DISAGREEMENTS have hampered the sealing of a contract between the Philippines and South Korea for the acquisition of 12 fighter jets worth P19 billion which is seen to boost the capability of the Philippine Armed Forces.
Defense Undersecretary Fernando Manalo on Monday said that negotiators disagreed on the terms of payment and validity of the warranty of the spare parts.
Manalo explained that under the terms of the contract, the warranty for spare parts is two years or 600 hours of flying time whichever comes first and within that period, the supplier firm, the Korea Aerospace Industry (KAI), should deliver the replacement for defective parts in 30 to 45 days upon receipt of the notice.
But the KAI wanted a longer period of 180 days because it would take the firm some time to come out with a replacement on such modern and expensive spare parts.
Another contested issue, he added, is KAI’s demand of 52 percent advance payment and progressive billing, which is contrary to the provisions of Republic Act 9184 or the Government Procurement Act.
The law only allows a 15 percent down payment and the balance will be paid upon delivery.
Manalo said the Department of National Defense’s Bids and Awards Committee will not approve a contract that will not follow what the law requires.
“We can only recommend to the President. You can just imagine that a big portion of the P18.9- billion budget would be immediately invested from the start,” Manalo said. He pointed out that if the government fails to heed the KAI’s request, an additional cost would be added to the original contract price.
Notwithstanding the disagreements, the official remains confident that they would be able to thresh out the kinks and sign the contract because the Air Force badly needs fighter jets to strengthen its air capability.
“We are already preparing our firm position and then we are going to submit it to KAI for them to determine whether that is acceptable,” he said. “We will immediately resolve the issue. They will either accept or reject all the unresolved issues.”
Manalo said they wanted the issues resolved within the year.
The procurement of 12 Korean-made FA 50 fighter jets was approved in December 2012. The funding will come from the P75 billion modernization program set for implementation in the next five years.
The DND originally planned to procure a squadron or 24 fighter jets but reduced it to 12 because of funding problems.