Philippine Department of National Defense Terminates UH-1 Contract, Blacklists Supplier

by Dan Darling, International Military Markets Analyst , Forecast International.

Following a furor sparked by a series run by Philippine daily The Manila Times, which exposed the shadiness of a 21-unit procurement of UH-1 helicopters, the Philippine Department of National Defense (DND) has cancelled the PHP1.263 billion ($28.5 million) deal. In addition, the DND has ordered the blacklisting of the contracted supplier – a joint venture combining Rice Aircraft Services and Eagle Copters Ltd – from further bidding on future Philippine defense projects.

The original contract – negotiated directly with the Rice-led joint venture following three failed bidding attempts by the DND between December 2012 and September 2013 – called for the refurbishment, delivery and acceptance by the Philippine Air Force (PAF) of all 21 units by September 23, 2014. A contract was awarded to the JV in December 2013, with a notice to proceed with deliveries following a month later in January 2014.

But, by March 25, only eight of the required 21 units had been delivered to Clark Air Base in the Philippines (along with 21 sets of gun mounts), with just seven of these UH-1s refurbished, accepted by the technical inspection acceptance committee, and handed over to the PAF. Because the cumulative amount of liquidated damages had reached 10 percent of the contract, Defense Secretary Voltaire Gazmin sent a notice of termination to the JV informing it that the contract was being partially terminated and giving the JV seven days to submit a verified position paper detailing why the contract should not be terminated.

Now, with the remainder of the contract scrapped and officials from both the DND and PAF embroiled in the Huey procurement controversy, little immediate headway is likely to be made regarding patching PAF rotor-wing capability shortcomings. The UH-1 Huey forms the core of the PAF helicopter arm, but much of its legacy fleet is decrepit and unusable. Thus, the DND had sought to acquire the refurbished models to augment the existing fleet, which would have been assigned to multiple mission types, including medevac, tactical troop transport, and logistical support.

At present, only about 16 to 20 UH-1Hs in the PAF inventory are fully or partially mission-capable – far short of the PAF requirement of 67 operational combat utility helicopters. These Hueys are primarily used as combat utility helicopters within counterinsurgency operations. The acquisition of the 21 refurbished UH-1 Hueys from the Rice-Eagle JV was meant to fix this operational shortcoming.

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