THE P1.2-billion helicopter project awarded by the Department of National Defense (DND) to a foreign supplier should be stopped as it does not only violate the terms of the agreement, but also delivered old, refurbished units, a source said on Sunday.
In an interview with The Manila Times, the source, who was privy to the deal, noted that the contract was for 21 UH-1H helicopters. But what were delivered to the Philippine Air Force (PAF) were the older UH-1D helicopters. These units, the source said, are not reliable because their parts are already “obsolete.”
“If DND awarded the contract to a qualified supplier, the helicopters should have been fully operational by 2014 and those helicopters should have been used during the Mamasapano incident,” the source added.
He said the helicopters delivered by Rice Aircraft Services Inc. and its Canadian partner, Eagle Copters Ltd., are not yet operational since they are not equipped with protective parts such as intake screen and other features that will allow them to fly under Philippine conditions.
The source said President Benigno Aquino 3rd was hoodwinked into believing that the aircraft delivered were UH 1H models.
“The age of UH 1D is older than UH 1H and the manufacturer [Dornier] is no longer existing and no helicopter parts are being manufactured specifically for UH 1D. This model is using Bell spare parts specifically designed for UH 1H, thus there is always an issue of safety,” the source explained.
“The UH 1H is a Vietnam War veteran while the UH 1D was used by the German armed forces. What they do now is they put in UH 1H parts in UH 1D choppers. There are discrepancies and these would be unsafe,” he said.
Documents showed that negotiation for the contract was headed by Fernando Manalo, Defense undersecretary for finance, munitions, installation and materiel.
The contract was approved by Defense Secretary Voltaire Gazmin in 2013.
In his July 2012 State of the Nation Address, the President boasted that 21 refurbished UH 1H choppers were on their way to the Philippines.
The source said Aquino lied.
“It was farthest from the truth. First, it was the UH 1D model, not the UH 1H. Second, we only have nine helicopters delivered as of now and all of them have issues. They can only fly, if they could fly, for training and will not be effective for mission,” he added.
The Times was furnished voluminous documents about the project since its inception up to the commission of several violations as stated in various communications between the DND and the supplier.
As part of a “cover-up” by Defense officials, four units of the questioned helicopters were presented last year during the PAF anniversary. But the aircraft would not even start because of engine problems.
The source alleged that high-ranking DND officials compelled PAF officials to “accept” the “defective” aircraft.
The joint venture of Rice Aircraft Services Inc. and Eagle Copters Ltd, according to the source, defrauded the government by submitting the Statement of Compliance during the negotiation, stating that they will comply with all requirements for procurement of 21 refurbished UH 1 Helicopters.
“This act deprived the government the opportunity to negotiate the project with a qualified supplier who can deliver superior quality of Bell UH 1H instead of UH 1D,” the source said.
“The Joint Venture companies also deprived PAF the chance to acquire better UH 1H necessary to carry on with its missions and enhanced its capability as part of the AFP Modernization Program,” he added.
Of the 21 “refurbished” helicopters, nine have been delivered and at least one more is waiting to be “accepted.”
Documents obtained by The Times also showed that Rice Aircraft Services Inc. and Eagle Copters committed the following violations:
Misrepresentation during the negotiation that they have the capacity to deliver within 180 days 21 refurbished helicopters; failure to refurbish helicopters at the approved facility; failure to support the end-user with the necessary manuals for UH 1D because the Dornier class manuals were written in German; and failure to supply repairs and maintenance on the discrepancies of the accepted UH 1D making the units unavailable to fly for a long time in violation of the warranty clause stipulated in the Terms of Reference.
The source said the helicopters delivered were incompatible with night vision goggles and lacked crash-worthy and self-sealing fuel cells.
All units delivered to PAF showed discrepancies immediately after a few hours of flying time.
“Non-compliance with those requirements [in the contract]is highly disadvantageous to the government whereby the pilots or the end-users of those helicopters will be having a hard time to fly during nighttime and their safety is at stake,” the source said.
Because of these discrepancies, he added, the contract for the procurement of the 21 refurbished UH 1 helicopters should have been terminated and notices to qualified suppliers should have been sent pursuant to procurement laws.
Under the contract, the supplier must deliver the aircraft on or before September 21, 2014. But since it failed to deliver within the allowed period of extension, the supplier had been paying the corresponding Liquidated Damages (LD) pursuant to the Terms of Reference of the project.
After the maximum allowable LD, the contract shall be terminated pursuant to the TOR.
“In this case, the supplier had been paying LD since September 2014. The LD had reached its maximum amount as of November 2014. There was no termination made by DND [that is]continuously conducting inspection and acceptance of the UH 1D,” the source said.
The Defense department had held three public biddings for the Huey acquisition project but all failed because the bidders failed to comply with some requirements. On the third attempt, only Rice Aircraft participated but eventually failed.
The DND then resorted to a negotiated contract with Rice Aircraft.
Section 53 of the implementing rules of the procurement law permits agencies to enter into negotiated contracts when there has been a failure of public bidding for the second time.
Negotiated procurement is “a method of procurement of goods, infrastructure projects and consulting services, whereby the procuring entity directly negotiates a contract with a technically, legally and financially capable supplier, contractor or consultant.”