DEFENSE Secretary Voltaire Gazmin on Wednesday ordered the “partial termination” of the P1.2 billion UH-1 helicopter procurement contract with US supplier Rice Aircraft Services Inc. (RASI) due to the firm’s failure to deliver the ordered units within “180 days upon the opening of the letter of credit.”
In a Notice of Termination sent to RASI president Robert Rice dated March 25, 2015, Gazmin informed the supplier that the project is being “partially terminated for exceeding the ten percent (10%) maximum liquidated damages.”
“You are hereby ordered to submit a verified position paper stating why the contract should not be terminated within seven (7) days upon receipt hereof. Failure to show cause within the provided period, either by inaction or by default, shall cause the issuance of an order terminating the contract,” warned the chief of the Department of National Defense (DND), which has been embroiled in the controversy surrounding the questionable acquisition of 21 refurbished UH-1D helicopters.
The UH-1Ds made by the defunct Dornier of Germany were supposed to be delivered on September 23, 2014, the 180th day after the opening of the Letter of Credit on March 27, 2014.
“You have delivered the UH-1 units in tranches and as of the date of this notice, only eight out of the 21 UH-1 Helicopters including 21 sets of Gun Mounts has been accepted by the TIAC (acceptance committee),” Gazmin said.
The Defense chief further informed Rice that the maximum liquidated damages was reached on January 31, 2015 and that RASI has “failed to comply with the agreed Schedule of Requirement of the Contract Agreement.”