AFP Modernization Act Overview

Program objectives and national roles

Section 3 provides that the AFP modernization program must be implemented to develop AFP capability to uphold sovereignty and territorial integrity and secure national territory against intrusion and encroachment.
Section 3 requires AFP capability to assist civilian agencies in preservation of national patrimony, including living and nonliving marine, submarine, mineral, forest, and other natural resources within Philippine territory and the exclusive economic zone (EEZ).
Section 3 requires AFP capability to protect the Filipino people not only from armed threats but also from the ill effects of life-threatening and destructive consequences of natural and man-made disasters and calamities, including typhoons, earthquakes, volcanic eruptions, major accidents in far-flung or inaccessible terrain or at sea, and all forms of ecological damage.
Section 3 requires AFP capability to assist other agencies in enforcing domestic and foreign policies and international covenants against piracy, white slavery, smuggling, drug trafficking, hijacking of aircraft and seacraft, and transport of toxic and other ecologically-harmful substances through or in Philippine territory.
Section 3 requires AFP capability to enhance support to the Philippine National Police in law enforcement and internal security operations.
Section 3 requires AFP capability to fulfill the country’s international commitments and to support national development.

Building blocks of modernization

Section 4 provides that the AFP modernization program consists of: (1) force restructuring and organizational development; (2) capability, material, and technology development; (3) bases/support system development; (4) human resource development; and (5) doctrines development.
Section 4 requires the force restructuring component to develop the AFP into a compact, efficient, responsive, modern force capable of conventional and/or unconventional warfare, disaster relief and rescue operations, and contributing to economic development and other nontraditional military roles.
Section 4 requires force restructuring to identify, organize, train, and develop reserve force and affiliated reserve units, especially in the Navy and Air Force.
Section 4 requires technology acquisition to address assessed threats, while requiring that equipment and material acquisitions for the air force, navy, and army be made according to modernization objectives and that acquisitions of new systems be synchronized with phase-out of uneconomical and obsolete major equipment and weapons systems in the AFP inventory.
Section 4 prohibits purchasing any major equipment and weapons system if it is not used by the armed forces in the country of origin or used by the armed forces of at least two countries.
Section 4 restricts supplier participation by requiring that only offers from suppliers who are the manufacturers be entertained.
Section 4 requires that no supply contract be entered into unless it provides, in clear and unambiguous terms, after-sales services and availability of spare parts.
Section 4 requires bases/support system development to: develop permanent bases for land, air, and naval forces; provide systematic relocation of AFP units; provide adequate support systems and housing facilities; provide training grounds for maneuver and territorial forces and reserve components; and develop bases and camps using standard criteria for space allocations, zoning, and correlation of land areas and structures.
Section 4 sets human resource development objectives, including strengthening patriotic spirit, nationalist consciousness, and respect for people’s rights; transforming AFP into a primarily external security-oriented force; developing a compact citizen-based force; performing environment/resource protection and multi-national peace-keeping operations; converting AFP into a service/people-oriented and professionally united force; and improving the quality of life of soldiers and their families with reorientation of values.
Section 4 requires doctrines development to support transition from an internal security-oriented force to an external security-oriented force through generation, evaluation, consolidation, and formalization of doctrines; periodic review and validation through field application, testing, and exercises; and dissemination of approved doctrines at all levels.
Section 4 mandates the Secretary of National Defense to formulate guidelines to implement the doctrines development provisions consistent with the modernization objectives.

