LATER today (Monday), the Senate will conduct a hearing on the “controversial” P15.7 billion contract between the Defense Department and Hyundai Heavy Industries (HHI) of South Korea for the acquisition of two modern frigates. Whatever emerges from the hearing, it is a near certainty that we will have once again witnessed a gross misuse of legislative prerogative for the apparent purpose of wasting valuable session time and taxpayer resources.
The controversy erupted following news reports that originated with the online news site Rappler, which alleged that Special Assistant to the President Christopher “Bong” Go improperly intervened in the contract to favor a supplier preferred by HHI. The faint implication of the various reports that Go had somehow profited by his alleged involvement became a clear accusation once Senator Antonio Trillanes IV, a self-declared political enemy of President Rodrigo Duterte, got his hands on it. He will be leading the Senate inquiry, which was initiated by a resolution filed by Trillanes and Senators Kiko Pangilinan, Franklin Drilon, Bam Aquino, Risa Hontiveros, and Leila de Lima.
The issue that has thrown a harsh spotlight on the procurement deal is a conflict that arose in January of last year between HHI and the Defense Acquisition Office (DAO) regarding HHI’s choice of supplier for a critical system in the ships called a Combat Management System (CMS). HHI, balancing the needs to meet both the technical and cost specifications of the contract, opted to go with a system produced by South Korea-based Hanwha Tales, while the Navy preferred a more expensive system by the better-known Netherlands-based firm Tacticos Thales.
According to the terms of the contract awarded to HHI, so long as any subsystems selected by the shipbuilder meet the cost and technical specifications of the contract and are considered commercially viable – according to a provision which is spelled out in the contract for the two frigates – the Navy must accept the builder’s choice, if it has not specified a supplier in the contract, which it did not in this instance. This is a typical arrangement for complex shipbuilding contracts, which involve hundreds of subsystems and dozens or even hundreds of different suppliers.
Bong Go’s supposed “interference” stems from a note sent by Defense Secretary Delfin Lorenzana in January 2017 to the then-Flag Officer in Command of the Navy Ronald Mercado stating that Go had asked for a report on the issue to be prepared for President Duterte.
There are a few points to keep in mind as Senator Trillanes and his opposition colleagues try to find malfeasance where there is none. First, whether the “request” originated with Go or with the Presidential Management Staff, it is not evidence of “interference” – in fact, it is simply evidence that the PMS is doing its job to monitor and keep the President apprised of the progress of important projects. Second, the entire contract – from conception to the resolution by the DND Bids and Awards Committee awarding the project to HHI – was developed by the previous administration, including the apparent ambiguity in the choice of the vital CMS subcontractor.
Third, the Navy responsibly spent several months reviewing the contract and HHI’s management of it and concluded – again – that it is legal and in line with the technical specifications, and should be honored.
Thus, Senator Trillanes and his colleagues will apparently be trying to convince the Filipino people is that it is somehow corrupt or improper for a government official to suggest that a proper, transparent, and extensively reviewed procurement contract for vitally needed defense assets be followed. This is an egregious waste of the country’s time which richly deserves rebuke, if not outright censure.