Motivated by Significant Increase in Austal Price Offer
The Philippines’ Department of National Defense (DND) has confirmed it is seeking new proposals to meet a Philippine Navy (PN) requirement for six OPVs, following differences with Austal over price increases for the vessels proposed by the Australian shipbuilder.
“Pending our approval of the contract for the purchase, they [Austal] said the cost had increased — materials, labour and everything. They asked for additional payment. I think our budget is PHP30 billion [$584 million], so they want PHP12 billion more for the six OPVs or they said we can reduce the number from six to five,” Defense Secretary Delfin Lorenzana was quoted as saying on 5 April by the state-owned Philippine News Agency (PNA).
Austal was believed to be the frontrunner in this project, but Lorenzana said the DND cannot ask the Department of Budget and Management for additional funding, adding that it is not an option either for the PN to reduce the number of OPVs to be acquired. “What they [the PN] really want is six because that is the number they need, so they are now talking with other proponents capable of giving that number without increasing the price or reducing the number of ships,” he added.
Lorenzana said shipbuilders from France, Sweden, South Korea, Japan, and India have expressed interest in the PN’s OPV project. Moreover, MON understands that Dutch shipbuilder Damen is offering Manila its OPV 2200. “Damen is seriously considering building these vessels at a local, Philippine shipyard,” a company representative told MON during the DSA 2022 defence exhibition in Kuala Lumpur.
Meanwhile, the PNA quoted Lorenzana as saying it is now unclear whether the OPV contract will be signed before Philippine President Rodrigo Duterte steps down on 30 June. “Maybe, if we can negotiate the price and provisions in the contract, maybe we can sign it before [the] end of the president’s term. Otherwise, I will just pass it on to the next administration, so they will be the ones signing,” he said.
The OPV project, the funds for which were released last year, is meant to replace Second World War-era surface assets already decommissioned by the PN.
Meanwhile, as the modernisation of the country’s armed forces continues, the Philippine Air Force (PAF) announced on 6 April that it held a formal “acceptance, turnover and blessing ceremony” at the Villamor Air Base in Pasay City for two T129B ATAK combat helicopters and one C295W medium-lift transport aircraft.
The helicopters, which arrived in-country on 9 March, are the first two of six on order from Turkish Aerospace. The C295W, delivered on 28 March, is the first of three ordered by the PAF in 2019.