MANILA, Philippines — The former flag officer in command of the Philippine Navy on Wednesday stressed that he did not commit “insubordination” by “insisting” that a Dutch company provide the computer system of the two frigates that the military is procuring from a South Korean firm.
In a hearing by the House Committee on National Defense and Security, Vice Adm. Ronald Joseph Mercado denied that he insisted on going with Thales Tacticos of the Netherlands. He said that it was Hyundai Heavy Industries, the South Korean firm contracted for the supply of the frigates, that offered the Navy two brands for the ships’ combat management system in the first place.
Mercado said that Hyundai did not submit the validity of their bid proposal nor tell the Navy that it would have to shoulder the price difference if it chooses the Dutch firm’s system.
The former Navy chief, who is set to retire on Friday, said that one basic rule in bidding is that the price offered by the bidder is fixed.
Mercado also accused Hyundai of wanting to substitute Hanwha Thales with Hanwha System, which is a different technology, did not undergo post-qualification, was not in the contract and was not compliant with the AFP Modernization Law requirement that military procure defense equipment of “proven technology.”
“This is the reason why I kept on asking for guidance and clarifications from my higher authorities because I do not want, as flag-officer-in-command then, for Philippine Navy officers and staff to face possible graft and corruption charges,” he said during the House hearing.
Rep. Gary Alejano (Magdalo), a former Marine captain, meanwhile wondered about the people responsible for inserting a questionable provision in the Navy frigate contract.
The assailed provision said that Hyundai, as the ship builder, had the right for final selection of the equipment or system to be installed on the frigates for as long as it met the specification and other design aspects of the procuring agency, the Philippine Navy.
“By inserting the said provision, the Philippine Navy was put in a very disadvantageous position,” Alejano said.
“The said provision deprives the Philippine Navy, and the whole country in general, of the benefits that could have been derived from a more modernized Philippine Navy,” he said.
According to the former military officer, personal and business interests prevailed over national interest in the multibillion contract which is part of the modernization program of the Armed Forces of the Philippines.
Alejano, in a privilege speech, said that Special Assistant to the President Christopher “Bong” Go might have interfered in the contract to favor the Hanwha System. Go has appeared before a Senate panel to deny having a hand in the deal.
“What we have now is a deal that will greatly undermine the aspirations of our Philippine Navy to be recognized as a credible force in Asia,” Alejano said.
He also urged his colleagues to ensure that troops will get the best deal in the country’s modernization program in the face of aggressive external and internal threats.
Ex-Navy chief: This is why Frigate project must push through
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