control systems has been forged.
In addition, the AFP has been conducting studies with the Department of Agriculture (DA) to come up with a MOA on joint operation and use of monitoring, control and surveillance system to protect the country's coastal, territorial sea and exclusive economic zone (EEZ) against illegal fishing and exploitation of marine resources. Further, the Department of Finance (DOF) - Department of Budget Management (DBM) - Commission on Audit (COA) Joint Circular 04-98 on the administration of the AFP Modernization Act Trust Fund (AFPMATF) has been formulated and approved by the agencies concerned in December 1997.
DND Circular No. 29 - Implementing Guidelines to Republic Act No. 7898 (IG) prescribes the policies, planning guidance and procedures for the AFP Modernization Program. Embodied in the IG are policy statements that serve to strengthen the existing programs of the four components, namely, Force Restructuring; Human Resource Development; Doctrine Development; and Bases and Support System Development. It also contains the specific procedures for implementing the Cability, Materiel and Technology Development component program, resulting in the formulation of a more established equipment acquisition process. Issuring such procedures was necessary since it will be the first time for the AFP to venture into major procurement projects. As such, throughout the process, various changes can be expected with regard guidelines and procedures as further review, analysis and evaluation are made. Nevertheless, all these changes are intended to continuously update the procedures to suit the prevailing and anticipated trends and settings in the procurement environment.
EQUIPMENT ACQUISITION PROCESS
Equipment acquisition is deemed a very crucial part of the AFP Modernization Program for it composes the bulk of the budgetary requirement of [be Program. Thus, an intensive review, analysis and evaluation of technical, financial, and countertrade considerations shall be undertaken before acquisition of a particular equipment is approved at the DND level.
Under the IG, the Chief of Staff, AFP (CSAFP) is authorized to issue instructions to further implement the procedures. As such, the CSAFP issued directives and procedures related to the IG, from which evolved the equipment acquisition process consisting of five stages, which are as follows:
Stage I - Project Definition
At this stage, the Major Service concerned identifies its particular equipment needs and prepares the Circular of Requirements (COR) which outlines the operational requirements of a mission and equipment needed. The AFP Modernization Board (AFPMB) then reviews and evaluates the COR. Once the COR is approved, the Chief of Staff, AFP (CSAFP) endorses it to the Secretary of National Defense (SND) for approval. After the SND's approval, the CSAFP is directed to pre-qualify the proponents.
Stage II - Pre-qualification of Proponents/Proposals
The CSAFP, through the AFP Modernization Program Management Office (AFPMPMO) issues project specific guidelines to the Major Service on the commercial aspects and the general terms and conditions of pre-qualification. Once the guidelines are relayed, the Major Service concerned finalizes and issues the Request for Proposal (RFP) to the manufacturers/suppliers. The RFP, which contains the mandatory and operational requirements, as well as other technical specifications of the equipment being acquired, will be the basis for the proposals of prospective suppliers that were identified by the Major Service through a survey of the defense market. Due to the peculiarities in defense acquisition and the defense market, RFPs shall often be issued through direct invitation.
Pre-qualification is then conducted based on the responses to the RFP by the proponents. In pre-qualifying proponents, corporate profile, track record, and commitment of the proponent to enter into a countertrade/offset arrangement with the Philippine Government are taken into consideration. By using these factors, the Major Service concerned prepares a "shortlist" of proposals/proponents to be submitted by its Modernization Board to the AFPMB for review and evaluation before it is endorsed by the CSAFP to the SND for approval. Once the SND approves the "shortlist", the CSAFP is directed to conduct the bidding.
Stage III - Final Selection of Bids/Bidders
Upon approval of the "shortlist", the CSAFP activates the Bids, Awards and Negotiations Committee (BANC) for the project. The AFPMPMO, in coordination with the BANC concerned, then prepares and issues to the pre-qualified proponents an Invitation to Bid (ITB). The ITB contains more specific requirements, financial package, countertrade and offset scheme and other considerations necessary for a detailed comparative evaluation of all bids so as to select the Most Advantageous Bid (MAB).
