IMPLEMENTING GUIDELINES, RULES AND REGULATIONS OF THE ARMED FORCES OF THE PHILIPPINES MODERNIZATION PROGRAM
Chapter 1.0. GENERAL PROVISIONS
ARTICLE 1.1. General Policies, Guidelines and Objectives
1.1.1. The Armed Forces of the Philippines (AFP) shall be
modernized to a level where it can effectively and fully perform its
constitutional mandate to uphold the sovereignty and preserve the
patrimony of the Republic of the Philippines.
1.1.2. The AFP Modernization Program shall have the following objectives:
a. To develop the AFP’s capability to uphold the sovereignty
and territorial integrity of the Republic and to secure the national
territory from all forms of intrusion and encroachment;b. To develop its capability to assist civilian agencies in
the preservation of the national patrimony, including the country’s
living and non-living marine, submarine, mineral, forest and other
natural resources located within its territory and its exclusive
economic zone;c. To enhance its capability to fulfill its mandate to
protect the Filipino people not only from armed threats but 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 from all forms of ecological damage;d. To improve its capability to assist other agencies in the
enforcement of domestic and foreign policies as well as international
covenants against piracy, white slavery, smuggling, drug trafficking,
hijacking of aircraft and sea craft and the transport of toxic and other
ecologically harmful substances taking place in or through Philippine
territory;e. To enhance its capability in the conduct of Internal
Security Operations (ISO), particularly in the suppression of insurgency
and other serious threats to national security;f. To enhance its capability to fulfill the country’s international commitments; and
g. To develop its capability to support national development.
1.1.3. The AFP Modernization Program shall have the following components:
a. Force Restructuring and Organizational Development (Program I);
b. Capability, Materiel, and Technology Development (Program II);
c. Bases/Support Systems Development (Program III);
d. Human Resources Development (Program IV); and
e. Doctrines Development (Program V).
1.1.4. The AFP Modernization Program shall be implemented over a
period of fifteen (15) years. However, payments for amortization of
outstanding multi-year contract obligations incurred under the Program
may extend beyond this period.
1.1.5. The AFP shall prepare and periodically update the Five (5) —
Year Rolling Plan which contains the list of AFP Modernization Program
projects, the future years’ defense program reflecting the AFP’s action
to keep abreast with changing security concerns and advances in
technology, and the estimated expenditures and proposed appropriations
for each project. The Five (5) – Year Rolling Plan shall cover the
fiscal year with respect to which it is submitted and the four (4)
succeeding fiscal years. It shall be submitted to the Secretary for
approval.
ARTICLE 1.2. Purpose and Coverage
1.2.1. The Implementing Guidelines, Rules and Regulations (IGRRs)
prescribed herein are issued pursuant to Section 4 of the AFP
Modernization Act and shall govern the implementation of all the
programs and projects under the AFP Modernization Program approved by
Congress through Joint Resolution No. 28.
1.2.2. Chapter 8.0 of these IGRRs governs the AFP Modernization Act Trust Fund.
1.2.3. These IGRRs contain the implementing rules and regulations for Section 2 of Executive Order No. 201 (2000).
ARTICLE 1.3. Definition of Terms — For purposes of and as used in these IGRRs, the terms hereunder shall be construed as follows:
1.3.1. “AFP” refers to the Armed Forces of the Philippines.
1.3.2. “AFP Modernization Act” refers to Republic Act No. 7898 which was enacted into law on 23 February 1995.
1.3.3. “AFP Modernization Act Trust Fund” or “AFPMATF” refers to the trust fund created under Section 11 of the AFP Modernization Act.
1.3.4. “AFP Modernization Program” or “Program” or “AFPMP”
refers to the modernization program submitted by the President of the
Philippines pursuant to Section 7 of the AFP Modernization Act and
approved by Congress through Joint Resolution No. 28, dated 19 December
1996.
1.3.5 An “Authority to Transfer Fund” or “ATF”
is a document issued by AFP-GHQ to an authorized government depository
bank (AGDB) authorizing the transfer of cash deposit to the AGDB
branches of the Major Services and Government Arsenal to support the
funding of the allotment transferred.
1.3.6. A “Bid Evaluation Plan” or “BEP”
is a comprehensive document that contains the procedure for the
acquisition of an equipment or weapons system, indicating the method of
procurement, conduct of prequalification of bidders and the bidding
proper up to and including the award of the contract. It includes the
method and criteria to be adopted in the evaluation and assessment of
bidders’ prequalification statements and the method and criteria for the
evaluation and assessment of bids. The Bid Evaluation Plan also
includes provisions for the integration and evaluation of countertrade
proposals.
1.3.7. A “bid security” is provided to the procurement agency to
ensure that the successful bidder shall enter into a contract with the
agency when awarded the contract within the time specified in the Notice
of Award and furnish the required performance security. Its form,
amount and other attributes are governed by existing laws, rules and
regulations, unless otherwise indicated in these IGRRs.
1.3.8. A “Combo Account” is a combination
of savings and current deposit accounts maintained in an AGDB against
which all disbursements of AFPMP shall be made. The account is credited
to the amount of deposit and is charged with commercial checks drawn.
1.3.9. “Circular of Requirements” or “COR”
defines the operational and technical requirements of the equipment or
weapons system to be procured. It is presented in the context of the
National Defense Strategy, the likely operational scenarios, and the
doctrines or concept of operations in which such equipment or weapons
system shall be employed. It shall likewise include, as applicable,
Force Restructuring, Human Resource Development, Base Development, and
other support requirements. If the equipment is part of a systems-mix,
such as maritime surveillance, which involves air and sea operations,
the concept of operations of the systems-mix shall also be stated.
Similarly, in the case of equipment or weapons systems, which have to be
operationally inter-phased or integrated with civilian agencies of the
government (e.g., air defense radar with civilian air traffic control
system), the concept of inter-phase or integration shall be
incorporated.
1.3.10. “Construction” means
all materials and services associated with the site preparation,
excavation, erection, building, installation of equipment or materials,
decoration and finishing, construction, reconstruction, demolition,
repair or renovation of a building, structure or works, as well as
services incidental to construction such as drilling, mapping, satellite
photography, seismic investigations and similar services provided
pursuant to the procurement contract, if the value of those services
does not exceed that of the construction itself.
1.3.11. “Contract Negotiation”
is the second stage in the procedure for the acquisition of equipment
and weapons systems under the capability, materiel and technology
development component of the AFP Modernization Program. It involves the
bidding process, including the prequalification of bidders and award of
the contract.
1.3.12. “Countertrade or countertrade arrangement”
refers to arrangements mentioned in Executive Order No. 120 (1993) and
its implementing rules and regulations designed to compensate for
foreign exchange outflow, open new markets for Philippine products and
services, overcome quota and trade restrictions of other countries, and
provide for technology transfer to and industrial growth of the
Philippines.
1.3.13. “Department” or “DND” refers to the Department of National Defense.
1.3.14. “Doctrine” refers to
the fundamental principles by which the armed forces or elements thereof
guide their actions in support of national objectives.
1.3.15. “Equipment” refers to all non-expendable items needed to outfit or equip an individual or organization.
1.3.16. “Equipment Acquisition”
is the first stage in the procedure for the acquisition of equipment
and weapons systems under the capability, materiel and technology
development component of the AFP Modernization Program. It involves the
formulation of the Circular of Requirements (COR) and the preparation of
the Bid Evaluation Plan (BEP).
1.3.17. “Force structure” refers to the number, size, and composition of the units that comprise the defense force.
1.3.18. “GA” or “Arsenal” refers to the Government Arsenal, a bureau under the Department created by Republic Act No. 1884, as amended.
1.3.19. “Implementing Guidelines, Rules and Regulations” or “IGRRs” refers to the guidelines, rules and regulations prescribed in this Department Circular.
1.3.20. A “Major Equipment or Weapons System”
refers to one of a limited number of systems or sub-systems, which, for
reasons of military urgency, criticality, or resource requirements, is
determined by the Department of National Defense as being vital to the
interests of national defense and security.
1.3.21. A “manufacturer” refers
to an entity which makes, develops, fabricates, assembles, builds or
otherwise produces an equipment or weapons system. In case of equipment
or weapons systems involving sub-manufacturers, the manufacturer for
each part or sub-system shall be required to make the undertaking for
the availability of after-sales services and spare parts mentioned in
item 3.1.1(e) hereunder, in addition to the undertaking of the principal
manufacturer.
