Philippines Scraps UH-1 Helicopter Deal, Blacklists Supplier

Philippines’ Department of National Defense (DND) has scrapped the controversial P1.2- billion ($27 million) UH-1 helicopter project and ordered blacklisting of the supplier, the joint venture between Rice Aircraft Services Inc and Eagle Copter Ltd of Canada, The Manila Times reported on April 17.

On Friday, Malacañang (office of the president) confirmed that Defense Secretary Voltaire Gazmin had ordered the termination of the deal, the news daily reported.

Gazmin “terminated the contract and issued a blacklisting order against the supplier. We only have accepted 7 UH-1 helicopters. We continue to commit to the observance of our procurement laws and defend what is advantageous to the government,” Presidential Communications Secretary Herminio Coloma Jr. said, quoting a statement sent to him by the DND Public Information Office.

Officials of the DND and the Philippine Air Force have been embroiled in the controversy surrounding the questionable acquisition of 21 refurbished UH-1D helicopters. The Manila Times source maintained that the supplier, in connivance with the officials, had worked to approve a “defective” and “disadvantageous” contract.

Last month, Gazmin ordered “partial termination” of the P1.2-billion  UH-1 helicopter procurement contract with the US supplier because of the firm’s failure to deliver the ordered units within “180 days upon the opening of the letter of credit.”

In a Notice of Termination, he informed the supplier that the project is being “partially terminated for exceeding the ten percent (10 percent) maximum liquidated damages.”

In his order dated April 16, 2015, the Defense chief informed Robert Rice, an official of the joint venture that the department decided to end the contract for “default” and other violations of the Government Procurement Act or Republic Act (RA) 9184.

“We regret to inform you that after profound perusal of the justification stated in your submitted Verified Position Paper dated April 6, 2015, the Contract Termination and Review Committee (CTRC) did not find substantial reasons to nullify the Notice of Termination.

“You are hereby ordered to submit a verified position paper stating why the contract should not be terminated within seven (7) days upon receipt hereof. Failure to show cause within the provided period, either by inaction or by default, shall cause the issuance of an order terminating the contract,” the DND chief warned.

In view hereof, the DND partially terminates the contract for default and by virtue of Section 68 Rule XXII of RA 9184, effective on the date of receipt of this notice,” Gazmin said.

He added that the DND has forfeited the performance bond amounting to P44 million.

“The joint venture of RASI and Eagle Copters is likewise suspended from participating in the public bidding [for] all government projects for a period of one (1) year, commencing on the date of the attached Blacklisting Order,” the Defense chief said.