Availability of funds for the project is certified with DBM's issuance of the Omnibus Forward Obligatorial Authority pursuant to Department of Budget Management (DBM) - Department of Finance (DOF) - Commission on Audit (COA) Joint Circular 4-98 dated 22 December 1997. The BANC evaluates the financial and technical aspects of the bid while the Philippine International Trading Corporation (PITC) evaluates the economic package of the bids and submits its findings to the BANC through the Joint Countertrade Working Group (JCWG). The BANC then consolidates all evaluation reports and recommends the MAB. The recommendation of the BANC is reviewed by the Senior Management Oversight Committee (SMOC) which is composed of the Deputy Chief of Staff as Chairman; the AFP Inspector General as Vice Chairman; and the Deputy Chiefs of Staff for Personnel (J1), Operations (J3), Logistics (J4), Plans (J5), Comptrollership (J6), Education and Training (J8) and the Judge Advocate General (TJAG) as members. Taking into account the findings of the SMOC on the recommendation of the BANC, the CSAFP, through the AFPMPMO, makes the appropriate endorsement to the SND. The Committee on Equipment Acquisition and Inventory Upgrade (CEAIU) at the DND reviews the recommendation of the CSAFP and in turn, forwards its recommendation to the SND for approval. Upon SND's approval of the MAB, he directs the CSAFP to negotiate the contract with the selected bidder.
Stage IV - Contract Negotiations
After negotiations, the Negotiated Implementing Contract (NIC) is prepared by the BANC and endorsed by the CSAFP to the SND for approval. A parallel effort is done by PITC on the countertrade agreement. The CSAFP, on the other hand, requests for an "approval-in-principle" of the financial terms and conditions contained in the NIC from the Department of Budget Management (DBM) through the Department of Finance (DOF). At the same time, PITC endorses the signed countertrade agreement to the SND. The NIC virtually awards the project to the winning bidder. A copy of the perfected contract is then elevated to the President for approval to implement the project.
Stage V - Contract Management and Implementation
Once presidential approval is obtained, the SND directs, through the CSAFP, the Major Service concerned to implement the contract. On the other hand, PITC operationalizes the countertrade agreement. At the GHQ level, the AFPMPMO supervises the implementation of the contract by the Major Service concerned, monitors the progress of the implementation and performance of the countertrade deal and recommends corrective measures if necessary.
National Defense Capability
It has long been the vision of the AFP to be self-reliant and able to defend the Republic with the least aid from any foreign armed forces. If the country possesses a modern armed force, there will be a better guarantee that its land and maritime boundaries will be respected and any form of threat and intrusion will be deterred. This will also project a more effective military force that can provide the necessary means to secure precious environmental resources from exploitation and degradation such as illegal fishing, poaching and dumping of pollutants. A modern armed force will definitely translate to better capability to prevent transnational crimes like piracy and smuggling.
Contributions to Regional Alliance
Every nation has an inherent obligation to remain an active participant in the international community. Asian countries, in particular, are becoming significant players in international affairs, especially in the aspect of economic cooperation. The Philippines has to seize the opportunities posed by this culture of cooperation in the region. This can be done by enhancing ties with neighboring countries, specifically in the field of peacekeeping and humanitarian operations. In this context, a modernized armed force, that is, one with credible military strength, is indispensable, for it means that it possesses a level of capability that can interplay with others. This, in turn, would translate to a more cohesive regional cooperation that can effectively contribute in maintaining balance of power in the region. In addition, with the foreign armed forces having high regard for the AFP, exchange of intelligence information and enhancement of interoperability through joint training exercises can be easily facilitated. Such a confident regional alliance would pave the way for the effective performance of regional tasks, to include, protection of environment, preservation of freedom of navigation, and fight against piracy, drug trafficking and smuggling.
A modernized AFP would translate to honor and prestige for the country as competent forces gain recognition for quality performance in military activities such as bilateral and multilateral military exercises, training exchanges, conferences, and symposia. A competent military force dispatched for peacekeeping operations and other international commitments would likewise enhance the nation's image as a dedicated member of the United Nations and as a respectable participant in global affairs.
The total capital outlay required for the AFP Modernization Program will definitely have a significant impact on the national budget, as well as on the country's trade balance. Having recognized this fact, the AFP has thus seen to it that procurement contracts under the AFP Modernization Program shall offer substantive returns to the country in the form of export earnings and investments. Such economic benefits shall be gained through special trading arrangements like countertrade, co-production and in-country manufacture.