1.3.22. A “margin of preference”
is an additional point or points granted to a bidder which, all other
terms and conditions being equal, provides additional proposals
considered advantageous to the government. Such margin shall be
calculated in accordance with the Bid Evaluation Plan, stated in the bid
documents and contained in the record of procurement proceedings.
1.3.23. “Modernization” refers
to the upgrade of forces, units, equipment, and weapons systems. It
includes the development of a self-reliant and credible strategic armed
force along the concept of a Citizens’ Armed Forces; the reconfiguration
of the Armed Forces of the Philippines structure; the
professionalization of the AFP; the undertaking of reforms in the
recruitment, training, employment and management of AFP personnel; the
development, validation or modification of AFP doctrines; the
acquisition and upgrading of appropriate technology and equipment; and
the relocation, improvement, and construction of bases and other
facilities.
1.3.24. “Multi-Year Obligational Authority” or “MYON”
is an authorization by the Department of Budget and Management (DBM) to
incur obligations or enter into contracts within the specified amount
approved by Congress Joint Resolution No. 28. This will assure that
funds are available to cover all payments under the multi-year contracts
required each year for the implementation of the projects identified
therein.
1.3.25. “National Defense Strategy”
is the strategy that prescribes national security and defense policies
to meet the objectives, purposes and interests of the nation.
1.3.26. A “Notice of Award” is a
formal communication made to the bidder whose bid was determined by
competent authorities to be the lowest evaluated responsive bid.
1.3.27. A “Notice of Cash Allocation” or “NCA”
is a formal document issued by DBM authorizing DND-AFP to withdraw a
specific amount from the servicing bank through the use of Modified
Disbursement Scheme (MDS) checks for deposit to a Combo Account
maintained in an AGDB.
1.3.28. A “Notice to Proceed” informs
the winning bidder when to begin the performance of its obligations
under the contract and determines the date of effectivity of such
contract.
1.3.29. “Omnibus Forward Obligational Authority”
or “OFOA” refers to the comprehensive authority issued by DBM to
DND-AFP certifying that funds shall be made available to cover the total
cost of the AFP Modernization Program as approved under Congress Joint
Resolution No. 28.
1.3.30. A “ procurement agency”
for purposes of projects involving the acquisition of equipment and
weapons systems under the capability, materiel and technology
development component of the AFP Modernization Program, refers to the
General Headquarters, AFP (AFP-GHQ). For purposes of projects falling
under the other components of the Program, the “procurement agency”
shall be the Major Services.
1.3.31. “Regular Force” refers
to the force largely or wholly composed of professional soldiers
maintained in time of peace to protect the people, secure the
sovereignty of the State and the integrity of the national territory. It
forms the nucleus for expansion in time of emergency.
1.3.32. “Reserve Force” refers to members of the armed forces who are not in active service but who are subject to call to active duty.
1.3.33. “Secretary” or “SND” refers to the Secretary of National Defense.
1.3.34. “Sophisticated defense equipment and weapons systems”
refers to highly specialized types of equipment and weapons systems the
procurement of which entails a high level of risk, more management
resources and greater complexity; and whose manufacturer is an entity
owned or operated by a sovereign State or whose export is restricted or
otherwise regulated by the manufacturers government. For purposes of
determining ownership under this definition, ownership by a State of at
least a controlling interest in the manufacturing entity shall suffice.
in instances where the manufacturing entity is owned or operated by more
than one State, the guarantee referred to in the term in the succeeding
definition shall be provided by all such States.
1.3.35. “Sovereign or government guarantee”
refers to a statement or declaration issued by a government
guaranteeing that a bidder shall, within the time specified in the
Notice of Award, enter into a contract with the Department of National
Defense of the Republic of the Philippines and furnish the required
security for the faithful performance of its obligations under the
contract.
1.3.36. A “Special Allotment Release Order” or “SARO”
is a final document issued by DBM to DND-AFP containing the
authorization and the amount of obligational authority for the
implementation of the purposes/projects indicated.
1.3.37. A “Sub-Allotment Advice” or “SAN”
is a document issued by AFP-GHQ to the Major Services to transfer the
amount of obligational authority for the implementation of the
purposes/projects related to the AFP Modernization Program, except
projects involving acquisitions under the capability, materiel and
technology development component of the Program, which shall be made at
the AFP-GHQ level. The SAA serves as the extension of the obligational
authority to each Major Service and the Government Arsenal.
1.3.38. “Upgrade” refers to the
improvement, refurbishing, or rehabilitation of existing equipment or
weapons system in order to improve its original operational capabilities
through the replacement of components or sub-systems with new ones, or
the installation of new additional equipment such as missiles, fire
control system, and digital electronics.
1.3.39. “Weapons system” refers
to a combination of one or more weapons with all related equipment,
materials, services, personnel, and means of delivery and deployment (if
applicable) required for self-sufficiency. It is the end item that will
be used to perform the operational requirement of the capabilities to
be developed (e.g., ship, aircraft, armored vehicle, truck, individual
and crew-served weapon, communication set, etc.) or the
sub-system/component of the end item (e.g., propulsion engine, fire
control system, and armament of a ship; engine of the aircraft; armament
of the armored vehicle, etc.).
ARTICLE 1.4. Applicability of Pertinent Laws
1.4.1. Presidential Decree No. 1594, as amended, and its
implementing rules and regulations (IRRs) shall cover infrastructure and
other construction contracts under the Program.
1.4.2. Unless otherwise indicated in these IGRRs, Executive Order
No. 302 (1996), as amended by Executive Order No. 201 (2000), and its
IRRs shall govern procurement contracts under the capability, materiel
and technology development component of the Program.
1.4.3. Contracts for consultancy services under any of the
component programs and projects of the AFP Modernization Program shall
be governed by existing laws, rules and regulations, particularly
Executive Order No. 164 and the NEDA Board-approved Guidelines on the
Procurement of Consulting Services for Government Projects.
Chapter 2.0. IMPLEMENTATION OF FORCE RESTRUCTURING AND ORGANIZATIONAL DEVELOPMENT PROGRAM
Art. 2.1. Policy and Objectives
2.1.1. The AFP shall be developed into a compact, efficient,
responsive and modern force with the capability to engage in
conventional and/or unconventional warfare, undertake disaster relief
and rescue operations, and contribute to economic development and
perform other non-traditional roles.
2.1.2. The AFP Modernization Program shall provide for the
identification, organization, training and development of the reserve
force and affiliated reserve units in the AFP, especially in the Navy
and Air Force.
2.1.3. The AFP shall be structured for external defense, internal
security, and other concerns such as the protection and preservation of
natural resources, disaster relief and rescue operations, community
development and nation building, and the fulfillment of the country’s
international, regional and bilateral commitments.
2.1.4. The AFP shall maintain two major components, the Regular Force and the Reserve Force.
2.1.5. The AFP shall maintain the tri-service structure. The GHQ
shall exercise direct command and control of joint and combined
operations.
2.1.6. The AFP shall organize and develop the reserve force and
affiliated reserve units as ready complement of the regular force
following the Total Force Concept.
2.1.7. Reconfiguration shall be phased according to priority.
Phase-out of regulars shall be complemented with phase-in of qualified
reserves.
ARTICLE 2.2. The Regular Force
2.2.1. The Regular Force shall be maintained in time of peace consonant to the actual security needs of the State.
2.2.2. The Regular Force shall be reorganized into a compact force
capable of responding to any contingency in time of peace, and providing
the base for expansion with the accretion of the mobilized reserve
forces in time of war or national emergency.
2.2.3. Reconfiguration and transfer of units shall follow the
principle of Area of Operational Responsibility (AOR). Units permanently
based thereat shall have primary responsibility for the conduct of any
operation in the AOR.
2.2.4. There shall be an appropriate mix of forces for efficient
and effective operations. The mix shall be balanced with the flexibility
and the capability to respond to a variety of contingencies and
situations, both military and non-military, in combat and in the
community. The units of this balanced force shall be well integrated to
operate as a team and complement each other.
2.2.5. A periodic review of the Table of Organization and Equipment
(TOE) and Table of Distribution and Allowance (TDA) shall be
implemented to determine the appropriate size of the AFP.
