Title
Guidelines for Revised AFP Modernization Act
Law
Dnd Department Circular No. 03, S. 2013
Decision Date
Apr 11, 2013
The Revised Armed Forces of the Philippines (AFP) Modernization Act aims to modernize the AFP over a fifteen-year period, focusing on force restructuring, capability development, and addressing security threats, in order to uphold sovereignty and protect the patrimony of the Republic.
implementing guidelines
rules and regulations
modernization

Legal basis and adopted systems

  • The IGRRs are issued pursuant to Republic Act No. 10349, which amends Republic Act No. 7898, establishing the Revised AFP Modernization Program.
  • The IGRRs define “Revised AFP Modernization Act” as RA 10349, enacted on December 11, 2012.
  • Republic Act No. 9184 (Government Procurement Reform Act) and its Revised Implementing Rules and Regulations (IRRs), plus applicable Government Procurement Policy Board (GPPB) issuances, apply suppletorily to the IGRRs under Article 1.4.1.
  • The IGRRs adopt the Defense System of Management (DSOM) framework through adoption of DND Department Circular No. 11 dated July 01, 2011, and its systems including Defense Strategic Planning System (DSPS), Defense Capability Assessment and Planning System (DCAPS), Defense Acquisition System (DAS), and Defense Resources Management System (DRMS), under Article 1.2.3 and Article 1.4.4.
  • The IGRRs expressly apply other cited laws/rules as part of the implementation framework, including Republic Act No. 7227 as amended by Republic Act Nos. 7917 and 9400 and Executive Order No. 303 dated March 29, 2004 under Article 1.4.2–1.4.3.

Policy, objectives, and strategic focus

  • The State policy under RA 10349 requires modernization of the AFP so it can effectively uphold sovereignty and preserve the Republic’s patrimony.
  • The Revised AFP Modernization Program must develop AFP capability to:
    • Uphold sovereignty and territorial integrity and secure national territory from intrusion and encroachment (Article 1.1.2(a)).
    • Assist civilian agencies in preserving national patrimony, including natural resources in Philippine territory and the exclusive economic zone (Article 1.1.2(b)).
    • Handle ill effects of disasters and calamities and ecological damage (Article 1.1.2(c)).
    • Assist enforcement of domestic and foreign policies and international covenants against piracy, white slavery, smuggling, drug trafficking, hijacking, and transport of toxic and ecologically harmful substances (Article 1.1.2(d)).
    • Enhance capability to conduct Internal Security Operations (ISO), including suppression of insurgency and serious threats (Article 1.1.2(e)).
    • Fulfill international commitments, support national development, and transform the AFP into a multi-mission oriented force (Article 1.1.2(f)–(h)).
  • The Revised AFP Modernization Program must be implemented over fifteen (15) years from 2013, but amortization payments for outstanding multi-year contract obligations incurred under the Revised AFP Modernization Act may extend beyond that period (Article 1.1.4).
  • The core purpose of the AFP is to secure state sovereignty and national territory integrity; the AFP is the protector of the people and the state (Article 1.1.5).

Scope, coverage, and core components

  • The IGRRs govern implementation of all programs and projects under the Revised AFP Modernization Act under Article 1.2.1.
  • Chapter 8 governs administration of the Revised AFP Modernization Act Trust Fund under Article 1.2.2.
  • The Revised AFP Modernization Program components are:
    • Force Restructuring and Organization Development
    • Capability, Materiel, and Technology Development
    • Bases/Support System Development
    • Human Resource Development
    • Doctrines Development (Article 1.1.3).
  • The program must be organized around core security concerns including:
    • Challenges to Territorial Integrity
    • Maritime Security
    • Natural Disasters
    • Internal Security
    • Cyber Security (Article 1.1.5.1).
  • Strategic objectives include maintaining sovereignty, achieving internal peace and security, supporting national development and disaster risk reduction, contributing to regional/international peace and stability, and pursuing AFP transformation (Article 1.1.5.2).
  • Mission areas include:
    • Territorial Defense, Security and Stability
    • Disaster Risk Reduction and Response
    • International Engagements, Humanitarian Assistance and Peace Support Operations
    • Force-level C2, Support and Training (Article 1.1.5.3).

