Ship management company

DND approves acquisition of 6 offshore patrol boats from Korean company HHI – Manila Bulletin

The Department of National Defense (DND) has signed a contract with a South Korean shipbuilding company to purchase six Offshore Patrol Vessels (OPVs) for the Philippine Navy.

Secretary of the Ministry of National Defense, Delfin Lorenzana (left), shakes hands with Vice President and President of Hyundai Heavy Industries, Sam Hyun Ka, after signing the 30 billion peso contract for the acquisition of six Offshore Patrol Vessels (OPVs) for the Philippine Navy at DND Headquarters at Camp Aguinaldo, Quezon City on June 27, 2022. (Photo courtesy of DND)

The 30 billion peso contract was signed by outgoing DND Secretary Delfin Lorenzana and Hyundai Heavy Industries (HHI) Vice President and President Sam Hyun Ka at the DND headquarters in Camp Aguinaldo, Quezon City. , Monday, June 27.

An OPV is a small surface vessel designed for coastal defense, such as maritime security, border control, counter-terrorism, and disaster relief operations, among others. She is 94.4 meters long, 14.3 meters wide, with a displacement of 2,400 tons, a maximum speed of 22 knots, a cruising speed of 15 knots and a range of 5,500 nautical miles.

“The project aims to further enhance the maritime patrol capabilities of the Philippine Navy,” DND said in a statement.

The signing of the contract came as a surprise as Lorenzana revealed earlier that he would let the new DND secretary decide which company will be awarded the project to avoid suspicion that it would be a “midnight deal”. ” or a project carried out under the table. .

Lorenzana will step down as DND secretary on June 30 and will be replaced by former Armed Forces of the Philippines (AFP) chief of staff, retired General Jose Faustino Jr., who will serve as an officer DND official.

This means that Lorenzana will no longer be able to follow the developments of the project since Faustino will take over the operations of the DND, including the ongoing modernization program of the AFP.

“If I don’t sign this, it will go on forever. I don’t know the power or authority of the OIC, [Gen. Jose] Faustino, if he can sign contracts. Mabibinbin’yan [It will be shelved]),” Lorenzana told reporters on Tuesday, June 28.

The outgoing Chief of Defense said DND was “running out of time” to complete OPV’s acquisition of the six OPVs.

The Navy’s OPV acquisition project was prioritized under the second “horizon” of AFP’s revised modernization program as approved by President Duterte in May 2018, and with Austal – a Australian shipbuilding – originally considered to take over the project.

However, Lorenzana revealed that DND opted to find other developers after Austal requested an additional 12 billion pesos for the completion of the construction of the ships.

“They submitted additional requirements at the end of last year and they were asking for an additional 12 billion pesos for the six OPVs, or they will reduce the number from six to five units for the simple reason that the price of raw materials has increased. “, explained Lorenzana. .

DND could not provide the supplementary budget since the Department of Budget and Management (DBM) has already released the initial funding for the project.

The Navy then offered to carry out a new survey involving the main promoters HHI from South Korea, ASFAT from Turkey and Naval Group from France, as well as other competitors from Sweden, Israel and India.

“The winner was HHI because they promised not to increase the contract price even if the exchange rate increased. It’s a win for us,” Lorenzana said.

But one of HHI’s conditions was that the project had to start at least 100 days after the award notice was given to them.

“Naforesee namin, when time na mapirmahan niya [Faustino] ‘yan after several months, baka iba na ang presyo. Hyundai says na kapag nagtagal ng one hundred days from the time the award notice is given, hindi nila kaya ‘yung presyo. Naghahabol tayo ng presyo (We have planned that when the time comes [Faustino] signed after several months, the price might be different. Hyundai says if it takes a hundred days from the time the award notice is given, they can’t do it at that price. We go after a [affordable] price),” Lorenzana said.

“I think we did it in the best interests of the government. Instead of prolonging the project, let’s start it now. We’ve been working on this for a while, so let’s get it over with,” he added.

Part of the contract, it was revealed, is that the HHI will include technology transfer to the Navy, which refers to human engineering operator training and equipment maintenance; operations training; and a design ownership that grants them “a license to manufacture/construct using the OPV design for the exclusive use of the Philippine government.”

“Kausap ko sila kahapon, magtatayo sila dito ng service support facilities to help maintain these vessels, ‘yung tinatawag nant technology transfer (I spoke to [HHI] yesterday they will build service support facilities here to help maintain these ships, or what we call technology transfer),” Lorenzana said.

The South Korean government also plans to provide “freebies” to the Philippine Navy, such as a Pohang-class frigate similar to the BRP Conrado Yap (PS-39) and MG-520 light attack helicopters.