ARTICLE 2.3. The Reserve Force
2.3.1. Pursuant to Section 8, of Republic Act No. 7077, the Reserve
Force shall be organized into five (5) components, namely:
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a. Army Reserve Component; |
d. AFP-Wide Technical Reserve Component; and |
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b. Air Force Reserve Component; |
e. Affiliated Reserves |
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c. Navy Reserve Component; |
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2.3.2. Affiliated reserve units at the national and regional levels
shall be organized, administered, employed, and controlled by the AFP
in times of war or national emergency, as the President may order.
2.3.3. In time of peace, the Army, Air Force, and Navy Reserve
units may be structured for employment in search and rescue, and relief
operations particularly during disasters and calamities; protection of
natural resources and the environment; intelligence-gathering activities
of the AFP; augmenting the existing units of the regular force; and
other socio-economic development activities.
2.3.4. The AFP reserve units shall be structured to enhance their
relevance and usefulness to the communities where they are located, and,
correspondingly, to enhance the consciousness and appreciation of these
communities of the importance of the role of the Reserve Force in the
defense of the country and in socio-economic development.
2.3.5. In time of war, the initial requirements of the reserve
units shall be sourced from the government and the private sector.
2.3.6. Affiliated reserve units shall be organized from existing
government and privately owned corporations with strategic assets, in
contiguous locations, for various defense and security purposes.
2.3.7. The AFP shall identify the specific government facilities,
utilities, and private companies that are to be organized as affiliated
reserve units and designate the major service or GHQ unit responsible
for their control.
Chapter 3.0. IMPLEMENTATION OF CAPABILITY, MATERIEL AND TECHNOLOGY DEVELOPMENT PROGRAM
ARTICLE 3.1. Policies and Objectives
3.1.1. The AFP Modernization Program entails the development and
employment of certain capabilities that can address the assessed
threats. The acquisition of these capabilities shall be governed by the
following policies:
a. The types and quantities of air force, navy and army
equipment and materiel to be acquired shall be based on and determined
by the need to develop AFP capabilities pursuant to the modernization
objectives herein set forth.b. The acquisition of new equipment and weapons systems shall
be synchronized with the phase-out of uneconomical and obsolete major
equipment and weapons systems in the AFP inventory.c. No major equipment or weapons system shall be purchased
if the same is not being used by the armed forces in the country of
origin or used by the armed forces of at least two countries. A later
modified version of such equipment or weapons system, or subsystems
thereof, provided such modified version is not a prototype, shall be
deemed to be the same as the original one for the purpose of this
provision and shall qualify for acquisition under the provision of
Section 4(b) of Republic Act No. 7898.d. Only offers or bids from suppliers who are themselves the manufacturers shall be entertained.
e. No supply contract shall be entered into unless such
contract provides for, in clear and unambiguous terms, after-sales
services and the availability of spare parts. Such contract shall
contain an undertaking by the supplier that the maintenance services and
spare parts for the equipment or weapons system purchased are available
for a stipulated period which shall be equivalent more or less to the
estimated remaining life span of such equipment or weapons system.f. Bidders should not be, or have been, associated,
directly or indirectly, with persons or firms or any of their affiliates
that have been engaged by the Armed Forces of the Philippines or the
Government Arsenal or any of the agencies under the Department to
provide consulting services for the preparation of the design,
specifications and systems used for the procurement of the equipment or
weapons system to be purchased, as well as for the evaluation of the
technical and other specifications of bids. A statement to this effect
shall be included in the prequalification documents to be submitted by
every bidder.g. Equipment Acquisition and Contract Negotiation shall be
treated as two sequential but separate steps, each requiring the
separate decision of the Secretary. The decision making process for
Equipment Acquisition shall start at the appropriate service command and
submitted to the AFP Modernization Board, heretofore known as the AFP
Weapons Systems Board, while Contract Negotiations shall start at AFP
General Headquarters (GHQ) level.
3.1.2. The AFP Modernization Program shall be geared towards the development of the following defense capabilities:
a. Naval defense capability — given the archipelagic nature
of the Philippines, the Philippine Navy (PN) shall develop its
capabilities for naval defense, amphibious warfare, sealift and
transport, and surface warfare; naval gunfire support, detection and
maritime surveillance, search and rescue, disaster response as well as
capabilities for anti-air, anti-submarine and mine warfare.b. Air defense capability — The Philippine Air Force (PAF),
being the country’s first line of external defense, shall develop its
air defense capability by acquiring multi-role aircraft, air munitions,
avionics, point and area defense missile system, maritime patrol and
reconnaissance, and early warning and control system, as well as
capabilities for strategic and battlefield airlift and limited ground
attack in support of surface forces.c. Ground defense capability — The fragmented nature of
Philippine land territory requires the Philippine Army (PA) to develop
its capabilities for ground defense and internal security as well as its
capability for assistance to national development, search and rescue
operations, relief and rehabilitation, natural resources and
environmental protection.d. General Headquarters capability — The modernization of the
AFP further requires the development of the General Headquarters
capabilities for command, control, communications, and information
systems network.
ARTICLE 3.2. Development of AFP Capability, Materiel and Technology
3.2.1. The AFP shall develop its capabilities to effectively carry
out its Internal Security Operations (ISO) and External Defense
Operations (EDO). Its EDO shall address the defense needs at the
Kalayaan Island Group and provide protection for the country’s 200-mile
exclusive economic zone (EEZ).
3.2.2. A National Command Center (NCC) shall be developed as the central facility for national command and control.
3.2.3. The AFP shall adopt information technology systems to enhance management.
3.2.4. The development of the defense capabilities mentioned in
Item 3.1.2 above shall be undertaken through the acquisition of new
equipment and weapons systems from in-country or foreign sources and the
upgrading of existing inventories.
3.2.5. Existing inventories with continuing operational utility may
be upgraded; provided, that the upgrade cost is reasonable compared to
the acquisition cost of new equipment or weapons system; provided,
further, that the equipment or weapons system to be upgraded is included
in the AFP Modernization Program approved by Congress through Joint
Resolution No. 28; provided, furthermore, that such upgrade shall follow
the procedure laid down in this Chapter.
3.2.6. Considering the high cost of new equipment or weapons
system, used equipment or weapons system may be acquired; provided that:
a. The used equipment or weapons system meets the desired operational requirements of the AFP;
b. It still has at least fifteen (15) years service life, or
at least fifty percent (50%) of its service life remaining, or if
subjected to a service life extension program, is upgradeable to attain
its original characteristics or capabilities;c. Its acquisition cost is reasonable compared to the cost of new equipment; and
d. The supplier shall ensure the availability of after-sales maintenance support and services.
3.2.7. Lend-lease or lease-purchase arrangements for the
acquisition of major equipment or weapons system may be resorted to as
practicable and advantageous cost-wise from the standpoint of operations
and maintenance, among other considerations.
3.2.8. Phase-in of modern equipment shall be synchronized with the
phase-out of uneconomical major equipment and weapons systems in the AFP
inventory. Considerations shall be focused on cost factors associated
with maintaining these assets vis-a-vis re-allocating such funds for the
upgrade of other existing equipment. In this regard, a periodic
inventory of existing major equipment and weapons systems shall be
conducted to identify those equipment or weapons systems for disposal.
3.2.9. The AFP shall incorporate risk management in the implementation of the AFP Modernization Program.
3.2.10. Communication and electronic equipment to be
acquired shall, as much as possible, have built-in communication
security features and, if applicable, provisions for upgrade considering
the rapid advances in technology.
3.2.11. In contracts worth US One Million Dollars ($1 M)
or more involving the acquisition or upgrade of equipment or weapons
systems from foreign suppliers, the provisions of Executive Order No.
120 (1993) and its implementing rules and regulations shall apply,
3.2.12. All other terms and conditions being equal, bids
for procurement contracts that include arrangements for the setting up
of local maintenance facilities for the equipment or weapons system
being offered shall, along with other similar arrangements, be given a
margin of preference.
3.2.13. Acquisition shall, as much as possible, be
multi-sourced, without unnecessarily complicating logistics management
and support, in order to avoid over-dependence on one or a few
suppliers.
3.2.14. As feasible and without impairing
mission-essential requirements, major equipment acquisition shall
consider civil-military application and interoperability with other
government agencies. The selection of equipment to be acquired shall
also consider its application in support of economic development.
3.2.15. The AFP shall maximize the use of existing or
planned civilian facilities or infrastructure, particularly
communications, to supplement AFP requirements and provide the necessary
redundancy to existing or planned AFP systems.