Definitions and key terms

  • “AFP” refers to the Armed Forces of the Philippines (Article 1.3.1).
  • “Revised AFP Modernization Act” refers to RA 10349 enacted on December 11, 2012 (Article 1.3.2).
  • “Revised AFP Modernization Act Trust Fund” refers to the trust fund created under Section 11 of RA 10349 (Article 1.3.3).
  • “Revised AFP Modernization Program” refers to the modernization programs established under RA 10349 (Article 1.3.4).
  • “IGRRs” refers to the guidelines, rules and regulations prescribed for the Revised AFP Modernization Program (Article 1.3.5).
  • “Department” or “DND” refers to the Department of National Defense (Article 1.3.6).
  • “Secretary” or “SND” refers to the Secretary of National Defense (Article 1.3.12).
  • Other defined operational concepts include:
    • “Doctrine” (Article 1.3.7)
    • “Equipment” (Article 1.3.8)
    • “Government Arsenal” (“GA”) as a bureau under DND created by Republic Act No. 1884 as amended (Article 1.3.9)
    • “Major Equipment or Weapons System” as systems deemed vital to national defense and security by DND (Article 1.3.10)
    • “Upgrade”, “Weapons System”, “Budget”, “Capability (Military)”, “Defense Acquisition System (DAS)”, “Acquisition Planning”, “Procurement and Contracting”, “DSOM”, “Force”, “Life Cycle Cost”, and “Resource Manager (RM)” (Articles 1.3.13–1.3.23).

Governance through DSOM and planning

  • The IGRRs implement force restructuring and organization development to develop a compact, efficient, responsive and modern AFP capable of conventional and/or unconventional warfare, disaster relief and rescue, and non-traditional roles (Article 2.1).
  • The force restructuring component must integrate the reserve force and affiliated reserve units into overall AFP structure, including an enhanced reserve force development program consistent with the Constitution’s citizen’s army concept (Article 2.2).
  • The force restructuring component must operate as a reiterative process continuously assessing the external security and internal policy environments for continued responsiveness (Article 2.3).
  • Capability, materiel, and technology development must develop and employ capabilities needed to address assessed threats, with acquisition governed by modernization policies under Article 3.1.1 (Article 3.1.1).
  • Equipment acquisition must be governed by DAS under DSOM, including objective evaluation phases and procurement rules (Articles 3.1, 3.2.2, 3.3, 3.4).

Capability acquisition and procurement rules

  • Equipment and weapon acquisition must be synchronized with phase-out of uneconomical and obsolete major equipment and weapons systems in the AFP inventory (Article 3.1.1(b)).
  • No major equipment and weapons systems may be purchased if the same are not used by the armed forces in the country of origin or used by the armed forces of at least two countries (Article 3.1.1(c)).
  • A later modified version qualifies as the same as the original if the modified version is not a prototype (Article 3.1.1(c)).
  • Only offers from suppliers that are the actual manufacturers may be entertained (Article 3.1.1(d)).
  • No supply contract may be entered into unless it provides in clear and unambiguous terms for after-sales services and availability of spare parts (Article 3.1.1(e)).
  • The program must develop the following defense capability tracks:
    • Air defense capability (including multi-role aircraft, air munitions, avionics, point/area defense missile systems, maritime patrol and reconnaissance, early warning and control, strategic/battlefield airlift, and limited ground attack support) (Article 3.1.2).
    • Naval defense capability (including amphibious warfare, sea lift and transport, surface warfare, naval gunfire support, detection/maritime surveillance, search and rescue, disaster response, anti-air, anti-submarine, and mine warfare) (Article 3.1.2).
    • Ground defense capability (including ground defense, internal security, national development assistance, search and rescue, relief and rehabilitation, natural resources and environmental protection) (Article 3.1.2).
    • General headquarters capability for joint C4ISTAR (Article 3.1.2).
  • Acquisition planning must use a First Pass and Second Pass approach under DAS acquisition planning (Article 3.4.1).
  • The First Pass must objectively evaluate relative merits of approaches approved for further study by SND and consider at least:
    • operational requirements and effectiveness
    • estimated annual operating and support costs and life cycle costs
    • potential for competition
    • affordability (Article 3.4.2).
  • The SND, after consultation, must decide whether to proceed to Second Pass and document decisions in memoranda signed by the SND (Article 3.4.3).
  • The Second Pass must objectively evaluate alternatives given the First Pass decision and consider at least:
    • operational requirements and effectiveness
    • estimated annual operating and support costs and life cycle costs
    • potential for competition
    • potential delivery schedules and integration ability
    • affordability (Article 3.4.4).
  • The final decision on how to proceed must be documented in Acquisition Decision Memoranda signed by the SND (Article 3.4.5).
  • DAS Assessment Teams (DASATs) of major services manage single projects during acquisition planning and assist technical aspects during procurement and contracting (Article 3.4.6).
  • Bidding documents must be prepared by the DND-AFP Integrated Contracting Team (ICT) in coordination with DASAT using standard GPPB forms and manuals (Article 3.4.7).
  • Procurement must be competitive bidding, subject to exceptions under RA 9184, its revised IRR, and GPPB issuances (Article 3.4.8).
  • Procurement activities are governed by RA 9184 and its revised IRR, including GPPB issuances, covering from publication of Invitation to Bid through implementation and termination of contracts (Article 3.9.1).
  • The DND may resort to alternative methods of procurement only subject to prior approval of the SND and only when justified by RA 9184, its revised IRR, and GPPB issuances (Article 3.9.2).

