State auditors questioned the procurement by the Armed Forces of the Philippines of 28 armored vehicles from Israel and 12 units of aircraft from South Korea because it did not undergo public bidding.
The Commission on Audit said the acquisition of the equipment in 2014 may not be justified because the military negotiated directly with suppliers.
The P882-million contract for the purchase of 28 armored vehicles was entered into between the Department of National Defense and Elbit Systems Land and C4I Ltd of Israel, while the P18.976-million deal for the purchase of 12 aircraft was with Korea Trade-Investment Promotion Agency (Kotra) and Korea Aerospace Industries (KAI) of South Korea.
“The award of contract for the purchase of 28 units of Armored Vehicles…and 12 units of F/SA/LIFT Aircraft…without resorting to public bidding but through Negotiation under Defense Cooperation Agreement may not be justified since negotiations were made directly with suppliers which are not the agency or instrumentality of the country with which the Philippines had entered into a Defense Cooperation Agreement,” the auditors said in their 2014 audit report.
They added the Memorandum of Understanding between the parties does not expressly provide for a set of procurement rules different from RA [Republic Act] 9184, as required under Section 53.8 and Section 4.2 and 4.3 of the Revised IRR [implementing rules and regulations]of RA 9184; thus, the procurement is not exempted from RA 9184.”
RA 9184 is the Government Procurement Reform Act.
According to COA, the law allows government agencies to resort to negotiated procurement but this should be approved by the President and should involve the acquisition of major defense equipment or defense-related consultancy services when the expertise or capability required is not available locally.
“By virtue of said recommendation, DND/AFP negotiated with Elbit Systems, as the suppliers recommended by MOD-ISRAEL, for the refurbishment of the Armored Vehicles. We believe that the mode adopted does not conform to the Defense Cooperation Agreement as an alternative mode of procurement under RA 9184,” the auditors said.
They said negotiations are allowed with an agency or instrumentality of a country with which the Philippines has entered into a Defense Cooperation Agreement.
“There was no negotiation made with MOD-ISRAEL with regard to the purchase of the vehicles. Pre-negotiations and formal negotiations, however, was made directly with Elbit which is not directly an agency or instrumentality of the State of Israel,” they said.
“Although the equipment is not produced locally, there are foreign suppliers which manufacture similar items which might have participated had public bidding been conducted,” they added.
In the same audit report, auditors questioned the purchase of eight Bell 412EP helicopters through negotiation with a Canadian firm.
According to COA, the deal was worth P4,763,451,764.
The audit also found questionable several procurements by the military of portable radio receivers and Technical Forensic Upgrade System through negotiation.