(UPDATED – 2:28 p.m.) MANILA, Philippines — Former Department of National Defense (DND) chief Voltaire Gazmin confirmed that it was the Aquino administration that initiated the procurement of the two Philippine Navy frigates, but noted that he did not issue any approval for the P16-billion deal.
“Yes, we initiated the procurement of the frigate procurement project,” he said during the Senate Committee on National Defense and Security’s probe into the military contract on Monday.
But Gazmin stressed that as his term was drawing to a close, he was advised to “refrain from issuing awards and executing contracts,” which was why the DND’s Bids and Awards Committee (BAC) proceeded with the bidding and “other related activities”, but he did not “issue any approval for awarding of the projects and other subsequent steps during the transition period.”
During the inquiry, former BAC chairman Ernesto Boac added that the project was undertaken by the DND during the time of then President Benigno Aquino III “up to the time of the recommendation of the DND bids and awards committee to the Secretary of the National Defense, recommending to issue the notice of award.”
Following questioning by Senate panel chair Sen, Gringo Honasan, DND chief Delfin Lorenzana confirmed that four bidders had participated in the frigate acquisition project, and that he signed a notice of award in favor of Hyundai Heavy Industries (HHI) in August 2016 with a bid price of P15,744,571,584.
Lorenzana also confirmed that in December 2016, HHI, a major shipbuilding firm headquartered in Ulsan, South Korea, was given notice to proceed and promised to deliver the frigates by 2020.
Navy Flag Officer in Command Vice Admiral Ronald Joseph Mercado, who acknowledged that he had supported the Philippine Navy (PN) project management team’s stand against HHI and was subsequently relieved from his post by Lorenzana, denied insisting that the Tacticos system by Thales be used as opposed to HHI’s selection of Hanwha Systems as the supplier of the combat management system (CMS) to be installed in the frigates.
During the hearing Mercado alleged that it was in fact HHI that offered Thales to the DND during the bidding process.
The DND, through a steering committee formed by Lorenzana, eventually affirmed HHI’s selection regarding the installation of the CMS in the frigates.
Mercado also reiterated that President Rodrigo Duterte’s special assistant Christopher Lawrence “Bong” Go neither approached him to inquire about the project nor communicated with him about the undertaking.
Later in the hearing, Lorenzana explained that he had relieved Mercado of his post because the latter was preventing the frigate project from moving forward.
Mercado was supposedly insisting on the use of the Tacticos system created by Thales of the Netherlands, as opposed to the Hanwha Systems chosen by HHI as the supplier of the CMS.
Lorenzana said his legal officer read through the contract and found that Hanwha Systems was compliant with it, which was why the DND chief sent the Philippine Navy a memo that the project should already be implemented.
But in a discussion among senior leaders, which excluded Lorenzana, Mercado supposedly continued to insist on Tacticos and even said that he would work towards the cancellation of the contract if it would not push through.
“Another memo was sent to him and he defied that. He did not follow the memo,” Lorenzana said.
Also, the DND chief accused Mercado of allegedly preventing the Philippine Navy team under Lorenzana’s control from meeting with the people from HHI to discuss the project.
Lorenzana said Mercado allegedly usurped his authority. “I lost confidence in him because he is blocking the project left and right and making up some excuses.”
The DND secretary added that President Rodrigo Duterte had given him the go-signal to relieve Mercado of his post.
The frigate project is now moving forward, although the delivery of the ships is delayed by six months after Hyundai asked for some “adjustments,” said Lorenzana.