Operational capability development by service

Section 5 provides that the modernization program must develop specified defense capabilities.
Section 5 requires the Philippine Navy (PN) to develop naval defense capability, amphibious warfare, sealift and transport, surface warfare, naval gunfire support, detection and maritime surveillance, search and rescue, disaster response, and capabilities for anti-air, anti-submarine, and maritime defense operations; and requires PN capability to detect and identify illegal intrusion and passage, protect submarine-based lines of communication, monitor surface and submarine passage through Philippine territorial waters, and preserve marine resources through the Philippine Coast Guard (PCG).
Section 5 requires the PN to provide transportation of personnel and materiel in natural disaster and rescue operations and, if practicable, to provide and manufacture sea-craft and infrastructure supply and maintenance requirements through Filipino skills and technology.
Section 5 requires the Philippine Air Force (PAF) to develop air defense capability through acquisition of multi-role aircraft, air munitions, avionics, point and area defense missile systems, maritime patrol and reconnaissance, early warning and control systems, and capabilities for strategic and battlefield airlift and limited ground attack in support of surface forces.
Section 5 requires the enhanced air defense capability to detect, identify, intercept, and engage—if necessary—aircraft illegally intruding into or passing through Philippine airspace up to areas near or around Philippine territorial limits; provide air support to ground and naval armed forces; provide airlift, search and rescue, rapid deployment and related support in combat and for disaster and other civilian relief operations; and, if practicable, manufacture aircraft and infrastructure supply and maintenance requirements through Filipino skills and technology.
Section 5 requires the Philippine Army (PA) to develop ground defense and internal security capabilities, plus capability to assist national development, search and rescue, relief and rehabilitation, natural resources and environmental protection.
Section 5 requires enhanced army defense capability to locate and maintain adequate ground forces in strategic sites capable of independent or joint defense operations; transport personnel and equipment rapidly in all kinds of terrain and weather conditions; conduct disaster relief and civilian engineering and construction; monitor compliance with laws for preservation and protection of forest, wildlife, and mineral resources as required by the proper government agency; and, if practicable, provide and manufacture personnel and infrastructure supply and maintenance through Filipino skills and technology.
Section 5 requires development of general headquarters capabilities for command, control, communications, and information systems network.

Implementation period, planning, and Congress approval

Section 6 requires implementation of the modernization program over a period of fifteen (15) years.
Section 6 allows amortization payments for outstanding multi-year contract obligations incurred under the Act to extend beyond fifteen (15) years.
Section 7 requires the President, upon recommendation of the Secretaries of National Defense and Budget and Management, to submit the AFP modernization program to Congress within ninety (90) days from the Act’s effectivity for consideration and approval in a joint resolution of the House of Representatives and the Senate.
Section 7 requires the submitted program to show the size and shape of the AFP in terms of personnel, equipment, and facilities during modernization phases.
Section 7 requires the submitted program to identify modernization projects, including major weapon and non-weapon equipment and technology acquisitions sought; any major infrastructure construction or improvement; and the particular objective(s) and component(s) under Sections 3 and 4, respectively, to which intended acquisition, construction, or improvements belong.
Section 7 requires the submitted program to show priorities, schedules, and estimated average cost of each modernization project or upgrading.
Section 7 provides that if Congress approves the modernization program, the joint resolution becomes the basis for subsequent executive and legislative actions to implement the program from year to year until complete and full realization.

Budgeting, trust fund, and contracting authority

Section 8 requires annual appropriations to include amounts necessary to support funding requirements for all modernization projects approved by Congress under Section 7.
Section 8 states that funds appropriated under the Act are treated as a distinct and separate budget item from the regular appropriation for the Department of National Defense (DND) and AFP and are administered by the Secretary of National Defense.
Section 8 sets a ceiling for the first five (5) years at Fifty billion pesos (P50,000,000,000.00).
Section 8 requires that thereafter the ceiling may be increased commensurate to the increase in Gross National Product (GNP).
Section 9 authorizes the Secretary of National Defense, pursuant to the modernization program, projects, and appropriations approved by Congress, to enter into multi-year contracts, lease, and lease-purchase agreements subject to Presidential approval and compliance with existing laws and regulations, including those of the Commission on Audit, under terms and conditions most favorable to the government.
Section 9 requires Congress, upon certification by the President, to make corresponding appropriations for the ensuing fiscal year for multi-year contracts.
Section 9 limits Congress appropriation by providing that Congress shall appropriate only funds necessary to pay any unpaid amount where the funds referenced in Section 11 are not sufficient or available to meet payment in full or in part.
Section 9 requires the Secretary of National Defense to submit to Congress, through the chairmen of the Senate Committees on National Defense and Security and the chairmen of the House Committees on National Defense and Appropriations, copies of multi-year contracts and other agreements/arrangements so Congress can appropriate funds.
Section 11 creates the AFP Modernization Act Trust Fund, used exclusively for the AFP modernization program but not to include salaries and allowances.
Section 11 funds the trust fund through: (1) appropriations for the AFP modernization program; (2) proceeds from sale, lease, or joint development of military reservations authorized by Congress, including immovable and other facilities not covered by the Bases Conversion Development Authority under Republic Act No. 7227; (3) shares of the AFP from proceeds of the sale of military camps under Republic Act No. 7227; (4) proceeds from sale of products of the government arsenal; (5) proceeds from disposal of excess and/or uneconomically repairable equipment and other movable assets of the AFP and the government arsenal; (6) funds from budgetary surplus, if any, as authorized by Congress subject to Section 8; and (7) all interest income of the trust fund.
Section 11 requires administration by the Secretary of National Defense in accordance with existing government auditing rules and regulations.

