Defense Contracts under Self-Reliant Program

The Secretary of National Defense is authorized to enter into contracts on behalf of the government for manufacture or procurement of defense supplies, equipment, components, and related facilities.
Contracts may be made with any natural or juridical person, with or without public bidding.
The authority applies regardless of provisions in existing laws that might otherwise restrict such contracts, including specific administrative and legislative codes.

Foreign and local prime contractors engaged in defense manufacturing under the SRDP may register and avail of incentives under Republic Act No. 5186 as amended.
Registration is conditioned upon recommendation by the Department of National Defense and the National Economic and Development Authority and inclusion in an annually updated supplemental investment priority plan.
For national security, publication of the supplemental list may be dispensed with.
The Board of Investments will adopt special application procedures for defense contractors.

The President is authorized to contract loans, credits, or indebtedness up to $300 million USD or equivalent in foreign currencies for SRDP projects.
Terms of payment must be not less than ten years.
Loans may include supplier's credits, deferred payment arrangements, and bilateral agreements involving grants or commodity credits with foreign governments, UN agencies, reputable international organizations, or lenders.
Loan contracting requires project plans approved by the President and certification from the Commissioner of Budget regarding appropriations and programming.
The President may waive or modify laws related to preferences or restrictions on international public bidding when contracting loans.

The President may authorize the Development Bank of the Philippines (DBP) to administer loan proceeds and relend to contractors or subcontractors to cover direct peso costs of projects.
DBP shall guarantee and pay the government the principal, interest, and charges on such loans.
DBP with Presidential approval can guarantee loans obtained directly by contractors from local or foreign sources.

All revenues from financed projects, after operating expenses, must be turned over to the National Treasury for servicing loans.
Budgetary savings may cover any revenue shortfalls; if insufficient, the government appropriates necessary funds.
The Central Bank’s Monetary Board shall ensure provision of foreign exchange to service external debt.

Loans and related contracts may provide for exemptions from taxes, charges, or levies approving loans based on recommendations.
Payments on loans from foreign governments or institutions controlled by them are exempt from taxes, fees, and other charges.

At least one hundred million pesos is appropriated annually under the AFP Self-Reliant Defense Program budget to implement the decree.
The Budget Commission is authorized to release funds to the Department of National Defense upon request.

Existing laws, orders, or regulations inconsistent with this decree are repealed or modified accordingly.