3.2.16. For the procurement of defense equipment and
weapons systems, sources of funds other than the annual General
Appropriations Act shall be explored. In addition, financial strategies
shall be devised to address the huge financial outlay required for this
component of the Program.
3.2.17. The operation, maintenance, and repair costs of
equipment and weapons systems acquired under the AFP Modernization
Program shall be included in the annual AFP regular budget proposal.
ARTICLE 3.3. Procurement Procedure Under the Capability, Materiel and Technology Development Component of the Program
3.3.1. The Five (5) — Year Rolling Plan mentioned in Item 1.1.5
shall be the basis for the formulation of the Circular of Requirements
(COR) for the equipment and weapons systems to be procured under this
component of the Program.
3.3.2. The Chief of Staff, AFP, shall prescribe the composition and
designate the members of the Prequalification, Bidding, and Awards
Committee (PBAC) for each project under the capability, materiel and
technology development component of the Program, taking into account the
inclusion of appropriate legal, financial, technical, and other
expertise for a comprehensive prequalification of bidders and evaluation
of offers; provided, that the Major Service concerned shall be
represented by at least two (2) members in the PBAC.
3.3.3. In the procurement of highly technical and advanced
equipment and weapons systems, the services of qualified and experienced
procurement consultants may be hired: provided, that the in-house
capability of the DND-AFP has first been exhausted or determined to be
inadequate: provided, further, that the hiring of consultants shall be
in accordance with Item 1.4.3 of these IGRRs: provided, furthermore,
that the award of the contract for consultancy services shall,
regardless of the amount involved, require the approval of the
Secretary.
3.3.4. Whenever applicable, the Joint AFP – Philippine
International Trading Corporation (PITC) Countertrade Working Group
shall be requested to evaluate the countertrade component of bids or
offers and to prepare the countertrade agreements in accordance with
Executive Order No. 120 (1993) and its implementing rules and
regulations, the Memorandum of Agreement between the Department of
National Defense and the Department of Trade and Industry, dated 6
December 1995, and the Memorandum of Agreement between the AFP and PITC,
dated 15 May 1996.
3.3.5. The procurement procedure consists of two separate but
sequential steps: Equipment Acquisition and Contract Negotiation.
ARTICLE 3.4. Equipment Acquisition
3.4.1. The Equipment Acquisition stage starts at the Major Services level.
3.4.2. The Major Services shall organize their respective Project
Management Teams (PMTs), each of which shall be responsible for a single
procurement project in all its stages, except the Contract Negotiation
stage, from identification up to implementation. PMTs shall be
responsible for the formulation of the Circulars of Requirements (CORs)
and Bid Evaluation Plans (BEPs).
3.4.3. The AFP Modernization Board, erstwhile known as the AFP
Weapons Systems Board, shall review and validate the Circulars of
Requirements (CORs) and Bid Evaluation Plans (BEPs). The record of its
proceedings shall be appended to its recommendations to the Chief of
Staff, AFP and shall contain all the deliberations between the AFP
Modernization Board and the Major Service Modernization Board concerned.
CORs and BEPs shall be submitted to the Secretary for final approval.
3.4.4. Upon approval by the Secretary, a directive shall be issued
to the Chief of Staff, AFP to begin the next step of the procurement
procedure.
ARTICLE 3.5. Contract Negotiation
3.5.1. The Contract Negotiation stage starts at the AFP-GHQ level.
3.5.2. Upon receipt of the directive mentioned in Item 3.4.4, the
Chief of Staff, AFP shall forthwith create a PBAC. Whenever applicable,
the AFP shall, prior to the commencement of the bidding, request for a
Multi-Year Obligational Authority from the DBM in accordance with the
procedure laid down in Item 8.2.3 of these IGRRs.
3.5.3. Due to the urgency of the AFP Modernization Program, all
prospective bidders shall be required to submit, as part of their
prequalification documents, a statement waiving any right to seek and
obtain a writ of injunction or prohibition, or a restraining order
against the procurement agency or its PBAC to prevent or restrain the
prequalification and bidding processes or any proceeding related
thereto, the negotiation and award of a contract to a successful bidder,
and the implementation of the contract. Such a waiver shall, however,
be without prejudice to the right of a disqualified or losing bidder to
question the lawfulness of its disqualification or the rejection of its
bid by appropriate administrative or judicial processes not involving
the issuance of a writ of injunction or prohibition, or a restraining
order.
3.5.4. The list of prequalified and predisqualified bidders shall
be submitted to the Secretary for approval. Upon approval by the
Secretary, the Chief of Staff, AFP shall notify prequalified and
predisqualified bidders within seven (7) days upon notice of such
approval. Predisqualified bidders may appeal the predisqualification to
the Secretary within fifteen (15) days from receipt of the notice of
predisqualification. The Secretary shall act on the appeal within
forty-five (45) days from receipt of the appeal. While the appeal is
pending, the bidding procedure shall be deemed suspended. The decision
of the Secretary on the appeal shall be final and immediately executory.
3.5.5. In the procurement of sophisticated defense equipment and
weapons systems, a sovereign or government guarantee shall be allowed in
addition to other forms of allowable bid security under existing laws,
rules and regulations. A sovereign or government guarantee shall be
valid until a contract has been awarded or when a failure of bidding has
been declared or when such bidding has been nullified by competent
authorities; provided, that if, for whatever reasons, such sovereign or
government guarantee is withdrawn at any time prior to the award of the
contract, the declaration of a failure of bidding or the nullification
of the bidding shall automatically disqualify the guaranteed bidder,
unless the latter posts another form of acceptable security within two
(2) business days after notice of such withdrawal.
3.5.6. To be acceptable, a sovereign or government guarantee must have the following features:
a. Written on official stationery and bearing the official seal of the issuing Government;
b. Signed by a competent representative or representatives of
the issuing government the source of whose authority to sign the
guarantee is clearly stated and whose signature or signatures are
properly authenticated by competent Philippine consular officials;c. Declares the ownership interest of the guaranteeing
government over the guaranteed bidder or the restricted nature of the
equipment or weapons system being offered; andd. Indicates the duration of the guarantee, which shall conform to the period mentioned in Item 3.5.5.
3.5.7. In view of the inherent complexity in the procurement of
sophisticated defense equipment and weapons systems, the periods for the
issuance of bid documents, the submission of prequalification
statements, the validity of bid securities, the evaluation of bids, the
making of a decision whether or not to award a contract, the issuance of
the Notice of Award, the approval of contracts, the issuance of the
Notice to Proceed, and other similar activities may be longer than those
prescribed in the implementing rules and regulations of Executive Order
No. 302. The extension of such periods shall depend on the degree of
complexity of the equipment or weapons systems to be acquired, be
indicated in the BEP and stated in the bid documents.
3.5.8. In determining the lowest evaluated responsive bid and in
addition to bid evaluation criteria under applicable laws, rules and
regulations, the PBAC shall consider the following, which shall be
described in the BEP and indicated in the bid documents:
a. The bid price, subject to any margin of preference applied;
b. The cost of operating, maintaining and repairing the
equipment, the time for delivery of the equipment, the functional
characteristics of the equipment, the terms of payment and of guarantees
in respect of the equipment, including the guarantee required in Item
3.1.1(e) of these IGRRs;c. The effect that acceptance of a bid would have on the
balance of payments position and foreign exchange reserves of the
country, the countertrade arrangements offered, the extent of local
content, including manufacture, labor and materials of the equipment or
weapons system being proposed, the economic-development potential being
offered, including domestic investment or other business activity, the
encouragement of domestic employment, the transfer of technology and the
development of domestic managerial, scientific and operational skills;
andd. National defense and security considerations.
3.5.9. The PBAC shall submit to the Chief of Staff, AFP, for
endorsement to the Secretary, the ranked list of responsive bids,
indicating therein the lowest evaluated responsive bid.
3.5.10. Upon approval by the Secretary, the Chief of
Staff, AFP shall issue the Notice of Award to the winning bidder. The
Secretary’s approval shall include a directive to the Chief of Staff,
AFP to finalize the terms of the contract.
3.5.11. The PBAC, assisted by the AFPMPMO, shall prepare
and submit to the Chief of Staff, AFP the final contract for endorsement
to the Secretary.
3.5.12. Upon signing the contract with the winning
bidder, the Secretary shall, whenever Item 8.2.5 hereunder applies,
submit the contract to the President for approval.