Arsenal modernization and savings use

Section 12 requires modernization of the government arsenal as part of the AFP modernization program to develop production capabilities for self-sufficiency in defense requirements.
Section 12 requires effective utilization of the government arsenal in producing basic weapons, ammunition, and other munitions for use of the AFP and the Philippine National Police (PNP).
Section 12 authorizes the government arsenal to sell and export products in excess of AFP/PNP requirements.
Section 12 authorizes the government arsenal to use production facilities it owns or are provided under the Act, or to arrange for joint venture, co-production, or similar agreements with local and foreign entities.
Section 13 requires the Secretary of National Defense, effective upon approval, to submit a report to Congress within the first quarter of the succeeding year.
Section 13 requires the report to include the amount of unused or undisbursed funds (other than unused appropriations for salaries and benefits of AFP personnel) remaining from all previous DND and AFP appropriations.
Section 13 requires the report to include the amount of savings from austerity measures pursued by all AFP services and units generated in the previous fiscal year.
Section 13 authorizes savings generated under this section to augment funds for the AFP modernization program.

Procurement system rules and emergency changes

Section 14 requires the DND-AFP to strengthen systems and procedures for equipment acquisition for new requirements under the modernization program.
Section 14 requires contract negotiations and equipment acquisition to be treated as two sequential but separate steps, each requiring a separate decision of the Secretary of National Defense.
Section 14 requires the decision-making process for equipment acquisition to start at the appropriate service command and be submitted to the AFP Weapons Systems Board.
Section 14 requires contract negotiation to start at the general headquarters AFP level.
Section 14 requires that the provisions of Presidential Decree No. 1594, as amended, and other applicable laws apply in equipment acquisition systems and procedures.
Section 15 allows the President, upon recommendation of the Secretary of National Defense, to modify the modernization program for unforeseen national security emergencies through substitution or revision of a component project.
Section 15 requires reporting of such Presidential action to Congress within thirty (30) days.

Preference policies and self-reliant defense posture

Section 10 requires the AFP, as far as practicable, to give preference in implementing modernization to Filipino contractors and suppliers, or to foreign contractors or suppliers able to locate a substantial portion of, if not the entire, production process of the item(s) involved within the Philippines.
Section 10 requires the Secretary of National Defense, as far as feasible, to incorporate in each contract/agreement special foreign exchange reduction schemes such as counter trade, in-country manufacture, co-production, or other innovative arrangements or combinations thereof.
Section 10 requires the AFP to ensure that in negotiating all applicable contracts or agreements, provisions are incorporated respecting transfer to the AFP of the principal technology involved and training of AFP personnel to operate and maintain such equipment or technology.

Reporting, separability, repeal, and effectivity

Section 16 requires the Secretary of National Defense to submit to the President and Congress an annual report on the status of the AFP Modernization Act Trust Fund not later than the end of the first quarter of the succeeding year.
Section 16 requires the Chief of Staff, AFP to submit to the President and Congress, through the Secretary of National Defense, an annual report of modernization implementation progress not later than the end of the first quarter of the succeeding year, including AFP modernization activities implemented prior to approval of the Act.
Section 17 provides a separability clause: if any provision is held unconstitutional or invalid, the other provisions remain in full force and effect.
Section 18 provides a repealing clause: all laws, executive orders, rules, and regulations inconsistent with or contrary to the Act are repealed or amended accordingly.
Section 19 provides effectivity: the Act takes effect after fifteen (15) days from publication in at least two (2) newspapers of national circulation.
Section 19 sets the approval date as February 23, 1995 and the Act is approved by the President.