• Bidder questions purchase of Navy Frigates

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    ONE of six bidders in the government’s acquisition of two Navy frigates has raised questions on the alleged modification of the bid structure by the bids and awards committee (BAC) of the Department of National Defense (DND), in which the project was supposedly split into two components.

    STX Offshore and Shipbuilding Co. Ltd. (STX Korea) claimed that dividing the bidding for the two ships and their weapons systems, and the bidding for ammunition, was grossly disadvantageous to the government and in serious violation of procurement laws.

    “Splitting the Authorized Budget of Contract (ABC) and the items to be bid out after the first stage of the bidding, and before the second stage, is tantamount to changing the terms and conditions of the bid in the middle of the game,” STX Korea said in a statement.

    It said that initially, the bidders were made to believe that the ABC was P18 billion and the items for bidding were the vessels, weapons system and ammunition, “and we joined the bidding on the basis of those parameters.”

    “It is thus unfair for everyone, especially for those who failed to pass the initial stage, to have the terms substantially changed when the bid has already been submitted,” STX Korea pointed out.

    It said the BAC later released the technical specification for the project but removed all references to ammunition. The BAC also attached a memorandum to the bid document, specifying the need to split the bidding for the vessels and the ammo which could be in the form of missiles, bullets, torpedoes and others.

    The firm claimed the BAC purposely split the project to make it appear that the winning bidder, Hyundai Heavy Industries, offered the lowest price at P16 billion for the two vessels alone.

    Splitting the bid will limit the number of bidders to those who will be able to match the specifications of the winner of the first bidding, it claimed.

    “In other words, there will be no competition for the bid of ammunition as the manufacturer of the launchers in the first bid is the only manufacturer of the ammunition that will fit such launchers,” STX Korea added.

    Arsenio Andolong, DND Public Affairs Service director, said the action of the BAC should not be considered as splitting the contract.

    He explained that the separation of the procurement of the platforms with launchers and procurement of missiles and munitions was the result of technical discussions with eligible bidders that included STX Korea, STX France, HHI, Garden Reach Shipbuilders and Engineers, Navanta S.A. and Daewoo Shipbuilding and Marine Engineering Co.

    Andolong added that the eligible bidders suggested to the Philippine Navy’s technical working group to acquire missiles or munitions through a government-to-government transaction, to facilitate the export-import license of the defense items.

    The DND official maintained that the department did not violate any provisions of Republic Act (RA) 9184 or the Procurement Reform Act in modifying the bidding documents.

    “It must be emphasized that the frigate project or Lot 1 was undertaken through a two-stage bidding as provided for under Section 30.3 of RA 9184 and its IRR (Implementing Rules and Regulations),” he pointed out.

    “In this modality, due to the nature of the requirements of the project, the required technical specifications … of the contracts cannot be precisely defined in advance bidding, therefore, the procuring entity shall prepare the bidding documents including the technical specification in the form of performance criteria only,” Andolong said.

    “Thus prospective bidders shall be requested at the first stage to submit their respective eligibility requirements and initial technical proposals only. Subsequently, meetings or discussions will be held by the BAC with those eligible bidders who passed the first bidding in order to come up with the final revised technical specifications,” Andolong explained.

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