3.5.13. Upon approval of the contract, the Secretary
shall issue to the winning bidder the Notice to Proceed. Provisions in
procurement contracts to the contrary notwithstanding, such contracts
shall be effective only upon the issuance of the Notice to Proceed.
3.5.14. In the case of multi-year contracts, the
Secretary, through the President, shall submit copies of the approved
contract to Congress, through the Chairmen of the Senate Committees on
National Defense and Security and Finance and the Chairmen of the House
Committees on National Defense and Appropriations, to enable Congress to
appropriate funds for the contract, pursuant to Section 9(b) and (c) of
Republic Act No. 7898.
ARTICLE 3.6. Self-Reliant Defense Posture
3.6.1. A self-reliance policy shall, as much as possible, be
pursued in materiel and technology development for the country’s defense
requirements in order to reduce dependence on foreign sources and at
the same time boost the local defense industry. Self-reliance for
defense entails careful selection to determine the weapons system or
components thereof that should be produced locally or acquired from
foreign sources.
3.6.2. The series acquisition of major equipment and weapons
systems, shall, wherever feasible, provide arrangement for the
production of the lead item(s) by the foreign manufacturer in the
country of origin, and the subsequent production in the country of the
rest of the series under such schemes as transfer of technology, joint
venture, or co-production. The upgrading of existing inventories shall
likewise follow a similar scheme as practicable. To this end, the
DND-AFP may, as necessary, require the foreign proponent to team up with
the local defense industry.
3.6.3. The development of the following local maintenance
capability for major equipment and weapons systems shall be given
priority:
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a. automotive transport equipment for a complete domestic maintenance and repair capability; |
f. armors; |
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b. missiles; |
g. large caliber weapons; and |
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c. fire control systems; |
h. electronic equipment. |
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d. aircraft; |
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e. ships; |
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Such maintenance capability shall either be in-house or with the private sector or both.
3.6.4. Technical skills and tooling shall be acquired to provide a
certain level of domestic repair and maintenance capability for
sophisticated components of major equipment and weapons systems. Bidders
for the equipment and weapons systems to be acquired under this
component of the Program shall be encouraged to incorporate proposals
for the provision of such skills and training to AFP personnel in their
bids.
3.6.5. Policies under the Self-Reliant Defense Posture (SRDP)
program pursuant to Presidential Decree No. 415 shall further govern the
development of in-country capability for the production and maintenance
of equipment and weapons systems to be acquired.
Chapter 4.0. IMPLEMENTATION OF BASES/SUPPORT SYSTEMS DEVELOPMENT PROGRAM
ARTICLE 4.1. Policies
4.1.1. The AFP Modernization Program shall develop permanent bases
for land, air, and naval forces along the following guidelines:
a. The development of the bases shall conform to the National
Defense Strategy and the governments socio-economic thrusts;b. The base development program shall provide systematic
relocation for AFP units to enhance their capability in the performance
of their mission, adequate support systems and housing facilities to AFP
units and personnel, and training grounds for maneuver and territorial
forces as well as the reserve components; andc. Bases and camps shall be developed along standard
criteria for space allocations, zoning and efficient correlation of land
areas and structure.
4.1.2. Item 1.4.1 shall apply in the procurement of construction
services under the bases/support systems development component of the
AFP Modernization Program. Similarly, Item 1.4.3 shall apply in the
procurement of consultancy services necessary for the implementation of
this component of the Program.
4.1.3. In cases where the procurement of an equipment or weapons
system under the capability, materiel and technology development
component of the Program requires the construction of bases and/or
support systems, the procurement of construction services shall be
incorporated with the procurement plan for such equipment or weapons
system. The provisions of Item 1.4.1 of these IGRRs shall, however,
govern the procedure for the procurement of construction services.
ARTICLE 4.2. Development of Military Reservations, Camps and/or Bases
4.2.1. Priority in the development of bases/support systems shall
be the projection and support of forces tasked to provide internal
security, air, and naval defense, and to protect the exclusive economic
zone (EEZ).
4.2.2. In areas or locations where camps are needed, the AFP may
acquire lands through expropriation proceedings or through executive
flat, when applicable. Funds required for this purpose shall be sourced
from the Bases/Systems Development Program component of the AFP
Modernization Program or from regular AFP appropriations.
4.2.3. The AFP shall, in the selection and development of sites for
new bases or camps, consider security implications, space allocations,
and regional and environmental factors.
4.2.4. A Master Development Plan based on standard criteria for
bases and camps shall be made. Each major service shall prepare
appropriate base development plans to be submitted to General
Headquarters for consolidation and review, and to the Department of
National Defense for approval.
4.2.5. Development and construction plans for all new camps, bases
and stations of type units and facilities shall have the same design and
specification, to differ only in their capacities for service-peculiar
requirements.
4.2.6. Base development plans shall, as far as practicable, provide
for future expansion arrangements considering the AFP’s defense
strategy in the long term.
4.2.7. Consistent with security and strategic requirements, camps
and bases shall, to the extent possible, provide for joint use by the
different AFP units. Camps and/or bases of major services may be set on
common sites for economical utilization of available real estate and for
common use of facilities such as airstrips, gunnery and target range,
and training areas.
4.2.8. The Master Development Plan shall include on-base housing
for military personnel. Such on-base housing may include recreational
areas, open spaces, concessionaires, and other community facilities, as
practicable.
ARTICLE 4.3. Excess Military Reservations, Camps and/or Bases
4.3.1. Existing military reservations, camps, bases and stations
which are not needed to support strategic plans shall be de-established
and disposed of through sale, lease, joint development, or through other
means, as may be authorized by Congress, the proceeds of which shall be
used to finance the AFP Modernization Program in accordance with the
procedure laid down in Item 8.3.4 herein.
4.3.2. The AFP shall submit to the Department of National Defense
for approval the proposed disposal of excess military reservations,
bases, camps, and stations referred to in the preceding paragraph.
4.3.3. Congressional authorization shall be requested by the
Secretary of National Defense, through the President, for the disposal
of said excess military reservations, bases, camps and stations.
ARTICLE 4.4. Ecological and Natural Resource Protection and Safety Precautions
4.4.1. In the selection of the actual location of new bases and
camps and the construction and operation of the facilities therein,
measures shall be taken to preserve the ecological balance of the area
and protect the natural environment.
4.4.2. All base development plans shall include an environmental
impact assessment section, which shall contain, among others,
precautions to insure that toxic materials or pollutants emanating from
base activities do not contaminate the environment and that the
operation of training areas where live firing shall be conducted do not
endanger surrounding communities or destroy the natural environment.
Chapter 5.0. IMPLEMENTATION OF HUMAN RESOURCES DEVELOPMENT PROGRAM
ARTICLE 5.1. Objectives — The Human Resources Development (HRD) component of the AFP Modernization Program shall have the following objectives:
a. To strengthen the patriotic spirit and nationalist
consciousness of the military, and respect for people’s rights in the
performance of their duty,b. To develop and transform the AFP into a primarily
external security-oriented force even as it continues to perform the
primary responsibility in the suppression of insurgency and other
serious threats to national security;c. To develop a compact, effective, efficient, and responsive citizen-based force;
d. To implement programs that will enable the AFP to
perform its role in environment/resource protection and multinational
peacekeeping operations;e. To convert the AFP into a service- and people-oriented and professionally-united force; and
f. To improve the quality of life of soldiers and their families and reorient the values of all AFP personnel.
ARTICLE 5.2. Development of the AFP Human Resources
5.2.1. The AFP HRD program shall be coordinated with and complement the other components of the AFP Modernization Program.
5.2.2. The AFP HRD program shall give emphasis to the following:
a. Procurement — Priority shall be given to technically
qualified personnel to address the needed skills in the AFP. To attain
this, the AFP shall strictly enforce the attrition policy to provide
vacancies for the procurement of needed skilled personnel.b. Training — The AFP shall re-orient its training program to
conform to the requirements of the AFP Modernization Program. In
addition, the AFP shall pursue opportunities to acquire additional
knowledge through joint training exercises with other countries.
5.2.3. The HRD Program shall also consider the following roles of the AFP:
a. Military roles — The AFP shall maintain trained and active
territorial forces; secure territorial waters, air space, and the
200-mile exclusive economic zone (EEZ); conduct necessary training and
education to its personnel; maintain a ready reserve force; participate
in war exercises; and engage in military diplomacy through defense
cooperation programs with other defense forces.b. Developmental and Environmental roles — The AFP shall
train and develop its personnel in nation-building and environmental
protection.