The AFP, therefore, signed a Memorandum of Agreement (MOA) with the Philippine International Trading Corporation (PITC) on May 1996, creating the Joint AFP -PITC Countertrade Working Group (JCWG). The group is tasked to formulate the framework and relevant guidelines in accordance with implementing a countertrade program that will offer significant benefits to our economy.
Countertrade package is among the criteria in the evaluation of bids tenders and offers in foreign procurement programs worth over a million US dollars. As contained in Executive Order No. 120, the minimum level of countertrade obligation is 50 percent (50%) of the contract price of importation. It must be noted that it is in the field of defense where the first major countertrade programs were implemented in the country.
Reduction in Foreign Exchange Outflow
With the Philippine Government (through the AFP) entering into long-term contracts for the opening of new markets for the country's products, reduction in the outflow of foreign currency is guaranteed. This will be a welcome change in the country's economy that has experienced more dollar outflow in recent years. With the countertrade arrangements, foreign exchange receipts will be generated by the increase in export while foreign reserves will be safeguarded as dollar outflows are lessened.
An illustration of how the country's export earnings have increased as a result of countertrade is the purchase by the Philippine Air Force in 1989 of eighteen (18) S-211 Trainer Jets from Agusta of Italy. Through the purchase agreement signed with Intersomer (an Italian trading company designated as the countertrade nominee of Agusta), the export of close to US$36 million worth of Philippine products over a five-year period was facilitated. As a result, a number of our products including crude coconut oil, garments, copra, porcelain, black tiger prawns, handicrafts, and activated carbon found their way into new markets in Italy, the Netherlands, Denmark and the United States. To date, the S-211 project has generated US$45 million in services, training and exports. This is almost 62 percent (62%) of the contract price of US$72 million.
Opportunities for Local Employment
Since the countertrade arrangement will entail in-country manufacture, co-production and other investment-generating schemes, it follows that more opportunities for local employment would be opened. The country would be the source of human resources that will be an integral part of the production process of the new multinational business ventures that will be established. In addition, these opportunities will mean enhancing the technical and management skills of our workforce through their exposure to new and modern equipment, procedures and systems.
Under the AFP Modernization Program, arrangements will be forged with the foreign supplier to perform its obligation through either one or a combination of such mechanisms as direct investments, research and development programs and technology transfer. These mechanisms should be in line with those classified as "pioneer" projects in the Investments Priorities Plan (IPP) or those which support the plan for development of our country as a transhipment point for the transportation, telecommunications, aerospace, ship repair and shipbuilding industries.
Technology transfer will definitely contribute to the national industrial base as advanced technologies and skills are introduced. This will mean learning modernized processes that will eventually aid in the production of quality local products that can compete in the world market. Eventually, local industries will flourish, thereby spurring industrialization.
Further, the direct transfer of technology will allow for the emergence of a pool of individuals with highly marketable, scientific and technological skills.
Self-Reliant Defense Industry
The ATP Modernization Program is guided by our Self-Reliance Defense Posture (SRDP) policy. The SRDP's objective is to rely primarily on the country's own capabilities and indigenous resources in developing and acquiring the basic materiel requirements of the AFP. This would mean generating local employment and boosting the local defense industry.
This vision of a self-reliant defense industry could be sustained through the arrangements provided for under the AFP Modernization Program that will allow for joint ventures such as co-production and in-country manufacture between local and foreign defense supply manufacturers. Through these arrangements, our defense industry would be able to develop its capability to select, adapt, repair, maintain and develop military equipment and assets on its own, thereby lessening its dependence on foreign defense suppliers.
Effective Support in Crisis Situations and Nation-building Activities
The AFP Modernization Program will pave the way for the creation of an effective and efficient armed force that could readily be relied upon by the government in rendering services to the people in times of crises and calamities, as well as in times of peace.
Modernized forces, equipment and facilities will surely enhance the AFP's capability to perform various tasks in support to the activities of other government agencies such as infrastructure development, rural health services, rural literacy programs, rescue and relief operations, resettlement and rehabilitation operations, and protection and preservation of natural resources.
Moreover, the involvement of a modernized armed force in nation-building and community development activities such as infrastructure projects will not only promote social interaction between the military and the civilians, but trade and commerce and access to economic growth zones and trade corridors as well.