Bids and Awards Committee (BAC) structure

  • The DND must establish a single Bids and Awards Committee (BAC) for its procurement (Article 3.5.1.1).
  • The SND may create separate BACs if the number/complexity of items warrants, organized either by:
    • geographical location of PMO/end-user units, or
    • nature of procurement (Article 3.5.1.2).
  • The BAC must be composed of at least five (5) and not more than seven (7) members of unquestionable integrity and procurement proficiency (Article 3.5.2.1).
  • The BAC must include regular members:
    • a Chairman who is at least a third ranking permanent official of DND and/or AFP (as applicable)
    • an officer (at least a fifth ranking permanent official) with procurement knowledge/experience and representing the legal/administrative area (to the extent possible)
    • an officer (at least a fifth ranking permanent official) with procurement knowledge/experience and representing the finance area (to the extent possible) (Article 3.5.2.1).
  • The BAC must include provisional members:
    • an officer with technical expertise relevant to the procurement (with procurement knowledge to the extent possible)
    • a representative from the end-user unit with knowledge of procurement laws and procedures (Article 3.5.2.1).
  • The Secretary of National Defense designates DND BAC members including the Chairman and Vice-Chairman; the Chief of Staff, AFP designates AFP BAC members including the Chairman and Vice-Chairman, and the Vice-Chairman is a regular BAC member (Article 3.5.2.1).
  • The Secretary of National Defense must designate members by appointment, with “permanent” referring to a plantilla position in the Department (Article 3.5.2.1).
  • The SND may designate alternate members who have the same qualifications as principals; alternates attend when principals are absent, and accountability is limited to acts/decisions of each (Article 3.5.2.2).
  • The SND must not be the Chairman or a member of the BAC (Article 3.5.2.3).
  • BAC members have a fixed term of one (1) year reckoned from appointment, renewable at SND discretion (Article 3.5.2.4).
  • After term expiry, current members continue until new BAC members are designated (Article 3.5.2.4).
  • Replacement for resignation, retirement, separation, transfer, reassignment, removal, or death serves only for the unexpired term; replacement for leave or suspension serves only during the leave/suspension; members may be suspended or removed for justifiable causes by the SND (Article 3.5.2.4).

BAC duties, meetings, quorum, observers

  • The BAC must perform procurement functions including:
    • advertise/post invitations to bid/requests for expressions of interest
    • conduct preprocurement and pre-bid conferences
    • determine bidder eligibility
    • receive bids
    • evaluate bids
    • undertake postqualification
    • resolve motions for reconsideration
    • recommend contract award to the SND
    • recommend imposition of sanctions under RA 9184 and its revised IRR
    • recommend alternative modes of procurement under RA 9184 and its revised IRR
    • perform other related functions, including creating a Technical Working Group (TWG) for technical/financial/legal support (Article 3.6.1).
  • The BAC must ensure DND compliance with RA 9184 and its IRR and must prepare a procurement monitoring report in the form prescribed by GPPB, covering procurement activities from pre-procurement conference through notice of award and contract approval, including standard and actual time for each major procurement activity (Article 3.6.2).
  • The procurement monitoring report must be approved and submitted by SND to the GPPB in printed and electronic format within fourteen (14) calendar days after the end of each semester (Article 3.6.2).
  • Quorum requires a majority of the total BAC composition designated by SND, with presence of the Chairman or Vice-Chairman required (Article 3.6.3).
  • The Chairman presides at BAC meetings; in absence, the Vice-Chairman presides (Article 3.6.4).
  • Decisions are valid and binding when approved by at least a majority of those present with quorum; the Chairman or Vice-Chairman votes only in a tie (Article 3.6.4).
  • The BAC must invite, at all procurement stages, at least two (2) observers (in addition to COA) who have no voting rights (Article 3.7.1).
  • One observer must come from a duly recognized private sector/discipline relevant to procurement (with examples listed for infrastructure, goods, and consulting services) (Article 3.7.1.1).
  • The other observer must come from an NGO (Article 3.7.1.2).
  • Observers must be registered with the SEC or CDA and must meet criteria including procurement/subject-matter expertise, absence of actual or potential conflict of interest, and other criteria set by the BAC (Article 3.7.2).
  • Observers must be invited at least three (3) calendar days before the relevant procurement stage/activity; their absence does not nullify proceedings if they were duly invited in writing (Article 3.7.3).
  • Observers must:
    • prepare observation reports for SND (copy furnished to BAC Chairman), including assessments of BAC compliance and areas of improvement
    • submit reports to SND, with copies to the GPPB and Office of the Ombudsman/Resident Ombudsman; if no report is submitted, it is understood the BAC followed correct procedures
    • inhibit and notify SND in writing of any actual or potential interest (Article 3.7.4).
  • Observers must be allowed access upon request (subject to signing a confidentiality agreement) to BAC meeting minutes, abstract of bids, post-qualification summary report, APP and related PPMP, and opened proposals (Article 3.7.5).