5.2.4. All programs under the HRD of the AFP shall be forwarded to the Department for approval.
ARTICLE 5.3. Education and Training Programs
5.3.1. The AFP shall keep itself abreast with the advances in
technology and shall continually update and develop its personnel in the
use of modern technology. Priority shall be given to programs that
ensure a high level of proficiency in military skills and expertise at
all echelons.
5.3.2. Responsiveness to present and future requirements of the AFP
Modernization Program shall be the primary consideration in selecting
local and foreign education and training programs for AFP personnel.
5.3.3. To carry out the objectives of the HRD program, the
following specific education and training programs shall be pursued:
a. Programs for the maintenance of the
equipment and weapons systems to be acquired under the AFP Modernization
Program, to ensure a sustained high level of operational readiness;b. Technical programs geared towards the
development of an in-house capability to develop and produce, through
innovation or invention, equipment and weapons systems for the AFP;c. Training programs in electronics and
information technology to update and upgrade existing capabilities of
personnel and to cope with the rapidly changing imperatives of the
information age;d. Management training programs to achieve greater efficiency in the utilization of resources, both human and material;
e. Training programs in nation-building and environmental protection;
f. Training programs in peacekeeping operations; and
g. Exchange training programs with ASEAN
member-countries and other countries to develop confidence building and
interoperability among armed forces of these countries.
5.3.4. The capabilities of AFP institutions to train, educate and
undertake research and development shall be continuously updated and
enhanced.
Chapter 6.0. IMPLEMENTATION OF DOCTRINES DEVELOPMENT PROGRAM
ARTICLE 6.1. Policy — The new
imperatives of the AFP Modernization Program require the review,
evaluation and validation of the existing set of doctrines in the AFP.
Towards this end, the Department of National Defense and the AFP shall
generate, evaluate, consolidate and formalize doctrines; conduct
periodic review and validation of doctrines through field application,
testing and exercises; and disseminate and inculcate approved doctrines
at all levels of command.
ARTICLE 6.2. Development of AFP Doctrines
6.2.1. The Doctrines Development Program shall cover all the
strategic, operational and tactical aspects to include intelligence;
command, control and communication; logistics; and administration for
the application of ground, air and sea forces in independent or joint
operations.
6.2.2. The Doctrines Development Program shall be designed to
complement all the components of the AFP Modernization Program. It is
specifically aimed at validating existing doctrines and formulating new
ones in anticipation of changes in strategic, operational and tactical
procedures that shall result from the AFP Modernization Program.
6.2.3. The National Defense Strategy shall be the strategic framework for the formulation of doctrines.
6.2.4. Doctrines to be formulated shall adapt to the domestic
setting while considering interoperability with the armed forces of
other countries.
6.2.5. In formulating doctrines, the AFP shall consider the dynamic
interactive relationship of strategy and doctrines, on one hand, and
force posture and resources, on the other.
6.2.6. The formulation of doctrines shall also consider the
experiences of the armed forces of other countries to validate military
theories or ideas.
6.2.7. The AFP shall enhance its structures and procedures for Doctrines Development.
6.2.8. The Chief of Staff, AFP shall be the approving authority for operational and tactical doctrines.
6.2.9. The Secretary shall be the approving authority for strategic doctrines.
Chapter 7.0. MODERNIZATION OF THE GOVERNMENT ARSENAL
ARTICLE 7.1. Policies
7.1.1. The Government Arsenal shall develop its production
capabilities to enhance self-sufficiency in the country’s defense
requirements. Towards this end, the Government Arsenal shall be
effectively utilized in the production of basic weapons, ammunitions and
other munitions for the use of the AFP and the Philippine National
Police (PNP). Products in excess of AFP and PNP requirements shall be
sold and/or exported.
7.1.2. The Government Arsenal may use such production facilities as
it may acquire under the AFP Modernization Act, or as it may arrange,
under joint venture, co-production or similar agreements, with local and
foreign entities.
ARTICLE 7.2. Development of the Government Arsenal
7.2.1. Solely for purposes of implementing its modernization
projects under the AFPMP approved by Congress through Joint Resolution
No. 28, the Government Arsenal shall be governed by rules similar to
those applicable to AFP Major Services, both in terms of procurement
procedures as well as in the handling of funds.
7.2.2. The Government Arsenal may enter into joint venture,
co-production, or other similar schemes for its modernization with local
and foreign entities having the capital, technology, and access to
international markets.
7.2.3. The Government Arsenal shall be developed to manufacture
ammunition and basic weapons for the AFP and the PNP. In the mean time
that this capability is being developed, it shall continue to provide
the small arms ammunition requirements of the AFP and the PNP.
ARTICLE 7.3. Sale and/or Export of Excess Products
— Products in excess of the requirements of the AFP and PNP shall be
sold or exported in accordance with existing provisions of law. The
proceeds of the sale of Government Arsenal products shall go to the AFP
Modernization Act Trust Fund, pursuant to Section 11 (d) of the AFP
Modernization Act and in accordance with the procedure laid down in Item
8.3.4 herein.
Chapter 8.0.
ADMINISTRATION OF THE ARMED FORCES OF THE PHILIPPINES MODERNIZATION ACT TRUST FUND (AFPMATF)
ARTICLE 8.1. Purpose — This Chapter
governs the administration of the AFP Modernization Act Trust Fund (R.A.
No. 7898), created under Section 11 of the AFP Modernization Act, and
implements Joint Circular No. 4-98 issued by the Department of Budget
and Management, Department of Finance and Commission on Audit, dated 22
December 1997.
ARTICLE 8.2. General Guidelines
8.2.1. The Secretary of National Defense (SND) shall be the
administrator of the Armed Forces of the Philippines Modernization Act
Trust Fund (AFPMATF). As such, the utilization of funds in the AFPMATF
shall require the approval of the SND.
8.2.2. AFP-GHQ, through DND, shall, immediately after the issuance
of this Department Circular, request DBM for the issuance of an Omnibus
Forward Obligational Authority (OFOA) covering the entire AFPMP as
approved by Congress under Joint Resolution No. 28.
8.2.3. No multi-year contract for the procurement of goods,
equipment and services under the AFPMP shall be entered into without a
Multi-Year Obligational Authority (MYOA) issued by DBM.
a. AFP shall explicitly consider the budgetary implications
of multi-year contracts during the project design and contract
negotiation phases.b. Before the start of the bidding process or, where
applicable, negotiation for negotiated procurement, the procurement
agency shall request for a MYOA from DBM. In no case shall the Secretary
enter into a contract without such MYOA.c. The request for the issuance of a MYOA shall include, among others, the following:
i. Estimated amount of the multi-year obligation;
ii. Projected payments for subsequent years; and
iii. Expected amount of revenues to be generated, in
addition to other sources of funding, to cover the multi-year
obligation.
8.2.4. The AFP Modernization Financial Program shall specify the
yearly cash flow requirements for the payment of principal, interest and
other related expenses in the acquisition of modernization equipment
and weapons systems such as, but not limited to, Freight Expense,
Consultancy Services Expense and Administrative Expense in the conduct
of Bidding and Bid Evaluation; provided, that Administrative Expense
shall not include salaries and allowances.
8.2.5. All contracts under the AFPMP worth Fifty Million Pesos
(P50,000,000.00) or more, whether multi- or single-year, shall be
submitted to the Office of the President, through DND, for approval.
8.2.6. Except for the interest income of the Combo Accounts for the
AFPMP, all funds intended for the AFPMATF from whatever source shall be
deposited with the Bureau of the Treasury (BTr) pursuant to E.O. 338.
8.2.7. AFP-GHQ, Major Services and GA shall maintain separate books of accounts for the AFPMATF.
8.2.8. AFP-GHQ shall open and maintain a separate MDS account for the AFPMATF.
8.2.9. AFP-GHQ, Major Services and GA shall respectively establish
and maintain Combo Accounts with an Authorized Government Depository
Bank (AGDB) to hold the funds transferred to them for the payment of
obligations incurred under the AFPMP. AFP shall enter into a Memorandum
of Agreement (MOA) with such AGDB to facilitate the transfer of funds
from the AFP-GHQ to the Major Services and GA. The MOA shall specify,
among others, that the transfer of funds shall be done through the
issuance of an Authority to Transfer Fund (ATF).
