A joint venture has a week to submit a verified position paper explaining why the Department of National Defense should retain a P1.26-billion helicopter deal despite its failure to deliver 21 UH-1 helicopters to the Philippine Air Force on time.
DND Secretary Voltaire Gazmin has sent a "Notice to Terminate" dated March 25 to Robert Rice Jr., the official representative of the joint venture of US-based Rice Aircraft Services Inc. and Canada-based Eagle Copter Ltd. saying it would "partially" terminate the deal because it has failed to comply with the agreed delivery schedule of 21 UH-1 helicopters.
"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 Defense secretary stressed.
The letter said that the joint venture reached the maximum liquidated damages on January 31 when it failed to comply with the agreement that the delivery of the choppers should be within 180 days since the Letter of Credit was opened.
"The Letter of Credit was opened in 27 March 2014 and the deadline for delivery for the Contract is on 23 September 2014," Gazmin wrote.
He pointed out that the DND gave a 13-day extension for shipment number two, composed of UH-1 with tail number 8969 and 8502. Its delivery date was October 16, 2014.
However, Rice Aircraft Services Inc. and Eagle Copter Ltd. delivered the units "in tranches." As of the date of the notice, only eight out of the 21 UH-1 helicopters and 21 sets of gun mounts were completely delivered to the Armed Forces of the Philippines' Technical Inspection and Acceptance Committee.
When DND was still bidding out the procurement deal for the helicopters, the joint venture failed to comply with the documentary requirements set by the DND Bids and Awards Committee. It also submitted an unsigned document.
Last March 19, three lawmakers — Reps. Samuel Pagdilao of ACT-CIS party-list, Leopoldo Bataoil of Pangasinan, and Romeo Acop of Antipolo City — who were former police officials asked the House to look into the deal, saying the helicopters were obsolete and the transaction was done in bad faith.
"Instead of terminating the project, the DND allowed the supplier to continue with the delivery of the helicopters despite its vilations and conspicuous disadvantages, which are inimical to the modernization of the AFP," the lawmakers said
(GMA)
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