BAC Secretariat and bidding process implementation

  • SND must create a Secretariat to support the BAC, and an existing organic office may serve as Secretariat; SND may also create a procurement unit concurrently as BAC Secretariat in line with DBM guidelines (Article 3.8.1).
  • The Secretariat must provide administrative support, organize meetings and conferences, prepare minutes and resolutions, keep custody of procurement documents and records, manage sale/distribution of bidding documents, advertise/post bidding opportunities and notices of award, assist procurement processes, monitor milestones for reporting, consolidate PPMPs, and act as a central communications channel for BAC with stakeholders and the public (Article 3.8.1).
  • The head of the Secretariat must be at least a fifth ranking permanent employee or, if not available, a permanent employee of the next lower rank, and procurement proficiency must be considered alongside integrity (Article 3.8.2).
  • BAC members and TWG must prioritize BAC assignments over other duties until requirements for the assignment are completed (Article 3.8.3).

Self-reliant defense posture and contract terms

  • The AFP must, as far as practicable, give preference to Filipino contractors and suppliers or foreign contractors/suppliers willing to locate a substantial portion (or the entire) production process within the Philippines (Article 3.10.1).
  • DND and AFP must coordinate with the GPPB and other relevant agencies to issue regulations/resolutions to implement RA 9184, its revised IRR, and Section 10 provisions on the SRDP program (Article 3.10.1).
  • The SND must incorporate in each contract/agreement special foreign exchange reduction schemes such as counter-trade, in-country manufacture, co-production, or other innovative arrangements, as far as feasible (Article 3.10.2).
  • The AFP must ensure that negotiations include contract provisions respecting transfer to the AFP of principal technology and training of AFP personnel to operate and maintain equipment/technology (Article 3.10.3).
  • Local manufacturers are exempt from the major equipment purchase condition only when the equipment is used by the armed forces in the country of origin or used by the armed forces of at least two countries, consistent with Article 3.1.1(c) (Article 3.10.4).
  • The DND may establish a defense technology research and industry development office to institutionalize technology transfer and support defense industries for economic development and employment, with organization and staffing provided by a specific issuance (Article 3.10.5).

Bases/support, HRD, and doctrines programs

  • The Bases/Support System Development program must develop permanent bases for land, air, and naval forces and establish coast watch and air defense radar systems (Article 4.1).
  • All basing requirements must be in accordance with the approved AFP Strategic Basing Plan developed by the DND-AFP (Article 4.1).
  • Basing requirements must conform with national defense strategies and the government’s socio-economic thrusts, provide systematic relocation including housing, provide training grounds (including live fire exercises and gunnery ranges), and develop bases and camps using standard criteria for space allocations, zoning, and efficient correlation of land areas and structures (Article 4.2).
  • The HRD component must strengthen patriotic spirit and nationalist consciousness and respect for people’s rights (Article 5.1).
  • The HRD component must also transform the AFP into a multi-mission oriented force, develop a compact and responsible citizen-based force, implement programs enabling roles in environment/resource protection and multinational peacekeeping, convert the AFP into a service/people-oriented and professionally united force, and improve the quality of life of soldiers and their families with reoriented values (Article 5.1).
  • DND and AFP must generate, evaluate, consolidate, and formalize doctrines; conduct periodic review and validation through field application, experience, testing and exercises; and disseminate and inculcate approved doctrines at all levels of command (Article 6.1.1).
  • The AFP must shift from predominantly militaristic solutions to a people-centered security strategy founded on broad-based consultations and engagements, focusing on long-term effects beyond diminishing armed capability (Article 6.1.2).
  • Doctrine development must support all components of the Revised AFP Modernization Program and focus on building a culture of joint force and strengthening joint force structure (Article 6.2.1).
  • Doctrines Development must include comprehensive review and assessment of existing doctrines, identification of doctrinal gaps, development of new responsive doctrines, doctrine testing/validation through joint and combined exercises, institutionalization, and continuous evaluation (Article 6.2.2).
  • Doctrinal requirements must be pursued toward development and institutionalization of processes and procedures across force restructuring, capability/materiel/technology, bases/support, and HRD (Article 6.2.3).
  • DND and AFP must emphasize a “joint” concept to maximize resources and efforts between and among major services, AFP General Headquarters, and DND, applying an “all-of-nation” approach (Article 6.2.4).