8.2.10. Upon the termination of the AFPMP, the books of
the AFPMATF shall be closed and the balances of Assets and Liabilities
Accounts shall be transferred to the General Fund (101) of the agencies
concerned.
8.2.11. The approved Special Budget and the receipt and
transfer of funds for the AFPMATF and all transactions involving the
Trust Fund shall be recorded in the books of accounts of fund 172 based
on the journal entries prescribed in Annex “A” of DBM-DOF-COA Joint
Circular No. 4-98.
8.2.12. In addition to the rules and regulations
promulgated herein, the disbursement of funds from the AFPMATF shall be
subject to existing budgeting, accounting and auditing rules and
regulations.
ARTICLE 8.3. Procedural Guidelines
8.3.1. At the beginning of each budget year, AFP-GHO shall submit to DBM, through DND, the following:
a. A Special Budget reflecting the total appropriations
authorized for the AFP Modernization Program in the annual General
Appropriations Act (GAA) and other funding sources. Such Special Budget
shall include the following: Work Plan, Financial Plan and Cash Program
(Annexes 1, 2 and 3, respectively, of DBM-DOF-COA Joint Circular No.
4-98).b. The Comprehensive Work Program and Financing Program for
the projects under the AFP Modernization Program, as approved under
Congress Joint Resolution No. 28, to guide DBM in the annual programming
of funds. The Comprehensive Work Program and Financing Program shall be
updated regularly by DND, in consultation with DBM, in accordance with
the Rolling Plan of the AFPMP and the fiscal program of the national
government.
8.3.2. Funds appropriated through the GAA:
a. Upon receipt of the Special Allotment Release Order (SARO)
from DBM covering the appropriation and allotment under the Special
Account in the General Fund (Fund 172), and the Journal Voucher (JV)
drawn by the BTR-NCAD, AFP-GHQ shall record the appropriations,
allotment and income/fund transfer in its AFPMATF books of accounts
under Fund 172.b. AFP-GHQ shall issue a Sub-Allotment Advice (SAA) to the
Major Services and GA, transferring the appropriation and allotment
covered by the SARO in the preceding paragraph. AFP-GHQ shall draw a JV
for each of the Major Services and GA to take up the SAA in the books of
AFPMATF.c. The Major Services and GA shall record in their
respective AFPMATF books of accounts for Fund 172 the SAA based on the
JV received from the AFP-GHQ.d. Based on the Notice of Cash Allocation (NCA) received from
DBM, AFP-GHQ shall issue an MDS check for deposit to its Combo Account.
Obligations incurred under the AFPMP shall be paid with commercial
checks drawn against this Combo Account.e. The MOA entered into between AFP-GHQ and the AGDB shall
govern the transfer of cash from the AFP-GHQ Combo Account to the Combo
Accounts of the Major Services and GA. The cash transfer shall be
recorded in accordance with the JV and ATF issued by AFP-GHQ.f. The usual accounting procedures in the incurrence of
obligations as well as the recording of corollary entries shall be
followed.
8.3.3. Share from the sale of military reservations covered by the
Bases Conversion Development Act (RA 7227, as amended by RA 7917):
a. Upon receipt by AFP-GHQ of the JV from the BTr,
transferring the share of AFP in the proceeds of the sale of the
military camps remitted by the Bases Conversion and Development
Authority (BCDA) from Special Account (Fund 170) in the General Fund to
AFPMATF (Fund 172), AFP-GHQ shall record the share from sale of camps in
the AFPMATF books of accounts.b. AFP-GHQ, through DND, shall request DBM for the use of the
proceeds from this fund source in accordance with the approved Special
Budget, and the issuance of the SARO and NCA.c. The applicable procedure outlined in 8.2.2(b) to (f),
inclusive, shall be followed in recording the transfer of appropriation,
allotment and cash from this source.
8.3.4. Proceeds from the sale of the products of the Government
Arsenal (GA); the sale, lease or joint development of military
reservations, including immovables and other facilities found therein,
not covered by the Bases Conversion Development Act (RA 7227, as amended
by RA 7917); and the disposal of excess and/or uneconomically
repairable equipment and other movable assets of the AFP and GA:
a. The sale of the products of the Government Arsenal (GA);
the sale, lease or joint development of military reservations, including
immovables and other facilities found therein, as may be authorized by
Congress, not covered by the Bases Conversion Development Act (RA 7227,
as amended by RA 7917); and the disposal of excess and/or uneconomically
repairable equipment and other movable assets of the AFP and GA, shall,
whenever applicable, be governed by the rules on public auction and
public bidding, as the case may be, of government assets so as to
generate maximum revenues for the government.b. Proceeds from these sources shall be properly receipted
and recorded as income in the disposing agency’s books of accounts. The
corresponding reduction in assets, when applicable, shall likewise be
entered into its books of accounts.c. The disposing agency shall deposit the proceeds with BTr
for the account of the AFPMATF. In depositing the proceeds, the
depositing agency shall indicate in the deposit slip the Agency Code and
Fund Code of the AFPMATF (Fund 172).d. The depositing agency shall forward a copy of the
validated deposit slip to AFP-GHQ, which shall record the income in
AFPMATF’s books of accounts.e. AFP-GHQ, through DND, shall request DBM for the use of the
proceeds from this fund source in accordance with the approved Special
Budget, and the issuance of the SARO and NCA.g. The applicable procedure outlined in 8.2.2(b) to (f),
inclusive, shall be followed in recording the transfer of appropriation,
allotment and cash from these sources.
8.3.5. Interest Income:
a. The interest income of the Combo Accounts as well as its
increments shall be recorded in the respective books of the AFP-GHQ,
Major Services and GA based on the Monthly Bank Reconciliation
Statements.b. At the end of each year, the Major Services and GA shall
transfer all interest and other income of their respective Combo
Accounts to the AFP-GHQ Combo Account through bank transfer.c. In utilizing interest income of the Combo Accounts and
its increments, AFP-GHQ, through DND, shall request DBM for the issuance
of the covering SARO based on the approved Special Budget and credit
advice from the bank. For purposes of utilization of this fund source,
the SARO shall suffice since a NCA is not necessary as the cash
requirement will be charged against the cash deposit in the Combo
Account.d. The AFPMATF interest income as well as its increments, or a
portion thereof, may be invested by the AFPMATF Management Committee
created hereunder, subject to the approval of the Secretary of National
Defense.e. The interest income of the AFPMATF shall, pursuant to
Commission on Audit (COA) rules and regulations and the recurring
provision in the annual General Appropriations Act, be invested only in
allowable government securities.
8.3.6. The Secretary, upon the recommendation of the Chief of
Staff, AFP may request the President for the utilization of budgetary
surplus and savings, if any, for the AFPMP. For this purpose, the AFP
shall incorporate in its proposed annual budget a provision authorizing
the utilization of the agency’s surplus and savings for AFP
Modernization Program purposes. The utilization of such budgetary
surplus and savings shall be in accordance with existing laws, rules and
regulations.
8.3.7. The Secretary, upon the recommendation of the Chief of
Staff, AFP, may request the President for authority to utilize any
unused AFP appropriations for the AFP Modernization Program.
ARTICLE 8.4. AFPMATF Management Committee
8.4.1. An AFPMATF Management Committee, whose members shall be
appointed by the Secretary, is hereby created to assist the SND in the
administration of the AFPMATF. It shall perform the following functions:
a. Determine, subject to the approval of the Secretary, which
of the allowable government securities yields the greatest returns for
the purpose of investing therein the interest income of the Combo
Accounts for the AFPMP;b. Undertake studies on how to generate resources to fund the
AFP Modernization Program and implement, subject to the approval of the
Secretary, the findings of those studies;c. Advise the Secretary on the management and utilization of the AFPMATF; and
d. Perform such other functions as may be assigned by the Secretary.
8.4.2. In the performance of its functions, the AFPMATF Management
Committee shall be assisted by the Defense Modernization Office, which
shall create a division to provide secretariat support for the Board.
Chapter 9.0. MANAGEMENT OF THE AFP MODERNIZATION PROGRAM
ARTICLE 9.1. Responsibility for the Implementation of the AFP Modernization Program
9.1.1. The Secretary is the administrator of the AFP Modernization
Program and shall exercise his functions through the Chief of Staff,
AFP, unless otherwise indicated in these IGRRs.
