Friday, May 25, 2012

National Security And Defense Contractors

MANILA, Philippines — Defense contractors have always played a critical role in the development of the armed forces of first world nations particularly the United States and Western European countries. These defense contractors would provide practically all of the hardware and software needed by the military such as small arms, missiles, tanks, submarines, warships, jet fighters and anything else needed by a major military power.

Governments in more advanced countries partner with their defense contractors throughout the whole project from inception and prototyping all the way to delivery and maintenance. Instead of bidding out for a specific item, the bids are project based thereby developing a local defense industry in the process. Once these defense contractors are established, these companies can also develop commercial applications for their products and establish an export market as well. Of course, during times of emergency, it would also be much easier for these defense contractors to increase production or even develop other products.

Our country should rethink about how we procure the needed armaments for our military, which is essentially done through a long drawn bidding process. President Aquino even commented that our current procurement law assumes that everyone in government is a crook. Our procurement laws are very restrictive in the sense that it does not allow for a long term relationship and does not take into consideration other important aspects such as national security.

Given the recent developments concerning claims involving our sovereign territory, it has become painfully clear that our military capability is inadequate to appropriately protect our national interest. Considering also that we have constitutional limitations on our military spending, our government, even if it so desires, will not be able to make substantial investments in production facilities to manufacture our own armaments. It is also not in our best interest to be heavily reliant on the grants and sourcing of needed military equipment from foreign nations even if they are considered our allies.

Where does this leave us then? We have no choice but develop our own defense industry by reviving the Self-Reliant Defense Program (SRDP) which was has its roots under Presidential Decree No. 415 dated March 19, 1974, which authorizes the Secretary of National Defense to enter into Defense Contracts to implement projects under the SRDP. It is interesting to note that our military capability in 1974 in relation to our neighbors was better than it is 38 years later.

As stated in PD No. 415, the objective is for us to “achieve a self-reliant defense posture”, which would require the immediate pursuit of “national defense projects for the acquisition of military material”. It further stated that the implementation of these SRDP projects “will generate labor, spur industrial and commercial activities and conserve foreign exchange resources”.

The SRDP allowed the Secretary of National Defense to “enter into contracts under such terms and conditions as may be agreed upon, with any natural or juridical person, with or without public bidding, for the manufacture or procurement of supplies, equipment or components thereof…needed for national defense and covered by the Self-Reliant Defense Program approved by the President of the Philippines…” In addition defense contractors under the SRDP were provided certain incentives and loan facilities were made available for SRDP projects. To top it off, “the amount of at least One hundred million pesos is hereby appropriated yearly under the SRDP Program budget of the AFP, to carry out the provisions and purposes of this Decree.”

Keep in mind that this was back in 1974 and what have we done for our defense industry since then? Unfortunately, we have neglected our local defense contractors and have based our acquisition program on our procurement law which is primarily based on giving the award to the lowest bidder and does not develop local industries including the defense industry. In a way, we are paying for all of this now. Hopefully, our current predicament is an eye opener and generate the clamor for our government to act on the full revival of our SRDP.

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George S. Chua | Manila Bulleting | May 23, 2012 | Article Link

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