Government Arsenal modernization and sales proceeds

  • The Government Arsenal must be modernized to achieve manufacturing capabilities to provide basic weapons, ammunition, and other munitions requirements for the AFP and other government law enforcement and security forces (Article 7.1).
  • The Government Arsenal is authorized to sell and export products in excess of AFP, PNP, and other government/security forces requirements (Article 7.1).
  • Proceeds from sales or exports of Government Arsenal products must form part of the AFP Modernization Act Trust Fund (Article 7.1).
  • The Government Arsenal may use production facilities it owns/establishes or facilities provided or arranged through joint venture, co-production, or similar arrangements with local and foreign entities (Article 7.1).
  • The Government Arsenal must be fully utilized in defense materiel-related research and development in consonance with the Self-Reliant Defense Posture Program objectives (Article 7.1).

Revised AFPMATF administration and funding sources

  • Chapter 8 governs administration of the Revised AFP Modernization Act Trust Fund created under Section 11 of the Revised AFP Modernization Act (Article 8.1).
  • The Revised AFPMATF must be used exclusively for the Revised AFP Modernization Program, including necessary expenses to implement procurement of equipment for preselection and post-qualification stages, excluding salaries and allowances (Article 8.2.1).
  • The trust fund must be funded from:
    • appropriations for the Revised AFP Modernization Program (Article 8.2.1(a))
    • proceeds from sale of military reservation authorized by Congress under existing laws/regulations, not covered by BCDA (Article 8.2.1(b))
    • proceeds from lease or joint development of military reservations authorized by the President under existing laws/regulations, not covered under RA 7227 as amended (Article 8.2.1(c))
    • AFP shares from proceeds of the sale of military camps under RA 7227 as amended, and at least fifty percent (50%) of proceeds net of direct expenses authorized to be deducted from lease/joint venture agreements and dispositions under applicable orders/rules (Article 8.2.1(d))
    • proceeds from public-private partnerships entered into by DND or AFP authorized by the President (Article 8.2.1(e))
    • proceeds from sale of GA products and, for joint venture, all incomes earned from the GA equity share in the joint venture (Article 8.2.1(f))
    • proceeds from disposal of excess and/or uneconomically repairable AFP and GA movable assets (Article 8.2.1(g))
    • budgetary surplus authorized by Congress, subject to Section 8 of the Act (Article 8.2.1(h))
    • donations from local and foreign sources specifically earmarked for the Revised AFP Modernization Program (Article 8.2.1(i))
    • all interest income of the trust fund (Article 8.2.1(j)).
  • All funds from the foregoing sources must be directly deposited to a special account in the General Fund created specifically for the Revised AFP Modernization Program; corresponding allotments and cash allocations must be released to the AFP upon submission of a special budget, then transferred to the trust fund administered by the Secretary of National Defense under existing budgeting and auditing rules (Article 8.2.1).
  • The Secretary of National Defense must administer the trust fund in accordance with existing government auditing rules and regulations (Article 8.2.2).
  • The Secretary of National Defense may enter into multi-year contracts, lease, and lease-purchase agreements under the Revised AFP Modernization Program and approved projections/appropriations, subject to approval of the President and existing laws/regulations, including COA terms and conditions most favorable to the government (Article 8.2.3.1).
  • For multi-year contracts, Congress must appropriate for ensuing fiscal years upon issuance of a multi-year obligational authority by DBM (Article 8.2.3.2).
  • DND and DBM must issue implementing guidelines to ensure consistency with the Revised AFP Modernization Program and existing guidelines in contracting multi-year projects (Article 8.2.3.2).
  • The Secretary of National Defense must submit copies of multi-year contracts and other agreements/arrangements to Congress through the Chairpersons of the Senate Committees

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