QuestionsQuestions (DND DEPARTMENT CIRCULAR NO. 03, S. 2013)
It is issued to implement the Revised Armed Forces of the Philippines Modernization Act under Republic Act (RA) No. 10349, which amends RA No. 7898.
They include developing AFP capability to uphold sovereignty and territorial integrity; assist civilian agencies in preserving national patrimony; respond to disasters and calamities and ecological damage; help enforce policies and international covenants against piracy and other crimes; enhance Internal Security Operations capability; fulfill international commitments; support national development; and transform AFP into a multi-mission oriented force.
Force Restructuring and Organization Development; Capability, Materiel, and Technology Development; Bases/Support System Development; Human Resource Development; and Doctrines Development.
It is implemented over fifteen (15) years from 2013; however, amortization payments for outstanding multi-year contract obligations incurred under the Revised AFP Modernization Act may extend beyond this period.
Core security concerns: challenges to territorial integrity, maritime security, natural disasters, internal security, and cyber security. Strategic objectives include maintaining sovereignty and defending territorial integrity and maritime interests; achieving internal peace and security; supporting national development and disaster risk reduction; contributing to regional and international peace; and pursuing AFP transformation.
Acquisition Planning is the first stage that evaluates options (using a First Pass/Second Pass approach), while Procurement and Contracting is the second stage that formally begins after an Acquisition Decision Memorandum (ADM) and follows RA 9184 and its Revised IRR.
Policies include synchronizing acquisition with phase-out of obsolete equipment; requiring that the major equipment is used by the armed forces in the country of origin or used by at least two countries (with some conditions on modified versions); entertaining offers only from suppliers who are the manufacturers; and requiring clear after-sales services and spare parts availability in supply contracts.
It must consider operational requirements and effectiveness; estimated annual operating and support costs and life cycle costs; potential for competition; and affordability.
It must consider operational requirements and effectiveness; annual operating and support costs and life cycle costs; potential for competition; potential delivery schedules and ability to integrate into the force; and affordability.
All procurement is to be done through competitive bidding, but DND-AFP may avail of exceptions provided under RA 9184, its Revised IRR, and issuances of the GPPB, subject to justification and compliance with those rules.
The Secretary of National Defense designates at least five (5) but not more than seven (7) members of unquestionable integrity and procurement proficiency, including regular members (Chairman at least 3rd ranking permanent official; procurement/procurement-legal representative; finance representative) and provisional members (technical expert; representative from the end-user unit with knowledge of procurement laws).
In no case shall the SND be the Chairman or a member of the BAC.
They include advertising/posting invitation to bid; conducting preprocurement and pre-bid conferences; determining bidder eligibility; receiving and evaluating bids; post-qualification; resolving motions for reconsideration; recommending award to the SND; recommending sanctions; recommending alternative modes of procurement; and creating Technical Working Groups (TWGs) when necessary.
Observers are non-voting participants invited for transparency (including COA and at least two observers from relevant private groups and NGOs). They submit reports on compliance and improvements; they must notify in writing any actual or potential interest; and they may access specified documents upon request subject to confidentiality agreements.
The trust fund is used exclusively for the modernization program (including implementation procurement-related expenses but not salaries/allowances). It is funded from listed sources (e.g., appropriations, certain sale/lease/joint development proceeds of military reservations, GA sales proceeds, disposal of excess assets, donations, and interest income). The Secretary of National Defense administers it under existing budgeting/auditing rules.
The SND may enter multi-year contracts/lease/lease-purchase agreements subject to Presidential approval and applicable laws (including COA rules) and contract terms favorable to government. Congress, through multi-year obligational authority from DBM, must provide the corresponding appropriations for ensuing years. Copies of the multi-year contracts/agreements are submitted to Congress to enable appropriation.
Sale of weapons, equipment and ammunition to the AFP directly and exclusively used for modernization projects is exempt from VAT; and importation of the same by the AFP is exempt from VAT and customs duties.