Contrary to the impression that the AFP Modernization Program is merely an expense, it is more of an investment in the country's economic future as tremendous socio-economic benefits can be reaped from the Program. As a result of a more secure environment brought about by competent forces securing the national territory, a more investment-friendly country marked by political stability will be projected. Countertrade arrangements can likewise create a more conducive atmosphere that will facilitate the conduct of business in the country. In addition, these arrangements can open the opportunity to further develop other industries as the country faces the increasingly competitive global environment. In the long run, economic progress will be within reach as a result of the Modernization Program.
AFP MODERNIZATION PROGRAM AND THE FILIPINO PEOPLE
Through the AFP Modernization Program, the Armed Forces embarks on a new crusade of developing its defense capabilities well suited to address the changes in the security environment. The Modernization Program is the AFP's response to its more crucial role in defending the Republic and its people. Now more than ever, the AFP aspires to be prepared at all times - to Win decisively and quickly during war, to assist in relief operations during crisis, and to participate in nation-building efforts during peacetime.
The AFP Modernization Program manifests that the AFP has now built its goal far looking to the challenges and opportunities of the 21st century. It proves the AFP's initiative to make those leaps and meet the security challenges and opportunities that lie ahead to make it a professional, capable and responsive armed force and a source of national pride.
More than merely acquiring modern fighter planes, tanks and vessels and training a lean and mean fighting and nation-building force, the AFP Modernization Program is meant to be an investment to the security of the nation and the Filipino people, in the near future and in the generations to come. It intends to maintain the nation free at all times from any potential threat, which can mar its development and its people's well-being.
More importantly, the Program manifests the AFP's sincere intent to be a truly service-oriented organization worthy of the people's confidence and trust and of the nation's glorious past. As such, the AFP is hoping to get the support of the Filipino people in the pursuit of its mighty vision. After all, the Armed Forces share the history of the nation and the aspirations of the Filipino people.
LAW/POLICIES/GUIDELINES GOVERNING THE AFP MODERNIZATION PROGRAM
Republic Act No 7898
An Act Providing for the Modernization of the Armed Forces of the Philippines and for Other Purposes
Joint Resolution No 28
Expressing the approval by both Houses of Congress of Republic Act No 7898, otherwise known as the AFP Modernization Act
Republic Act No 7227
An Act Accelerating the Conversion of Military Reservations into Other Productive Uses, Creating the Bases Conversion and Development Authority for This Purpose, Providing Funds Thereof and for Other Purposes
Republic Act No 6713
An Act Establishing a Code of Conduct and Ethical Standards for Public Officials and Employees, to Uphold the Time Honored Principle of Public Office Being , Public Trust, Grunting Incentives and Rewards for Exemplary Service, Enumerating Prohibited Acts and Transactions and Providing Penalties for Violations Thereof and for Other Purposes
Executive Order No 302
Providing policies, guidelines, rules and regulations for the procurement of goods/supplies by the National Government
Executive Order No 120
Directing the National Government, Its Departments, Bureaus, Agencies and Offices, including government-owned or controlled corporations, to adopt countentrade as a supplemental made tool with respect to the importation of Procurement of foreign capital equipment, machinery, products, goods and services
Executive Order No 1002
Declaring the accrued income from the AFP operations and exercise of regulatory functions as trust receipts and granting the Chief of Staff, AFP the authority in the use thereof as a. exemption from Section 50 of Presidential Decree No 1177
Executive Order No 338
Directing the deposit of cash balances to the National Treasury
Department Circular No 29
Implementing Guidelines to Republic Act No 7898
Joint Circular No 4 - 98 dtd 22 December 1997
Rules and regulations in the proper handling/administration of the AFP Modernization Act Trust Fund (AFPMATF)
SOP Nr 05 dtd 24 May 1995
Creation of the AFP Modernization Board
SOP Nr 02 dtd 21 February 1997
Creation of the Bids, Awards and Negotiations Committee (BANC)
SOP Nr 07 dtd 09 October 1981
Acquisition and Management of AFP Real Estate/Reservation
Republic of the Philippines
Department of National Defense
General Headquarters, Armed Forces of the Philippines
Office of the Chief OF STAFF
Camp General Emilio Aguinaldo, Quezon City