9.1.2. The Chief of Staff, AFP and Director, GA shall be
responsible for the implementation of the AFP Modernization Program in
their respective agencies.
9.1.3. The Chief of Staff, AFP and Director, Government Arsenal
(GA) shall issue further instructions, including standard operating
procedures (SOPs), to implement these IGRRs in the AFP and GA,
respectively.
ARTICLE 9.2. Organization and Functions
9.2.1. A Defense Modernization Office (DMO) is hereby created at
the Department of National Defense to supervise and monitor the
implementation of the AFP Modernization Program. All AFP Modernization
Program-related documents requiring the approval of the Secretary shall
be addressed directly to the Secretary of National Defense (attention:
Defense Modernization Office). The DMO shall be under the supervision
and report to the Office of the Undersecretary for Operations. It shall
be headed by a Director and have the following functions:
a. Provide secretariat support for the Secretary in the administration of the AFP Modernization Program;
b. Coordinate the approval processes of all modernization-related programs and projects at the DND level,
c. Provide staff support for the AFPMATF Management Committee; and
d. Perform such other functions as may be assigned by the Secretary.
In addition to the division mentioned in Item 8.3.2, the DMO shall
have such other divisions as may be necessary for the effective
performance of its functions.
9.2.2. The AFP Modernization Board (AFPMB) shall serve as the
advisory body of the Chief of Staff, AFP in the implementation of the
AFP Modernization Program and shall, among others, have the following
functions.
a. Advise the Chief of Staff, AFP on matters concerning AFP Capabilities development under the AFP Modernization Program,
b. Review and validate the result of studies or evaluations
with respect to the capabilities recommended to be developed by the
Major Services, GHQ, and AFPWSSUS;c. Cause the review of current AFP Capabilities vis-a-vis
the AFP Modernization Program to determine their validity, relevance,
responsiveness to current and future mission requirements; and,d. Undertake such other functions as the Chief of Staff, AFP may direct.
9.2.3. The Modernization Boards of the Major Services and
GHQ/AFPWSSUs shall serve as the advisory body of their respective Major
Service Commanders in the implementation of the Major Service
Modernization Program and shall, among others, have the following
functions:
a. Advise the Major Service Commanders on matters concerning
the development of their respective capabilities under the AFP
Modernization Program;b. Review and validate the result of the studies with respect to the development of certain capabilities.
c. Cause the review of the Major Service Modernization
Program to determine their validity, relevance, responsiveness to
current and future mission requirements; and,d. Undertake such other functions as the Major Service Commanders may direct.
9.2.4. The AFP Modernization Program Management Office (AFPMPMO)
shall assist and advise the Chief of Staff, AFP in the management and
implementation of the AFP Modernization Program and in the generation of
funds for the AFP Modernization Act Trust Fund. The AFPMPMO shall,
among others, have the following functions:
a. Formulate plans and strategies for the implementation of the AFP Modernization Program;
b. Coordinate the approval processes for AFP Modernization Program projects at the AFP level;
c. Monitor the conduct of prequalification of bidders, the bidding process, and funding of projects;
d. Conduct operations research and develop systems to enhance
utilization of resources and procedures in the implementation of
projects;e. Evaluate and conduct analysis on the financial aspect of
modernization projects vis-a-vis availability of funds in the AFP
Modernization Act Trust Fund;f. Conduct continuing studies on the use of the AFP real estate properties to generate funds;
g. Prepare updates on the implementation of the AFP Modernization Program;
h. Coordinate with various staffs and other agencies on all
matters relative to the implementation of the AFP Modernization Program;i. Assist the AFP Modernization Board and other similar
modernization-related bodies created at the AFP level in the performance
of their functions;j. Provide staff support during the evaluation and
deliberation of the project for implementation and shall keep a record
of the approved projects for reference;k. Whenever applicable, coordinate with the Joint AFP-PITC
Counter-Trade Working Group for the evaluation of counter-trade
proposals and preparation of counter-trade agreements,l. Monitor, through the Major Service Program Management
Offices, the implementation of procurement contracts and submit periodic
reports to the Chief of Staff, AFP;m. Provide administrative support to all committees or bodies
created by the Chief of Staff, AFP to implement the AFP Modernization
Program; andn. Maintain records of the AFP Modernization Program
9.2.5. The Major Service Modernization Program Offices shall assist
and advise their respective Commanders in the management and
implementation of the Major Service modernization projects and shall,
among others, have the following functions:
a. Update implementing plans of the Major Service modernization projects;
b. Coordinate the approval processes for AFP Modernization Program projects at the Major Service level;
c. Prepare updates on the implementation of the Major Service modernization projects;
d. Coordinate with various staffs, including the Project
Management Teams, and other agencies on all matters relative to the
implementation of the Major Service Modernization Program;e. Maintain records of the Major Service modernization projects; and
f. Provide support to the Major Service Modernization Board.
9.2.6. The creation, composition and functions of the
Prequalification, Bidding and Awards Committees (PBACs) for construction
and equipment and weapons systems acquisition projects, as well as the
Prequalification, Evaluation and Awards Committees (PEACs) for
consultancy services shall be governed by existing laws, rules and
regulations, unless otherwise indicated in these IGRRs.
9.2.7. The Government Arsenal shall, in accordance with Item 7.2.1
above, create the appropriate and necessary body or bodies parallel to
those mentioned in Items 9.2.3 and 9.2.5 for the implementation of the
modernization projects of the GA.
ARTICLE 9.3. Reportorial Requirements
9.3.1. The Chief of Staff, AFP shall submit to the President and
Congress, through the Secretary, an annual report containing the
progress of the implementation of the AFP Modernization Program.
9.3.2. The Secretary shall submit to Congress each year at or about
the time that the President’s budget is submitted to Congress the Five
(5) – Year Rolling Plan mentioned in Item 1.1.5.
9.3.3. The following reports shall be submitted:
a. The Chief of Staff, AFP shall cause the preparation and
submission to the DBM and Accounting Office, COA, through DND, of all
financial reports required under NBC No. 436, dated 28 December 1994;
NBC No. 422, dated 27 February 1991; COA Circular No. 92-89E, dated 04
March 1992; Joint Circular No. 9-81A, dated 30 November 1983; and COA
Circular No. 96-006, dated 02 May 1996, on quarterly reports.b. The Chief of Staff, AFP shall also cause the preparation
and submission to DBM and Accountancy Office, COA, through DND, of a
quarterly consolidated report on the AFPMATF.
9.3.4. The Chief of Staff, AFP shall submit to the Secretary an
annual report on the status of the AFPMATF to serve as basis of the
SND’s annual report to the President and Congress. Such report shall be
submitted not later than the end of the first quarter of the succeeding
year.
9.3.5. The AFPMATF Management Committee shall submit a quarterly
report of its operations to the Secretary. Such report shall be
submitted not later than the last day of the first month of the
succeeding quarter.
Chapter 10.0. MODIFICATION OF THE AFP MODERNIZATION PROGRAM
ARTICLE 10.1. Guidelines
10.1.1. To meet unforeseen national security emergencies,
the Secretary shall recommend to the President the modification of the
AFP Modernization Program through substitution or revision of a
component project therein. “Substitution or revision of a component
project” includes, among others, changes in program schedules, number of
equipment or weapons systems to be acquired, and capability mix.
10.1.2. The determination of the existence of a national
security emergency that warrants the modification of the Program shall
be made upon the recommendation of the Chief of Staff, AFP.
ARTICLE 10.2. Report on the Modification — The President,
upon the recommendation of the Secretary, shall report to Congress any
modification made to the AFP Modernization Program within thirty (30)
days.
CHAPTER 11.0. Final Provisions
ARTICLE 11.1. Separability Clause — If any provision of
these Implementing Guidelines, Rules, and Regulations should be declared
invalid by a competent court or tribunal, the remaining provisions
hereof, unaffected thereby, shall remain valid and binding.
ARTICLE 11.2. Repealing Clause — All orders, circulars,
memoranda and other department issuances inconsistent with this
Department Circular are hereby repealed or modified accordingly.
ARTICLE 11.3. Effectivity — This Department Circular shall
take effect fifteen (15) days from the date of its submission for
publication with the National Administrative Register, University of the
Philippines Law Center.
Adopted: 06 Mar. 2000
(SGD.) ORLANDO S. MERCADO
Secretary